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Jennifer Messado: The real estate market is now flooded with investors who want something tangible for their money - it's not just your first time homeowner that is searching.
Dennise Williams, Staff Reporter
REAL ESTATE has always been the barometer with which Jamaicans measure wealth. The market is now flooded with investors who want something tangible for their money, it's not just the first-time homeowner that is searching.
In fact, there seems to be frenzy on the real estate market as investors shun the lacklustre stock market and are wary of money market instruments whose returns are outstripped by inflation.
In its continuing series on the Jamaican real estate scene, Sunday Business recently spoke with prominent real estate attorney, Jennifer Messado whose name has been intertwined with property development in Jamaica for over 30 years.
With clients - real estate buyers, sellers and developers - scurrying in and out of her Holborn Road office on a daily basis, Mrs. Messado speaks with authority on the topic of real estate.
THE RESIDENTIAL MARKET
Sunday Business: Real estate is hot right now. What price range offers the most choices?
JENNIFER MESSADO: In the middle price range of $8 to $12 million it is absolutely excellent. In accessible locations like Kingston 6 and Kingston 7, properties are hot sellers. What makes Kingston 6 and 7 hot is because the neighbourhoods are user friendly (my new favourite phrase). There are good schools, shopping centres and the like.
I am ruling out Stony Hill, Forest Hills and Smokey Vale because of the overwhelming traffic; even Kingston 8 is plagued by traffic problems.
SB: What types of residential developments are in demand by buyers?
JM: Townhouses are still more desired than apartments. No matter how attractive an apartment is, a family will outgrow it. And developers are not listening to families. There is a cry for land space for children to run up and down. In the first world there are many parks for apartment dwellers to access. But, in Jamaica, for various reasons parks are not part of the Jamaican life.
Developers need to create landscaped outdoor living areas for the residents. Green areas are lacking in too many developments.
SB: Although real estate is hot, are there any signs of weakness in the market?
JM: In the $25 million price range, I am not confident that they will continue to provide investment returns that they are now. For properties in that price range, the rental is US$3,000 upward. Diplomats and expatriates are very price sensitive because of the movement of the dollar. Plus, there is some feeling that they have been taken for a ride. Right now, that tenant base is not willing to pay more than US$2,500 per month.
In fact, what they are doing is looking to provide their own accommodations. For example, the US Embassy is renovating the Crown Plaza and also building on Bamboo Avenue. That will cut into the diplomat rental market.
SB: What other weaknesses do you see in the market?
JM: The problem with large complexes is management. Another thing that investors need to be aware is that property values do not increase as fast with large developments.
The only exception to that rule is the Long Mountain Country Club. The property values rose there because there was space to expand and some homeowners were able to double the size of their units.
SB: What about the lower spectrum of the market?
JM: These properties are concentrated in the St. Catherine environment and now there is a development in St. Thomas.
In the more sought after sections of the Kingston Metropolitan Area there just isn't enough landspace for developers to price units at that region.
However, any new development in the $6 million and under are an absolute seller, especially due to the National Housing Trust increasing the benefits. Two persons can end up with a $3 million loan at [eight] per cent.
And through competition in this market, you get better designed houses. People are not taking any boxes.
For example, Caribbean Estates developed by New Era Homes, in Portmore is doing very well. There is a waiting list for the next phase as the first phase sold off without even being advertised.
SB:With such an aggressive market place, what advice do you have for investors?
JM: Investors should stick to something like Westbury (on Trafalgar Road) that is guaranteed to attract corporate rentals that will give adequate returns. Lots are also a good investment, especially with some building societies giving 50 per cent or more in financing.
Investors should also look at older communities like Havendale, Meadowbrook, Red Hills, Smoky Vale and Vineyard Town. These areas are not fashionable but nothing is wrong with them. The lots are large and the properties have retained their values. So there is opportunity to knock down the house and build something more modern.
"Reputable developers and associations, like teachers, police and nurses can come together and make deals. The association would assess the price range to suit their members and use financing available to them so that developers could give a suitable product."
Editor's note: See Part II next week.
