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INVEST IN JAMAICA'S REAL ESTATE MARKET

INVEST IN SOMETHING SOLID AND BUILD YOUR WEALTH

TOP 10 REASONS WHY YOU SHOULD INVEST IN THE JAMAICA'S REAL ESTATE MARKET

KACIEBUSINESS

Real estate is solid security that you should possess; whether it is in the form of direct or indirect ownership, it should be a part of your investment portfolio. As an asset, it increases in value over time, and it’s a great defensive asset that you can use to build wealth and pass on to your family. 

 

If you are contemplating purchasing real estate in Jamaica, know that the best time is now. Some may argue that it’s a time of economic distress (regarding the covid-19 pandemic), so purchasing would be a bad move. Economic trends show that the best time to purchase any asset class is when the market is at its lowest. Once you see a high potential future gain, your decision to invest can be valid.   

 

Here are my 10 reasons why you should consider investing in the real estate market.

 

1. Stamp Duty and Transfer Tax as Reduced.

The Jamaican government has significantly reduced the taxes associated with transferring real property in 2019. This amendment opened the market to investors all around.

 

The taxes associated with transferring real estate in Jamaica is Transfer Tax, Stamp duty, and Registration fee. Transfer tax which was previously at 5%, is now down to 2% of the sale price. This amount is paid solely by the Vendor (seller). On the other hand, Stamp duty was 4% and split equally between the buyer and seller. Stamp duty has now been drastically reduced to a flat fee of JMD 5,000 (USD 40), split between the vendor and purchaser. The Registration fee remains at 0.5% of the sale price and is also split between the buyer and seller. 

 

In addition to the tax reductions, sale deposits of 10% can now be negotiated between the buyer and the seller. A sale deposit is a guaranteed amount that the buyer pays to show the intention to execute a sale. 

 

This decision by the Jamaican government has made real estate more affordable to acquire and profitable for local and international investors. This is a huge economic benefit and opportunity that everyone should understand. 

 

If you are considering investing in Jamaica’s property market but unsure of the costs associated with sale completion.  Here is an example of an estimated statement of account if you were to buy and sell property in Jamaica for JMD 15,000,000.00 (USD 101,351.00).

 

2. Low Interest Rates

Financing has become more accessible to acquire a property. Banks reduce their interest rates for mortgages, which is another plus for citizens and investors to own a property in Jamaica. However, the same criteria are maintained by the banks to determine your eligibility. 

 

3. Low Property Tax

Jamaica has one of the lowest property tax rates compared to countries around the world. As a property owner, you’ll pay a flat tax of JMD 1,000 (USD 9) on all properties valued up to JMD 400,000.00 (USD 3,800) and a progressive tax regime with eight bands ranging from a low of 0.5% to a maximum of 0.9% per year on property value. 

 

4. Jamaica's Economy is at its Developing Stage

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Jamaica’s economy is steadily growing. The economy has grown to an average of 1% a year for the last three decades. Even though the sectors were hit hard by the global pandemic, the Jamaican government has steadily made progress in reducing the country’s debt. Since the country is currently at its developing stage, the potential growth rate is high for future gain in the market. With that said, prices for real estate will increase in value over time.  

 

5. Brand Jamaica is Big

Brand Jamaica is growing across the world, and the Jamaican government is making big plans to pump resources towards upgrading the brand so that the economy can fully benefit from its growth. This objective will attract more businesses to the country and can improves its wealth. 

 

6. Popular Tourist Destination

Jamaica is listed in the top 25 Best Destinations in the World. It is ranked #14 on the TripAdvisor website for the best destination and listed as the best destination in the Caribbean. 

 

In May 2019, Airbnb bookings grew to 62 percent, from 55,000 to 89,500 guests in 2018.  Although the tourism sector has been hit heavily by the COVID-19 pandemic, it seeks to rebound. The tourism minister, Mr. Hon. Edmund Bartlett’s “Rediscover Jamaica” campaign grew some hotel’s local bookings to 50% and 60%. This campaign strategy has helped the sector tremendously to stability. He stated recently that investors are still showing high confidence in the Jamaican market and adding that development projects are still on target. 

 

7. The Real Estate Investment Trusts (REITs) Market is Maturing.

Publicly traded real estate investment trusts (REITs) are optionally improving and growing in the market. REIT is an excellent way to invest without going through the costs associated with traditionally buying and selling real property. You can own real property in Jamaica by buying shares in real estate companies on the stock market with a small amount of money without exposing yourself to legal fees, commission, taxes, and deposits. 

 

The real estate market in Jamaica is on a positive trajectory. The increase in new residential and commercial developments by traded companies aimed at meeting the growing demand for housing in the market. With the introduction of Airbnb and the demand for housing stock in certain locations across the island, these traded companies can grow exponentially in value over time. Go here to check out my two (2) top Jamaican REITs. 

 

8. Great National Housing Trust (NHT) benefits for Contributors.

The National Housing Trust (NHT) has improved its contributors’ ability to afford home loans. They have increased the NHT’s loan limit from $5.5 million to $6.5 million. Also, NHT has reduced interest rates for all mortgagors.  NHT has also increased the loan limit for Construction Loan. 

 

The institution now offers 100 percent financing on its units. This means that individuals and families can now obtain financing at a cheaper rate for their entire purchase as compared to rates offered by commercial banks.

 

9. Quality Farmlands and Great Earning Potential in the Agricultural Sector.

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Agriculture plays a vital role in the country’s overall development. Jamaica has acres of arable and pasture lands that are very rich in producing quality crops and raising livestock. The tropical climate makes it suitable for investors to earn in the agricultural sector, whether by way of leasing the land to farmers or supplying agricultural produce to the local and the overseas market.  

 

10. You can Live a Dream Lifestyle

Jamaica is a tropical paradise with a stunning landscape, beautiful high mountains, rushing rivers, long white sand beaches and turquoise sea. Jamaica offers a lifestyle in a unique setting. Even though the island is small, we are known worldwide for our music, sport, food, arts, and most of all, our beautiful culture.  You can live your best life on this rich island doing all kinds of activities such as playing golf, tennis, water sports, and so much more. Jamaica is a natural mystic beauty that will solitude your mind.  

 

The Bottom line

Investing in real estate overall can enhance the risk-and-return of an investor’s portfolio. On its own, real estate offers cash flow, equity building, a hedge against inflation. Jamaica’s real estate market is steadily growing, constructions islandwide remain active, and investors remain positive about the future of the country’s economy. Besides, Jamaica is the number one destination in the Caribbean, and its growing brand can bring numerous businesses to the island.  

 

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Kacie Johnson is a licensed Jamaican Real Estate Agent for 8 years and a certified Paralegal for over 14 years.

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