Jackie Pete Smith, Contributor 
Townhouse complex on Cassandra Avenue in Drumblair. - Ricardo Makyn/Staff Photographer
THE YEAR 2005 began with the anticipation of a buoyant year. The economic indicators looked positive. Inflation was 13.7 per cent with strong signs of trending downwards.
The Jamaica Chamber of Commerce Business Confidence Index showed high consumer and investor confidence, with expectations of favourable gains in the economy. Business confidence reached its peak in the first four months when compared to the same period over the past four years.
FOREIGN DIRECT INVESTMENT
Foreign Direct Investment (FDI) inflows continued with foreign investors and Jamaicans overseas seeking to purchase property in Jamaica. Spanish investors such as Grupo Pinero and the RIU Group guaranteed an increase in the island's room stock with the construction of new hotels.
Infrastructural developments such as the airport expansion, improved water supplies, Highway 2000, potential retirement villages for returning citizens, and developments such as Harmony Cove in Trelawny also stimulated the excitement for land purchase.
All this encouraged greater competitiveness in the market. Mortgage institutions such as building societies lowered their rates to as low as 11 per cent, while the National Housing Trust (NHT) reduced its rates by 1 - 2 per cent. Falling interest rates whetted the appetites of those who wanted to diversify their investment portfolio into real estate, and companies experienced growing sales portfolios, with some averaging a more than 50 per cent property sale from overseas clients.
PROPERTIES CONTINUE
TO APPRECIATE
As a result of the foregoing, the value of properties continued to appreciate and demand increase. In 2003, a two-bedroom townhouse in Long Mountain was valued at $4.4 million. Today, it is valued at approximately $9 million, more than a 100 per cent increase.
While there has been a steady supply of housing solutions in the lower- and upper-income category, the supply has not kept pace with growing demand. This is most noticeable in the middle-income units in the $5m to $10m price range, with mainly young
professionals competing for the limited housing stock.
A major challenge is limited availability of land, particularly in metropolitan areas. With a population of 2.6 million, a population growth rate of 0.5 per cent per annum, a country of 4,441 square feet of land; and increased interest by overseas and Jamaican investors, it is evident that real estate prices will continue to increase as demand outpace supply.
All this heightened awareness of the industry reinforces the fact that real estate remains one of the best long term investments anyone can make. The gains are obvious; however some concerns that need to be dealt with in order to maximise the returns on these investments. These will be addressed in Part 2.
Jackie Pete Smith is the general manager at Jamaica National Real Estate Co. Ltd.
