Jamaica is currently facing a chronic oversupply of apartments, especially in Kingston, where there are upwards of 1,000 unsold units.
This according to real estate broker Anya Levy and veteran real estate entrepreneur and developer, Peter Rousseau. Both are of the view that the apartment segment of the real estate market is already over-saturated, with very little takers based primarily on the price being demanded by developers.
They made the point that the demand for town houses remains strong while highlighting the growing opportunities in the commercial real estate market, particularly as in regards to warehousing and car parks.
Speaking recently at the Sygnus Business Breakfast panel discussion under the theme, ‘Using Flexible Capital to Unlock Value in Real Estate’, both real estate experts dispelled the notion that given this oversupply, an imminent real estate bubble could arise.
Rousseau argued that if there is to be a downturn in the real estate market — it would be in the apartment segment, pointing out that this oversupply of apartments is evident in the Corporate Area. He pointed to the many vacant apartments in places like Liguanea, Barbican and other upscale neighbourhoods.
“When you drive around parts of Barbican, Liguanea and a number of areas at nights and look at the number of apartment buildings built recently, the number of lighted apartments to non-lighted apartments, sometimes you see upwards of 80 darkness,” Rousseau lamented, making the case that many of these apartments are unsold and unoccupied.
He was adamant that there is no real estate bust on the horizon but admitted that he is concerned about this oversupply of apartments in Jamaica.
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“There is a saying in real estate, ‘Behind every boom is a burst in the market,’ but the market will correct itself,” Rousseau posited as he shared his experience of boom and bursts in the real estate market in Jamaica and the Caribbean, where he has done many real estate development projects.
“In my view, if the economy is progressing as it is doing then the chances of overheating is some years away,” Rousseau emphatically stated.
Levy was also of the opinion that a burst in the real estate market in Jamaica is some distance away, and expressed confidence that if this happens the result will not be as catastrophic as seen in the not-too-distant past when several institutions went into real estate and got burnt.
She then made the point that given this excess supply, “if you don’t adjust rate downwards, they (apartments) are just going to stay vacant”. She cautioned developers in their pricing of residential real estate because of the current high demand.
“They have been inching up their prices, going from US$200 per square foot, to US$250 per square foot and now climbing to US $340 per square foot …What we want to see is for developers to taper off on the prices, because what’s gonna happen is that the mortgages persons have to service — there is going to be a disconnect with the anticipated income of prospective buyers,” Levy explained.
Rousseau also spoke about pricing distortions in the real estate market and also cautioned developers about pricing their properties, while observing that some developments are priced too high and have little uptake. Other developments, he said, are reasonably priced in which the developers get a reasonable rate of return rather than aiming too high and missing sales targets.
Warehousing and car parks
Both Rosseau and Levy identified warehousing and car parks as the next big thing in the real estate market in Jamaica, based on the demand.
“In the commercial and warehousing market there is an under-supply, and I suspect that investment in those areas pretty much will have a good run in the coming years,” Rousseau declared. For her part Levy offered: “warehousing is a market, which is emerging but has been untapped for so long”.
She explained than many of the lands identified for warehousing and other industrial purposes are owned by the Government, which is changing them out from agriculture to industrial use. However, the time in making this adjustment has caused many projects to be stalled or not yet come to market
Jamaicans are not big on renting to begin with, it’s just a cultural thing. Those who do rent prefer to do shared living situations, or take a small apt in a house than a building. Sorry for the investors and stakeholders who thought they would be swimming in the dough.
everybody wah clean them Drugs Money the sameway
Prices them want for the apartments too high, whether to rent it or buy it and we all know jamaica economy nuh set up dem way deh for that. People salaries nuh reach deh suh. On the other hand why people ago rent apartment fi 100s of thousands of dollars, when dem can purchase a nice economical house through NHT and mortgage every month still cheaper than rent for some of those apartments. Instead building those luxury apartments they gonna have to try focus on building something economical but still profitable so everyone can utilize not just a small portion of the population.
Reason being nothing is cheap in Jamaica,not even basic food items some ppl can buy much less fi go by or rent apartments. That’s y ppl capture piece a land and build something in their budget,u buy $12mill apartment u affi pay maintenance,tax etc it no fair at all. So whoever a invest a build all those apartments want back wat them spend plus interest.
Sir, we don’t buy overpriced tenament yards from drug dealers.
Same so, weh ppl must get 35 million to spend on an apartment that you family cant grow up in? And them no put no great deal of luxury in it for that price.
a oversupply because
1. rent is too high
2. laundry
the developer might be more focus on #2 than so much so #1 :travel
More sellers than buyers, then one company a watch the other and one renter a watch the other renter… unu kip it den…. longer it nuh rent is the longer dem ago tek get back money pon dem investment . a whol heap a people live pon minimum wage the average person cant afford to rent, only holiday renters they would get.. suh unu kip it high, the bubble soon pop.. unu have any idea seh a whol heap a residential house pon the north coast a try sell fi years now a cant sell..this is a no brainer…
99% of apartments are build by drug dons, it is about time people stop buy drugs people things. look pon roy fowl him build apartment at about 10-12 locations and a some so call decent people buy them. all a few a dem that career gaal buy him nephew dey wid a gal that live in every apartment location lol. uno think dem drugs boys dey a fool, but a we he consumer foolish more. who the fuk have money fi build houses other than matalon, gore etc them kind a way dey. Pure drugist own those apt and people fi star boycott them clath. bout them want apt fi sell fi 16 mil to 20 odd mil with partition boards inside and the front doors some cases are thick plastic door, ole thieves dem.
Anon 1:19
who do you think Matalon and those uptown long standing people are? They are from generational wealth and they are drug dealers too and corrupt politicians they linked with from long time. They moved the most drugs back in the days, you are silly to think is only ghetto come up people are involved in unscrupulous practices. Tsk Tsk. See old Seaga laid to rest was one of the biggest Don’s of all.