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No pandemic real estate deals in Jamaica

CEO of Better Homes and Gardens Real Estate Jamaica Limited Edwin Wint says the deals expected under pandemic conditions have failed to materialise, although cash purchasers have sometimes struck gold.

Wint and other realtors say that there is no trend of individuals selling their properties at a significant discount, although there have been some sell and leaseback deals on the market. 

“In some market segments, it’s a sellers’ market. Demand is good and there’s a supply issue for some types of properties. We sold a detached house in Cherry Gardens above list price on the first day of viewing”

— Edwin Wint, CEO, Better Homes and Gardens Real Estate Jamaica Limited

Such arrangements benefit buyers and sellers, with the buyer having an immediate tenant providing rental income after purchase, while the sellers secure new funds for operations and investment in their companies.

In a similar manner, Limners and Bards, advertising and media production company, sold its building in Kingston and leased it back for its operations, thereby increasing its cash position. Consequently, at the end of the company’s first quarter, January 31, 2021, cash and cash equivalents increased by JM$93.5 million to JM$342.25 million, reflecting a high liquidity position.

Fashion and entertainment company Pulse Investments also tapped new funding in a complicated deal, in which its main shareholder, Kingsley Cooper, sold Villa Ronai to the company for JM$600 million and then loaned back the funds to the corporation for further investment and growth.

Kingston Properties, in the January to March 2021 quarter, acquired an office building in New Kingston on a sale and leaseback agreement for a consideration of approximately US$1.2 million.

First Rock Holdings also disclosed in its most recent audited financials that it has entered into an agreement to purchase the property known as 12-14 Oxford Terrace from Advanced Integrated Systems, for a consideration of US$1.93 million. That deal, however, was not a sell and leaseback.

Kingsley Cooper sold Villa Ronai to Pulse Investments for JM$600 million and then loaned back the funds to the company — for which he is the chairman — for further investment and growth. (File photo)

Overall, realtors noted that properties are not being discounted.

Buyers’ market vs sellers’ market

Edwin Wint states, “In some market segments, it’s a sellers’ market. Demand is good and there’s a supply issue for some types of properties. We sold a detached house in Cherry Gardens above list price on the first day of viewing.”

Caribbean Business Report reached out to President of the Realtors Association of Jamaica (RAJ) Donovan Reid , who is managing broker of Donovan Reid & Associates for comment.

He stated, “We have not seen any discounts of the pandemic. Real estate properties are long-term assets. They are not like a pair of shoes that can be discounted. We have not seen any downward movement. The segment of the market which was most affected was Airbnb (short-term rentals) but with the increase in vaccinations, we expect this to change.

“In terms of long-term rentals and sales, we haven’t seen any reduction in pricing. There has been no increase in price or none out of line with inflation, no major shifts. They have pretty much been stable.”

Other realtors say that buyers are offering more than the asking price in order to beat those competing with them for certain properties.

According to Andrew James, CEO of Andrew James Realty and immediate past president of the RAJ, “Based on the limited supply of properties on the market, the prices continue to go up because of the demand. We are seeing people offering more than the asking price and even cash purchases.”

Andrew James, immediate past president, Realtors Association of Jamaica (Photo: Twitter @realtorsjamaica)

Some analysts note that asset pricing has been affected by the abundance of liquidity available. Simply put, there is too much money chasing property and other assets.  The increase in liquidity is connected to the central bank’s policy efforts.

Andrew Issa, lead broker at Coldwell Banker Jamaica, told Caribbean Business Report, “The market is extremely strong with multiple offers. There is still a shortage of townhomes.

He projects that price stability will not last much longer either.

“It depends on location and size, but prices are pushing up and with steel and lumber prices jumping, prices now are definitely not going to last .”

Andrew Issa, CEO, Coldwell Bankers Jamaica, says the local market is extremely strong with multiple offers, and that there is still a shortage of townhomes. (Photo: PROVEN)

Howard Johnson Jnr, CEO of Howard Johnson Realty said some of his clients have  benefited from some good opportunities or deals since the pandemic.

However, he notes, “I have not seen an overwhelming amount of “below market” transactions.  However, many of our cash purchasers have negotiated good deals for themselves.  As is expected, there will be some who are having difficulties and are susceptible to offers that would ease the situation. There are buyers waiting on deals, but the inventory is holding firm for the most part. It is still showing signs of a sellers market. Sellers are holding out at their listed prices and most times getting it.

Edwin Wint said that in terms of price discounts, the most significant change has been in the rental market. “We’ve seen a bit of correction in the residential rental market.   With the number of new apartments coming into the rental market, the rents have been trending downwards, especially for the older units.