Luxury apartments displacing single home buyers
Published:Sunday | November 3, 2019 | 12:38 AMNeville Graham - Business Reporter
In Jamaica’s capital city, home buyers who dream of yard space, their own boundary wall or fence, and all that comes with a stand-alone residence now have to worry about more than just the mortgage in single house property.
Land space is increasingly being consumed by multi-story complexes, including space that at one time housed single dwellings but are being converted by developers.
Andrew James, the president of the Realtors Association of Jamaica, RAJ, says property values in Kingston and St Andrew are such that only developers are easily outbidding small buyers and snagging the few properties available.
“Anything in the Golden Triangle that is being sold now that is half acre and above is going for in excess of $100 million,” James told the Financial Gleaner.
“The developer will be willing to spend that kind of money because he knows that when he’s finished he will be making serious money,” he said.
That ‘serious money’ can come from gated communities comprised of a number of multi-storey edifices priced at the middle to upper end of the market.
However, the concentrated focus on that market tier has given rise to the question of its continued absorptive capacity. But so far, those who sell real estate say the market is far from satiated.
The 20 South Apartments recently advertised an open house for two-bedroom penthouses at US435,000 ($62 million) and one-bedroom apartments at US$350,000 ($49 Million).
Realtor Julian Dixon of Keller Williams says the sales event was being held to dispose of 6-7 units which the developer had held back from the original sale, which began mid-2017.
“This is really the final lap. Most of the units were disposed of. The developer held back these units hence they became available,” Dixon said, dismissing suggestions that the move reflects a softening of the luxury housing market.
Broker at Coldwell Banker Jamaica, Andrew Issa, says he’s inclined to agree.
“While there is the perennial question of the ability of the market to absorb all that is coming on going forward that is a question mark that for the last three-four years, I have been proven wrong on,” Issa said, adding that talk of an oversupply of luxury apartments is, for the moment, just talk.
“While there are persons are saying that there may be a softening I personally am not seeing that. What my agents are saying is that the units available or being built for rental are not keeping pace with the demand in that the stock is running ahead,” he said.
James says the availability of units at 20 South appears to be part of a strategic play.
“Some of the developers are using a strategy where they pre-sell then hold back some units and then release the rest when market conditions are more favourable,” he told the Financial Gleaner.
The units on offer at the 20 South open house are twice the price of comparable units when they went on sale in 2017. Then, the one-bedroom apartments were costing US$166,000 to US$200,000, while two-bedroom apartments sold for US$245,000.
The RAJ president, meanwhile, is pushing back at what persons define as luxury in the Jamaican market, even for apartments priced at $50 million to $70 million or more.
“The truth is that Jamaica has not yet tapped into the real luxury market. We need to tap into villas because in comparison to other Caribbean destinations Jamaica’s real estate is undervalued,” James said.
As to the dreamers looking for their own space, the RAJ president said, they are increasingly looking outside of Kingston – as far as St Elizabeth in the west and St. Thomas in the east – for opportunities.
“The developers who are willing to do single dwelling homes are looking more to St Catherine and to a great extent St Thomas now that there is talk of better roads. My advice is to buy now because if you wait until later the price will be higher,” he said.