Resurging tourism and infrastructure improvements activate new luxury developments and vacation home investments in Jamaica amid unmet demand for affordable housing options and mortgage accessibility challenges.

This extended overview from the Global Property Guide covers key aspects of the Jamaican housing market and takes a closer look at its most recent developments and long-term trends.

• Market-Defining Features and Trends
• Demand Highlights
• Supply Highlights
• Mortgage Market
• Rental Market
• Socio-Economic Context

Market-Defining Features and Trends

Jamaica's economy has exhibited a notable revival after the severe downturn caused by the COVID-19 pandemic in 2020. Growth rates soared to 4.6% in 2021 and 5.2% in 2022, largely propelled by a resurgence in tourism. Despite a moderation of 2.2% in 2023 and a projected further slowdown to 1.8% in 2024, confidence remains robust, buoyed by increasing tourist arrivals and ongoing investments in the tourism sector.

In his statement, the Minister of Tourism shared an expectation of 4.2 million visitors bringing US$ 4.1 billion to the country by the end of the 2023/24 fiscal year marking an all-time high. According to the latest data available from the Jamaican Tourist Board (2022 figures published in May 2024), the majority of tourists on stopover arrivals come to Jamaica from the US (74.8%), followed by Europe (11.1%), and Canada (10.9%). Apart from being the target market for short-term rental properties, the same source countries comprise the main demographics of luxury vacation home investors.

Data Source: Jamaica Tourist Board

The housing market in the country is divided between affordable and luxury segments. Affordable housing demand is driven by population growth, urbanization, and strong local aspirations for homeownership. The state primarily addresses this segment through the National Housing Trust (NHT), although significant undersupply persists, amidst ongoing affordability issues tied to significant property price appreciation over time and only marginal growth in salaries. In 2023, NHT completed only 1,546 units, a 42% decline from the previous year and well below the 10-year average. To tackle the issue of affordability and undersupply, the Jamaican Government announced a range of initiatives including easier access to finance and developer engagement projects.

Conversely, luxury housing mainly attracts foreign investors and the Jamaican diaspora seeking ties to their homeland while earning rental income. The appeal includes Jamaica's thriving tourism sector, direct international flights from Europe, the US, and Canada to key cities like Kingston, Montego Bay, and Ocho Rios, and the attractive lifestyle of island living. High-end developments are typically carried out by private developers in prime tourism areas, offering premium amenities to affluent buyers.

Tourist arrivals by port of arrival:

In terms of regional distribution, the demand-supply dynamic is heavily influenced by infrastructure developments. One of the examples is St. Thomas Parish expecting a surge of tourist and residential development related to the opening of a four-lane highway earlier this year stretching from Harbour View in Kingston to Yallahs in St. as a part of the Southern Coastal Highway Improvement Project (SCHIP).

According to the Minister of Finance and the Public Service of Jamaica Dr. Nigel Clarke, infrastructural improvement efforts are set to continue. In his opening statement at the 2024/25 Budget Debate in the House of Representatives, the Minister announced that a total of J$ 6.3 billion has been allocated to complete the construction of the Harbour View to Port Antonio section of the Southern Coastal Highway Project and commence works on Phase 3 of the local roadwork construction packages. Additionally, J$ 10.2 billion has been provided for the Montego Bay Perimeter Road to complete land acquisition activities and design for the 11-kilometer four-lane carriageway along the Long Hill Bypass corridor, and the continuation of construction works on the 15-kilometer four-lane carriageway from Ironshore to Bogue.

Jamaica's mortgage market offers a variety of options including local and foreign currency loans provided by commercial banks, building societies, credit unions, and the National Housing Trust (NHT). The interest rates reflect this diversity: as of April 2024, domestic currency mortgage loans at commercial banks averaged 7.43%, a slight increase from the previous year, while foreign currency loans decreased to 6.43%. Building societies, on the other hand, offered domestic currency mortgages at a higher rate of 7.82%, with foreign currency rates slightly up to 7.00%.

Mortgage interest rates as of 30 Apr 2024:

In 2023 and early 2024, the growth in mortgage loans faced a slowdown due to monetary policy tightening. However, with inflation levels stabilizing, there is an expectation that the Bank of Jamaica will lower its main policy rate, currently set at 7%, later in the year. This potential rate cut is anticipated to stimulate renewed activity in the housing loan sector.

In Jamaica's rental market, long-term rental properties mainly accommodate working professionals, expatriates, and students. Additionally, a considerable portion of the market is dedicated to short-term rentals catering primarily to tourists and situated in key tourism hubs along the North Coast, offering access to shorelines and convenient connectivity. As government-led infrastructural projects advance, there is anticipation of increased rental activity at the South Coast alike. Average daily rates for short-term accommodations vary significantly across regions, with Montego Bay and the broader North Coast commanding premium rates.

