Past, Present and Future Trends in the T&T market
2023 is one month young and there is no better time to look back at trends passed and trends coming this year. From 2019 to now, the real estate market has seen drastic shifts in both residential and commercial trends. The effects of the pandemic have changed how we work, how we live and even the types of property we buy over the last few years.
Before the pandemic (2014 to 2019)
- Before 2014, in the high-end residential segment, owners/investors enjoyed exorbitant rental rates, most times quoted in US dollars and sales figures north of $6m. However, in our Red Book T&T 2019 edition, we reported changes in the market from the preceding 5 years up to 2018. From as early as 2015, we saw a decrease in the high-end condominium and housing market, due in part to the exodus of the ex-pat community, reduced investor confidence and economic woes. This resulted in a gradual decrease in the high-end home segment.
- On the other hand, despite pitfalls in the economy, demand in the middle to lower residential sale segment remained stable during that period. However, the composition of types of property and price ranges changed to match that of changing consumer demands. When analyzed by property type, condo living (apartments and townhouses) was the popular option for sales over houses, partly due to price and safety. Also, at the time, land was a cheaper alternative for first time homeowners, especially as construction costs were lower.
- In 2014, the commercial office rental market was buoyant with demand outweighing supply in A Class and B Class office space. However, from 2015 to 2019, also driven by the exodus of expatriates in our market due to the worldwide decrease in demand for oil at that time, this segment contracted. Vacancy rates in A Class and B Class buildings increased to as much as 25% and rental rates decreased by a third in some cases.
- Consequently, the turbulent commercial rental market translated to a contraction in the commercial sale of office buildings. Commercial developers had to adjust to longer investment periods due to the unpredictable market. Hence, the appetite for commercial sales weakened during this period.
During the pandemic (2020 to 2021)
In early 2020, the pandemic shook our lives; from where we work to how we socialize radically changed almost overnight. Lockdowns and work from home mandates in 2020 and 2021 had a considerable impact on different real estate segments.
- Post lockdowns, there was an increase in transactions in the residential sale segment of the market as customers came to the realization that home was now being used as workspaces, living spaces and recreational spaces. As a result, houses became more popular again. Buyers were requesting rental and sale options that could double as both work and home. With pressures on almost everybody’s income, buyers were more price conscious than before and looked for the best value in the price point which they could have afforded. On the other side, vendors adjusted their prices and expectations throughout 2020 and 2021. Price reductions are usually within the 5% to 10% range. However, prices decreased incrementally from their initial asking prices, at times by as much as 20%.
- Developers were also cognizant of the shifts in the residential market during the pandemic and brought homes specifically built for the first-time buyer under the $2m price range to market. This was at an opportune time as the Stamp Duty concession rose to $2m for first-time homeowners in 2021. Additionally, tech was also an emergent force in our daily lives since lockdown of 2020. Thus, with connectivity and technology at the forefront, residential developers started incorporating SMART systems into newer homes without the exorbitant cost.
- Travel restrictions and health and safety fears grounded many T&T citizens, and the staycation home trend emerged. Between an increase in enquiries and listings, sales of staycation homes in Tobago, Blanchisseuse and Mayaro increased over 250% in 2020/2021 from 2019.
- In the commercial rental segment, due to work from home mandates, tenants whose revenues were affected by lockdowns, relinquished their office rentals, resulting in more vacant space in A Class and B Class buildings. Hence, landlords/building owners were forced to reduce rental rates, offer rebates and work with tenants to keep spaces occupied and offer smaller spaces. Reduced rental rates on the market also led to some companies relocating from B Class to A Class spaces. Consequently, the excess supply of office space on the market and the general uncertainty in the economy, resulted in no considerable commercial sale transactions during this period.
After the pandemic (2022 to 2023)
Though we are not completely out of the pandemic, for many companies and buyers alike, 2022 was a year of return to normalcy, recovery from two years of curtailed revenues and a time for decisions. Hence, the trends that emerged in 2022, will probably sustain into 2023 and 2024.
- 2021 was a great year for starter homes and we foresee developers shifting their product offerings more to affordable homes for that budget-conscious buyer. Some developers are even breathing new life into outdated buildings, both commercial and residential, to bring to the market a modern niche condominium product that present buyers seem to love. Units tend to be under the $2m price range; around $1.7m outside of Port of Spain and city centres, but are marginally higher in high demand areas.
- In 2022,houses accounted for 43% of residential property sales. The downward pressure on pricing of homes during the pandemic and the appetite for stand-alone homes has made houses a trend we predict will continue in 2023 for buyers who can afford it.
- In 2022, land remained a hot sell but with construction costs high, purchasers are buying and holding or preferring to build on their own.
- In 2022, many conglomerates and large businesses reassessed the real estate portfolios and divested some of their assets, resulting in a comeback for commercial sales. Additionally, with the contraction of commercial Real Estate during the pandemic and before, some developers are shifting gears and repurposing commercial buildings into residential units, while keeping commercial space. Mixed-use buildings are a novel concept to the T&T market, but we look forward to seeing this in 2023 and 2024.
To find out more about what's changing in our market, start a chat with any one of our agents!