The Editor, Sir:

The Sunday Gleaner carried an article on the recent run up in the price of real estate. The increase is due partly to the high cost of construction in Jamaica, but another significant factor is due to pure speculation by investors who are looking for a quick return. The selling prices of new apartments and townhouses in Kingston are now running at $12,000 per square foot and over.

This is at or above the prices currently prevailing in Florida and they have now started experiencing a real estate slump due to the high prices there. Considering the vast difference in per capita income and interest rates between Florida and Jamaica, these prices in Jamaica cannot be sustained. I was recently in Panama, a country of similar population and per capita income, and house prices generally are significantly less.

Another indication that these high prices cannot be sustained is the very low return on investment from rental income from Kingston properties for all but the very high-end units that are being rented to foreigners.

I am, therefore, cautioning would-be investors to be very careful in chasing after these high-priced real estate units. Learn from the experience of others and don't get burnt. It may be better to continue to rent and save your money and wait for prices to stabilise. It may also be worth investing in a lot of land now and building what you can afford in the future.

I am, etc.,

JOHN MAHFOOD

john.mahfood@yahoo.com