Jamaican realtors, property developers and bankers selling mortgages are reporting more interest in investment property purchases, and a concurrent upswell in mid-income developments in Kingston that is partly a response to that demand.
Devon Young, a developer who is finalising a new residential complex in Kingston called The Hamptons, financed through the Jamaica Mortgage Bank, (JMB), told the Financial Gleaner that over 90 per cent of interest in the property was driven by prospective short-term rental business through Airbnb.
Accordingly, he said, permission to use the units at Hamptons in this way has been written into the sale contracts.
The banks, meanwhile, are reporting an upswing in borrowings for real estate investment. National Commercial Bank (NCB), says it has seen a near 26 per cent jump in lending for investment property acquisitions year over year, since the start of 2018 to July.
Sagicor Bank Jamaica, which recently slashed mortgage rates to 7.5 per cent, said last Thursday that it is hoping to see “exponential” increase in mortgages sold between September and December, saying investment-driven purchasers of property valued in the region of $20 million would see savings of $13,000 monthly under the rate cut. They have also added a three-month moratorium on mortgage payments.
President of the Realtors Association of Jamaica, Howard Johnson Jr, says that while the Airbnb brand is pulling more investors to real estate, there is broad interest in the short-stay market beyond it, which caters to Jamaicans and professionals who rent properties for periods of one month to a year, while on work projects.
For the transactions handled by realtors, Johnson said, one in three of current buyers was seeking investment properties on which they hope to get a return through rentals.
JMB general manager Courtney Wynter adds that most investment property purchases are in Kingston, although Ocho Rios and Montego Bay are also on the upswing. He attributed the rise of the short-stay market to Airbnb, but he also cited the temporary closure of the former Wyndham hotel in New Kingston as one of the drivers. The 303-room is being renovated following its acquisition by Kevin Hendrickson.
However while both NCB and Sagicor Bank both say Airbnb is perceived to be influential, their data is not refined enough to make a direct correlation between the platform and the rise in property loans.
“Airbnb is becoming increasing more popular in Jamaica and some persons are certainly acquiring real estate for the purpose of either short- or long-term investments …”, said Sagicor Bank’s product manager Garfield Morgan. “We are, however, unable to say for a fact that Airbnb specially is influencing the mortgage market, but rather a variety of factors.”
NCB says its data captures whether its loans are financing owner-occupied purchases or investment properties, but that the “data points do not narrow down the purpose for a mortgage to Airbnb activities”, according to the bank’s communications unit.
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