No immediate COVID-19 real estate hit, say players
Local real estate players say it could take years for the sector to recover from the economic fallout brought on by the COVID-19 pandemic.
While local estimates were unavailable, the international real estate market is projecting a decline from US$913.3 billion in 2019 to US$908.9 billion in 2020 at a compound annual growth rate of minus 0.5 per cent. However, the market is expected to bounce back with a growth of seven per cent from 2021, with an expected increase to US$1,107.2 billion in 2023.
“It is affecting Jamaica already,” businessman Mark Kerr-Jarrett told The Gleaner. “Several projects have been put on hold – not cancelled – and from what I have been reliably informed, the persons with cash looking to purchase now are expecting significant discounts.”
The managing director of Barnett Limited continued: “The recovery of the sector will depend on how quickly we can get the country back to work and reinitiate the consumer confidence – if we can open up the economy on a phased basis as quickly as possible.
“I am confident that the housing market should bounce back quickly once people are back at work and earning salaries as shelter is an essential need. The commercial and industrial markets should follow shortly thereafter.”
Andrew James, president of the Realtors Association of Jamaica, said that while the end of July would be a better time to give a more realistic forecast of the sector, he was convinced that real estate would be among the last industries to be affected by COVID-19.
He said that some potential buyers could be holding on to their cash in hopes of taking advantage of falling prices in roughly four to six months.
“The first thing is that real estate sales prices have not fallen, but there is a slowdown in price appreciation. If you put a Mona house on the market for anywhere between $28 million and $30 million, the cash purchaser will just suck it up and hope to capitalise on it later on because there is hope that prices will fall,” said James.
“You have another set who will be willing to buy but [don’t] because of the uncertainty and [the fact that] some of the banks might not be even willing to lend to certain sectors,” James added.