Factors Driving Change in T&T’s Real Estate Market

May 14th, 2024

By Kieran Andrew Khan

Jean-Paul de Meillac, CEO, Terra Caribbean Trinidad

Jean-Paul de Meillac
Chief Executive Officer
Terra Caribbean Trinidad

The real estate market continues to reverberate from the economic fallout of the COVID-19 pandemic. Jean-Paul de Meillac and Terra Caribbean Trinidad track the data and think more can be done to create an equitable, profitable, and mutually beneficial real estate market that spurs economic growth and security.

The pandemic impact: commercial vs residential

For the real estate experts at Terra, data has been their number one asset. Jean-Paul de Meillac, CEO of Terra Caribbean Trinidad, notes that the company maintains one of the largest data repositories in the region of the commercial and residential market. They share these insights with the public through the Red Book TT Edition, which can be accessed at terrared.com.

On the commercial front, it has become a renters’ market. Due in part to the exodus of the oil and gas companies out of Trinidad and Tobago (T&T) even before the start of the pandemic. During the COVID-19 pandemic, the work-from-home mandate applied more pressure to the commercial office landscape, as shown below. “Many companies have downsized or switched to hybrid models, capitalising on decreased rental rates and upgrading to A-class buildings. Hence, B and C-class buildings that generally have been tenanted for years are now becoming available. Landlords have also reduced the size of offices to allow companies to rent smaller spaces in prime commercial locations at more attractive rates,”
de Meillac pointed out. 

Real Estate Section Opener infographic

The residential market has seen a different trend. “The impact on the residential market (post-pandemic) has been interesting. In recent times we have seen more people opting for communal living in developments due to security concerns. However, since the pandemic, with more people being at home, they have also sought access to a yard or garden space or an additional room for a home office.”

Adapting city use

Construction which has generally been the mainstay for economic growth in T&T has become passive, with very few large-scale developments being undertaken by private or public sector entities. Inflation, driven by many factors, including increased shipping and logistics costs, has also made it difficult for investors to build at a price buyers can afford. “When we are faced with economic downturns and need to get people back to work, we generally go to the construction sector. But it currently makes very little sense to develop new office space in the city of Port of Spain. Instead, there’s a new trend which we are encouraging, adapting commercial buildings and repurposing them for residential use in the capital city. The way forward is to construct affordable housing near where people work and their children attend school. Given that the significant costs for steel and concrete are already sunk in the existing structure, the refitting costs are attractive for investment purposes as much as it is for residential buyers,”
de Meillac observed. While this is not outright gentrification, it is becoming a much slower burn towards bringing life back to parts of the city by bringing in pockets of residents.

Recommendations to revive the market

The Association of Real Estate Agents (AREA), in which de Meillac also serves, is hopeful that the Government will move to proclaim new laws that will improve the calibre of real estate services on the market. The Real Estate Agents Bill 2020, passed by the Senate on 20th May 2020, includes mandatory registration and licensing for all real estate agents and brokers. But de Meillac believes much more can be done. “The structure of the stamp duty schedule needs to be updated to meet the reality of inflation on the cost of housing developments, given that prices have gone up. For instance, stamp duty should not have to be payable on residential land purchases but rather re-apportioned into construction costs for homeowners. Additionally, while we know developers are already incentivised to build for the general public, we believe that more can be done to encourage developers in terms of tax exemptions on, perhaps, construction materials. Today, the average single-family unit starts at a price point that is challenging for many. However, the banks are liquid, and the Central Bank has worked to keep mortgage rates down. The Trinidad & Tobago Mortgage Finance Company (TTMF) offers 2% for a fixed period under a TT$1.5M loan, but this may also need revision.” He notes that completely digitising the approvals process for new developments in an efficient manner will reduce the development cost for new construction as the final product can get to market faster. 

Still, de Meillac advises anyone with job security and the means to borrow, to invest, as real estate is one of the best means to build wealth. “It’s never about timing the market; it’s about time in the market. Real estate will always generally increase in value because inflation exists, but figuring out what people need at the right price point and delivering on that, is what we need more of in T&T, along with the support of incentives and requisite legislation.”