Despite ongoing improvements in tourism and infrastructure that continue to bolster Jamaica's real estate sector, making it an appealing option for both local and international investors, high crime rates, low productivity, and susceptibility to external shocks persistently remain the main challenges.

The real estate market in Jamaica is not officially monitored by the government authorities or the statistical office. Consequently, key performance indicators are typically based on a compilation of data from various available sources and anecdotal evidence from the media and statements of government officials.

Demand Highlights: The Dual Market of Affordable and Luxury Housing

The real estate market in Jamaica is fragmented, with the two main categories of real estate developments being affordable housing and luxury housing. Demand for affordable housing is mainly driven by population growth, urbanization, and a strong desire for homeownership among Jamaicans. Conversely, high-end properties and vacation homes in popular tourist destinations along the North Coast are primarily acquired by foreign investors and the Jamaican diaspora, who invest in properties to maintain a connection to their home country and generate income.

According to Statista estimates, the real estate market in Jamaica has been experiencing significant growth and development in recent years. After a slight slump in 2023, when the value of residential real estate transactions reached US$ 550 million, marking a 3.51% decrease compared to the previous year, Statista Market Insights' analysts expect market dynamics to pick up. Projected transaction volumes are set to reach US$ 610 million in 2024, representing a 10.91% increase.

Data Source: Statista Market Insights

Supply Highlights: Affordable Housing Shortage, Luxury Properties in Tourist Destinations

On the supply side, affordable housing in Jamaica is primarily offered by government agencies, with the National Housing Trust (NHT) being the main provider. This segment is experiencing a significant undersupply, despite various state initiatives aimed at supporting housing provision for the lower-income population. In contrast, luxury developments are predominantly undertaken by private developers and are concentrated in high-tourism areas and the capital city, Kingston.

NHT-initiated housing projects

According to the latest annual report, NHT, the principal government agency responsible for expanding Jamaica's housing stock and providing financial support to homebuyers, completed 1,546 housing units in 2023. This represents a substantial 42% decrease compared to 2022 and falls significantly below the 10-year average of 2,021 units per year.

Data Source: National Housing Trust of Jamaica

Overall, the Government of Jamaica has targeted the commencement of 70,000 new housing solutions over the next five years. NHT is charged with contributing 43,000 of those solutions by 2026. To achieve this goal, the trust is planning to collaborate with developers to increase housing output through the Guaranteed Purchase Program (GPP) and the Developer's Programme.

Luxury housing

A notable trend in the Jamaican real estate market is the rising interest in luxury properties, with developers now prioritizing high-end projects aimed at affluent individuals and investors seeking exclusive, upscale living experiences. These properties feature a wide array of amenities and services such as private beach access, concierge services, and 24/7 security.

According to The Agency Journal insight, the most popular locations for luxury housing, attracting high-end developers and buyers, include the North Coast, particularly Montego Bay, Trelawny, and Ocho Rios. This region is a prime tourist destination with excellent accessibility by both road and air, notably due to the new international airport in Ocho Rios.

The South Coast, on the other hand, is emerging as a promising alternative, thanks to new road infrastructure developed under the Southern Coastal Highway Improvement Project (SCHIP) and a range of new developments coming up, particularly around the St. Thomas area.

Mortgage Market: Declining Volumes Amidst Interest Rate Increases

In Jamaica, a variety of financial institutions offer mortgages. Deposit-Taking Institutions (DTIs), regulated by the Bank of Jamaica and authorized to accept public deposits, include commercial banks (e.g., National Commercial Bank, Scotiabank Jamaica, JN Bank), building societies (e.g., Jamaica National Building Society, Victoria Mutual Building Society), and credit unions (e.g., COK Sodality Co-operative Credit Union, JTA Co-operative Credit Union). Non-DTIs, which also provide mortgages, encompass mortgage companies, insurance companies, and the government-run National Housing Trust (NHT), which primarily focuses on providing and financing affordable housing. Mortgages can be obtained in both domestic and foreign currency. Jamaica does not impose limits on foreign ownership or control, and local laws do not distinguish between local and foreign investors.

According to the Bank of Jamaica, in 2023 the growth in mortgage loans slowed due to the tightening of monetary policy. The National Housing Trust (NHT) granted 6,256 new main mortgage loans, representing a 14.6% year-on-year decrease. DTIs issued 3,882 new mortgage loans, marking a 13.3% year-on-year fall.

