HOUSING HICCUP - Developers stuck with hundreds of houses as economic slowdown affects buyers .... Large numbers of unsold units on market ... High-end homes put on hold

Published: Sunday | March 22, 2009

Dionne Rose, Staff Reporter

THE DOWNTURN in the economy has hit real-estate developers, with some forced to stall projects while others are hurting in the pocket as houses on the market are being sold at a painfully slow pace.

Reynold Scott, president of the Jamaica Developers' Association, told The Sunday Gleaner that the global economic downturn, which has caused the cost of raw materials to escalate and has led to a spike in domestic interest rates, has been having a devastating impact on the real-estate business.

"They have to; there is no question about that," said Scott when asked if developers were scaling back on projects. "They may have to find new systems of building to satisfy the demand that now exists because the truth is, the high end is contracting. So, even developers who build in the high end may find that the effective demand would be significantly lower."

Scott, principal of Geon Group, which builds high-end homes, said even his company has had to put projects on hold.

"We have put on hold a project out of town and we are actually consolidating the organisation to deal with smaller projects that will fall within the current price demand. So we have re-engineered ourselves to take advantage of the contracting of the pie," he told The Sunday Gleaner.

Developers who have had houses on the market are also complaining of a slowdown in the market. One such developer is Kemtek Development and Construction Limited, which is selling two-bedroom units in Trelawny known as Stonebrook Estates. The units are being sold for $6.5 million and have been on the market for almost one year.

"The market has changed," said Handell Tulloch, director of technical services at Kemtek. He said under usual circumstances, the units would have been sold off within six months. "We are still having houses being sold, but it is just that the rate is very slow."

The company has only been able to sell 78 of the 150 units that were put on the market one year ago.

"The customers are holding on to every dollar that they can. They are not making these investments like they would one time," Tulloch said.

Low-end demand

According to Edwin Wint, president of the Realtors' Association of Jamaica, various segments of the market have been responding differently.

He told The Sunday Gleaner that while there is a slowdown in the higher end of the market, the demand remains for houses in the lower end.

" ... Up to $12 million, any amount (of houses) could be sold there. The demand is very strong. Up to $15 million, there is still a reasonable level of demand; when you pass $15 million, that is when you get into another scenario," Wint said.

"Now when you get past $40 million, that market is a bit slack, between $20 and $30 million you still have some players. It is a bit slower than it was up to last year this time," he added.

Wint argued that what buyers are looking for now is value for money. He is advising developers to re-examine the market.

"Some of the investors and developers just need to retool their mindset, come off the $40 million bandwagon and get into the the middle and lower-middle range. That is what the market is demanding," Wint claimed.


Auction notices in The Sunday Gleaner

Thousands of Jamaicans are at risk of losing their houses as banks and other mortgage institutions move to foreclose.

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