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Property Development and Real Estate

While the stock market suffered a significant reversal in 2006, Trinidad and Tobago’s banking and financial services industry continued to perform strongly in its home base in 2006 and to be a leading provider of capital in the region.

Real estate prices are trending downwards. Somewhat.

That’s the word from real estate agents and brokers from Scarborough in Tobago to San Fernando in Trinidad.

Dawn Glaisher, owner of SeaJade Investments in Tobago, said the real estate market on the smaller of the two islands is “fairly active, but prices are starting to fall.”

“Prices have gone too high. Everybody is feeling that,” Glaisher said.

More negotiating is taking place. Buyers and sellers are looking for deals, cheaper buys. “If someone is interested, the price they are willing to entertain is lower than otherwise,” the broker said. “In one instance, the price (paid) was 20 per cent less (than the asking price).

“Although locals account for 70 per cent of land sales of property, they are going to slow down as well. We can’t pretend it is business as usual when people supposedly driving up the price have been banned from investing.”

The Tobago real estate situation has been dramatically affected by government now requiring non-nationals wanting to buy land there to obtain a licence.

The Minister of Finance’s imposition of that licence on February 7, 2007, under Section 6(2) of the Foreign Investment Act of 1990, means that many contracts are on hold. The Tobago real estate market is stable, bordering on nervousness. That unease is expected to lessen when the Ministry of Finance figures out exactly how that licence system is to work.

Banks have reported a reduction in mortgage loans and in the meantime, brokers and agents are wondering:

will the licensing system include exemptions?
what effect will it have on the tourism-dependent island?

Port of Spain-based real estate agent Patricia Lazzari of Eckel Quesnel Lazzari (EQL) Ltd said prices have gone up so high that buyers have in the last eight months become cautious about paying them. “What we suspect is happening is that properties that are very overpriced are going to come down in line with market value,” Lazzari said.

Agents are advising sellers to keep their prices in line with what the market is willing to offer. Lazzari said sellers in such high demand areas as Westmoorings, Fairways, Maraval, Diego Martin and St Ann’s, where the quality of what is available is limited, are hoping people will meet their price. A high-end property is anything with a price tag of $2 million-plus. So while a development like “The Emirates” at Elizabeth Park, St Joseph in east Trinidad with a price tag of $945,000 – two bedrooms, swimming pool and security – might be considered low end for some, for many this is very expensive real estate.

Lazzari said there’s still a big demand in west Trinidad for anything under $2 million. Whatever the price, most people want to live in a secure neighbourhood, so much so that some are willing to pay more for it.

The rental of residential homes and apartments for expatriates has gone up significantly within the last two years. Lazzari said the increase has almost doubled. Newspaper notices show that rents have gone from US$2,500 to US$5,000 a month. Some of the more upmarket living spaces for this clientele are Bayside Towers and La Riviera west of Port of Spain.

Rent in office buildings has gone up over the last year. From an average rental of $6-$8 a square foot, it’s now between $12 and $15 a square foot. The age-old law of supply and demand is dictating price. In response to demand, several new commercial buildings have sprung up in the last three years, namely Briar Place in St Clair, Ansa McAL Centre on Maraval Road and Nicholas Towers on Independence Square. “Those are getting renters easily,” Lazzari said.

The southern real estate market is similar to the north. Richard Saunders, vice-president of the Association of Real Estate Agents (AREA), said the implication of Home Construction Ltd’s 420-apartment One Woodbrook Place coming on stream in 2008 is a certain level of glut on the market as several other properties will come on stream simultaneously.

Added to One Woodbrook Place is the $150 million 64-unit complex at Shorelands, west of Westmoorings. Saunders said many of the first-time buyers of apartments in La Fontaine and La Riviera are property investors. “They look to make a flip – buy and sell,” Saunders said. Those buyers make their downpayment and progress payments, but as the project nears completion, they sell at a profit. “It’s the normal behaviour of a savvy investor looking to make a profit. The same thing obtains in Miami. You don’t have closing charges.”

There are small private sector residential developments, 20-plus units, in the northwestern peninsula – such as Cascade, St Ann’s, Diego Martin. “Most of those seem to be going well and are sold out,” Saunders said. “I’m hardly hearing of a project today that is unsold.”

Areas towards the east such as St Augustine and Maracas in St Joseph are also attractive. Maracas, St Joseph, which once mainly had single dwelling units, now have townhouses and apartment buildings to cater to the demand for housing from tutors and students from the University of the West Indies (UWI) and the University of Trinidad and Tobago (UTT). The UTT in particular is attracting foreign tutors and lecturers for the new institution’s developing programmes.

“Five years ago, you could have got a Maracas property for $700,000, now that’s in the $2 million range.” According to Saunders, the energy industry is the main driver of demand for accommodation. “There’s an active property development market in Trinidad,” he said. “They take up the top quality accommodation and that pushes the price up.”

Agent Irwin Elder, a director with AREA, said the demand for commercial space in the south has outstripped supply. “The supply is not there, so prices are high. You can’t find a property under $1 million. Land prices are high. If you have a decent house on it, you will readily find it going for millions.”

In the back streets of San Fernando, land is going for $70 a square foot. In the residential areas, it’s $150 and up. In Palmiste, it’s $110 a square foot. “If you can get commercial property on Cipero Street (San Fernando) for less than $200 a square foot, you’d be very lucky,” he said. “Gone are the days when (property) on Coffee Street was $50 a square foot. Coffee Street is at least $100-$150 a square foot, depending on the location.”

Elder said the only market that is stabilising is the rental and purchase of executive properties as projects come to fruition and expats leave.

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