Staff Reporter
PETER BUNTING, chairman of Dehring, Bunting & Golding (DB&G) says investors have been spoilt by the high returns of the last five years.
"There is nothing wrong with getting rich slowly," he told participants in the DB&G investment seminar held at The Ruins in Ocho Rios on Tuesday.
Mr. Bunting informed the audience that an understanding of the general economy is what will drive intelligent investment decisions.
"We are in a relatively stable period. Interest rates trended down and then remained flat which is a much better situation than what occurred over two years ago when interest rates spiked up sharply."
.
EXCHANGE RATE
"From January to December the exchange rate depreciated only five per cent which means it was relatively stable in our environment."
DEBT AND THE
BALANCED BUDGET
"The Finance Ministry has said that it will miss the balance budget target for this year. The fiscal deficit is expected to be two per cent for 2005/06; one per cent for 2006/07 and balanced in the 2007/08 budget period."
"And that is better than other Caribbean nations. But it is true that we have to catch up with the region in terms of debt. However, Jamaica is an improving credit story. And this is reflected in bond prices. But the truth is that we always have uncertainties such as the weather and oil prices."
REAL ESTATE MARKET
"Let me say first that I am not an expert. That said, I anticipate prices to flatten, particularly in the high-end market of Kingston. Those $20 million townhouses will not continue to appreciate as before.
However, the National Housing Trust action will create tremendous demand in the less than $12 million price range. The problem is that no one seems to be building for that market. Developers are either building starter units or high-end units.
And for those persons looking to invest in real estate, note that transaction costs are 20 per cent of the selling price. Therefore we see real estate as a long-term investment that should be held for around 10 years to get a profit from price appreciation. "
Mr. Bunting noted that in the United Kingdom, transaction costs in real estate are three per cent, including realtor fees.