The Bank of Jamaica's latest survey carried out in March 2022 indicated that, as of December 2021, approximately 15% of the total mortgage stock in the DTI sector was attributed to overseas residents, with the remaining 85% granted to locals.

Note: For illustrative purposes only. Annual reporting periods vary - Jan-Dec for DTI and Apr-Mar for NHT;NHT figures include main mortgages only (excluding Solar Water Heater loans and JFMP)

Data Source: National Housing Trust of Jamaica, Bank of Jamaica

As of April 2024, the Bank of Jamaica reported that the average interest rate on mortgage loans denominated in domestic currency at commercial banks was 7.43%, up from 7.14% a year earlier. The average interest rate for foreign currency mortgage loans at these banks was 6.43%, down from 6.87% in April 2023.

For building societies, the average interest rate on domestic currency mortgage loans in April 2024 was 7.82%, compared to 7.30% the previous year. The average rate for foreign currency loans was 7.00%, a significant increase from the 5.25% observed a year earlier.

Mortgage interest rates in Jamaica, %:

Data Source: National Bank of Jamaica

In his 2023/2024 Budget Presentation, Prime Minister Andrew Holness announced significant enhancements to the National Housing Trust (NHT) benefits policies, effective July 1, 2023. The main adjustments included:

• Open Market and Build On Own Land (BOL) Loans: increase from J$ 6.5 million to J$ 7.5 million.
• House Lot, Home Improvement, Ten Plus (10+), and Fifteen Plus (15+) Loans: increase from J$ 2.5 million to J$ 3.5 million.
• New loan ceiling to make more funds available for customers purchasing units on the Open Market, costing J$ 12 million or less: access to up to J$ 8.5 million (subject to affordability).
• New income bands: contributors earning J$ 100,001 per week or more (approximately 5% of the NHT's over 550,000 contributors), will access NHT loans at a rate of interest of 5%. The majority of NHT contributors (66%), will continue to access loans at 0%.
• Increase in NHT Home Grants: up to J$ 3.5 million to contributors earning less than $J 15,000.99 weekly who have contributed to the NHT for at least seven years or who meet other specific criteria. Home Grants may be used to supplement the cost to purchase or construct a home.

Rental Market: Continued Dominance of Short-Term Rentals in the North Coast

According to the latest Census conducted by the Statistical Institute of Jamaica in 2011, 66% of the Jamaican population lives in owner-occupied housing, while the remaining 34% reside in leased housing units. Rent increases in Jamaica are capped at 7.5% annually, with any increases above this threshold requiring approval from the Rent Assessment Board of Jamaica.

The long-term rental market predominantly serves the local working population, along with a growing number of expatriates and students. Additionally, a substantial portion of rental properties is dedicated to short-term rentals catering to tourists. These properties are typically located in major tourism hubs along the North Coast, offering shoreline access and good connectivity.

According to the latest data from AirDNA, the highest average daily rental rate of J$ 113,700 (US$ 724) was observed in Montego Bay Coast, followed by J$ 78,100 (US$ 498) in St. Brans Burg and J$ 58,900 (US$ 375) in Saint Ann. Those locations typically offer luxurious holiday villa options. The South Coast is relatively cheaper and less developed due to infrastructure and connectivity challenges, although improvements are anticipated with upcoming government-led infrastructural projects.

Main short-term rental market indicators across Jamaican submarkets, as of the end of June 2024:

Socio-Economic Context: Economic Resurgence Bolstered by Tourism

The Jamaican economy stabilized following a rebound from the sharp pandemic-induced decline in 2020. Following two years of relatively rapid growth (4.6% and 5.2% in 2021 and 2022), Jamaica's real GDP growth rate moderated to 2.2% last year. The recovery was boosted by the tourism rebound, especially owing to stopover visitors from the US, the largest market. IMF forecasts real growth to slow further to 1.8% in 2024, 1.7% in 2025, and 1.6% throughout 2026-2029.

Inflation continues to decrease gradually back to the target band of 4%-6% after peaking at 10.3% in 2022. In 2023, the average consumer price inflation rate dropped to 6.5%. Apart from a slight hike at the beginning of the year, the slowing trend in price growth continued in 2024, with inflation standing at 5.2% in May 2024, according to the Statistical Institute of Jamaica. As inflation levels stabilize, the Bank of Jamaica is expected to cut its main policy rate, which is currently at 7%, later in the year.

