Turnaround in real estate market downtown
Published:Sunday | November 28, 2010 | 12:00 AM
Avia Collinder, Business Writer
A long-forgotten enclave of commercial expansion, the older sections of downtown Kingston are seeing an upsurge in property buys by local companies and private investors ahead of an expected resurgence of business there in coming years.
The latest acquisition is Guardsman Group's purchase of the former Caribbean Fencing property at Water Lane, in the area known as Breezy Castle, from the Urban Development Company (UDC).
The J$39.617-million transaction closed earlier in November. (See story on Page C3).
UDC General Manger Joy Douglas said the security company, which is owned by Kenny Benjamin, would launch its development early in 2011.
Real-estate experts say much of the renewed interest in downtown was sparked by Digicel Group's move to establish its global headquarters on the waterfront.
The telecoms' multimillion-dollar bet on an area long abandoned because of crime has convinced other investors to reconsider the area's commercial potential.
Interest is also being driven by plans to set up an offshore, low-tax centre on the waterfront, which Government forecasts as the catalyst for some 50,000 new jobs.
The UDC, as added honey, has revamped and is marketing more aggressively the tax incentives available to downtown investors under the Urban Renewal Tax Relief programme.
Noting that property values in downtown Kingston have been depressed for many years, Douglas said that the Digicel, Guardsman Group, and other developments are "no doubt going to result in improved property values".
The UDC has also been fielding "an increase in queries related to the Urban Renewal Tax Relief Act from existing property owners, signalling intentions to redevelop properties. In some instances, these are from companies intending to relocate their head-office operations downtown," Douglas said.
Realtor Edwin Wint, immediate past president of the Realtors' Association of Jamaica (RAJ) and chief executive officer of La Maison Property Services, said Monday that the change in interest in downtown Kingston as an investment venue was marked.
"We have noted increased demand for properties," he said via email, "especially along Harbour Street, from its intersection with Princess Street in the west to Hanover Street in the east."
Property values for older-type buildings downtown are less than half the value of buildings located in the more modern New Kingston business and financial district, depending on age.
Values range from J$3,000 to J$5,000 per square foot downtown, compared to J$5,000 to J$10,000 for secondary locations in New Kingston.
The most expensive properties are on Knutsford Boulevard, where prices are J$10,000 per square foot and upwards.
The sum of downtown real-estate transactions that have either closed or are in varying stages of negotiation is not easy to count, but the resurgence of interest is enough to excite realtors, who, two years ago, complained of an almost total lack of interest in vacant space, notwithstanding cheap prices attached.
Increased value
"There is definite interest in downtown Kingston," said Howard Johnson Jr, the new RAJ president and head of Howard Johnson Realty.
" A lot of people are more confident because of the Digicel buy, and the Government is also steering them in that direction," he said.
Howard Johnson Realty has initiated one transaction for a location on Princess Street, but Johnson declined to disclose the location and buyer.
La Maison Realty is also in the "early stages" of negotiating a sale on Harbour Street and has repeated requests for property in that locality from several interested prospective purchasers, Wint said.
Johnson says realtors are getting queries for properties located on Princess Street, Harbour Street, and Duke Street, and other locations close to the UDC waterfront buildings, and Scotiabank Centre, which is at the corner of Duke Street and Port Royal Street.
"The area promises increased value in the future. We have seen no price increases, but there is a lot of activity," said the realtors' top spokesman.
"It is still a buyer's market and high-end business owners are buying. People are looking at unoccupied buildings with a view to restructuring for developments to come."
Another realtor from St Andrew, who asked not to be named, said she concluded the sale of property on Harbour Street in November to a non-Jamaican who works locally, and had bought the real estate as an investment, with an eye to the impact of the Digicel headquarters development.
Douglas says real-estate transactions downtown have been ramping up over the past year and are expected to continue.
A number of deals have been disclosed by the UDC itself, including one under negotiation in May — a new hotel and condominium deal for the Kingston waterfront that has been linked to hotelier and department store owner, Lee Issa.
The UDC is also giving up its office space at a prime spot on the waterfront and putting that building on the market, while shifting its headquarters to the edge of downtown.
Digicel is constructing two buildings on a 4.43-acre waterfront property acquired from the UDC for J$115 million.
The completion date for the headquarters is mid-2012.
"There is no doubt that Digicel's investment has stimulated interest in downtown Kingston," said the UDC's Douglas.
"The development should see over 800 Digicel staff and staff of other tenants acting as a stimulus for commerce, restaurants, and other services."