Data Source: IMF

The number of stopover visitors to the country demonstrated consistent growth between 2006 and 2019 before pivoting in 2020, during the outbreak of COVID-19 pandemic. Subsequent partial recovery followed in 2021 with a significant rebound in 2022. During the period of January - November 2023 over 2,600,000 stopover visitors were registered in Jamaica demonstrating an annual increase of 19% compared to the corresponding period of 2022, as reported by the Statistical Institute of Jamaica. A similar pattern was observed for the cruise passengers, the number of those reached almost 1.1 million in the latest reported period of Jan-Nov 2023.

As announced by Tourism Minister Hon. Edmund Bartlett at the meeting of the Standing Finance Committee of the House of Representatives, Jamaica is expected to welcome 4.2 million visitors and earn US$ 4.1 billion by the end of the 2023/24 fiscal year. The minister also highlighted in his Sectoral Debate that the industry-related development remains strong, with 2,000 new rooms set to open this year and a target of 20,000 rooms in the next ten to fifteen years.

Data Source: Statistical Institute of Jamaica

The country's budget balance has improved significantly since 2020 when the pandemic support measures led to the first deficit since 2015. Fitch Ratings forecasts that the overall surplus will equal J$ 9.1 billion (0.3% of GDP), with a primary surplus of J$ 181.9 billion (6.1% of GDP) in fiscal year 2023/2024.

The USD to JMD exchange rate has stayed fairly stable over the last two years. According to the Bank of Jamaica, over the 12 months to the end of April 2024, on average, the Jamaican dollar depreciated against the US dollar by 1.4%. There was, however, an uptick in the pace of depreciation in April which primarily resulted from a seasonal increase in demand following the ending of the March tax season.

Data Source: Bank of Jamaica

Nationwide unemployment, as reported by the IMF, was at 4.4% as of the end of 2023 - down from 6.2% in 2022 - demonstrating a continuous rebound after a significant hike in 2020 caused by the COVID-19 pandemic.

Data Source: IMF

Major country-wide risks continue to involve high crime rates, low productivity, and weak demographics, as well as vulnerability to external (including weather-related) shocks. At the same time, as the rebound after the significant shock of 2020 continued, sovereign ratings of Jamaica were revised upwards by all the main agencies and currently stand as following:

Sources

1. Statistical Institute of Jamaica (STATIN)
   1. Census Data: https://redatam.statinja.gov.jm:8191/
   2. Consumer Price Index: https://statinja.gov.jm/
   3. Tourism Statistics: https://statinja.gov.jm/
2. Bank of Jamaica
   1. NFIS Impact Indicators: https://boj.org.jm/
   2. Financial Stability Report 2022: https://boj.org.jm/
   3. Interest Rates Statistics: https://boj.org.jm/
   4. Average Exchange Rates: https://boj.org.jm/
3. International Monetary Fund (IMF)
   1. World Economic Outlook, April 2024, Jamaica: https://www.imf.org/
4. National Housing Trust of Jamaica
   1. Annual Report & Financial Statements 2022-2023: https://www-2.nht.gov.jm/
5. The Ministry of Tourism of Jamaica
   1. Investment in Tourism on the Rise: https://www.mot.gov.jm/
6. Jamaican Tourist Board
   1. Annual Travel Statistics 2022: https://www.jtbonline.org/
   2. Rent Assessment Board of Jamaica
   3. Cap Rates Regulations: https://rentassessmentboardjm.com/
7. Statista Market Insights
   1. Market Insights. Real Estate - Jamaica: https://www.statista.com/
8. AirDNA
   1. Data on Short-term Rentals in Jamaica, by submarket: https://app.airdna.co/
9. Fitch Ratings
   1. Fitch Upgrades Jamaica to 'BB-'; Outlook Positive: https://www.fitchratings.com/
10. S&P Global
    1. Jamaica Long-Term Ratings Raised To 'BB-' From 'B+' On Improved Finances; Outlook Stable: https://disclosure.spglobal.com/
11. Moody's
    1. Sovereign Rating for Jamaica: https://www.moodys.com/
12. Jamaica Information Service
    1. Jamaica Projected to Welcome 4.2 Million Visitors and Generate US$4.1B in Tourism Earnings for 2023/24: https://jis.gov.jm/
    2. Major Infrastructure Works Continue in New Fiscal Year: https://jis.gov.jm/
13. The Agency Journal
    1. In the Know: Jamaica's Vibrant Real Estate Market & Residential Developments: https://www.theagencyre.com/
14. Sotheby's International Realty Jamaica
    1. Catalog of Newbuilt Residential Properties for Sale: https://www.sothebysrealty.com.jm/
15. 7th Heaven Properties
    1. Catalogue of Newbuilt Residential Properties for Sale: https://www.7thheavenproperties.com/