At the beginning of 2014, market conditions appeared favourable. Since that time however, there have been significant developments that have changed the once bright outlook.
– While the global economy appeared to be coming out from under the dark cloud that had been hanging over it for some time, this is now threatened by the economic stagnation in the Eurozone and Japan, as well as the economic slowdown in China, not to mention the economic effects of the Ebola virus.
– Oil prices which have a significant effect on the local economy have plummeted from around $90-95 a barrel (at the beginning of 2014) to under $60 per barrel.
– After experiencing a growth of 2.1% in 2013, the Central Bank reported that economic growth locally was unexpectedly flat in the first quarter of 2014.
– Headline inflation in Trinidad & Tobago, after remaining relatively flat for the first half of 2014, rose to 9% in October 2014.
– Partly because of the increase in headline inflation mentioned above, the Central Bank relaxed its accommodative monetary policy stance it had adopted for the last four years and has now raised its repo’ rate twice within the last 3 months, from 2.75% to 3% initially and then subsequently to 3.25%. This has resulted in one commercial bank (so far) raising its prime lending rate to 8% which would seem to signal that the days of record-low, mortgage interest rates are now over.
As a result of these developments, the government has already started cutting back on expenses and reducing budgets, and private investors now appear to be in a “hold” mode due in part also to the upcoming elections in 2015. Nevertheless, there are still many projects well underway throughout the country which may help cushion the economic impact of all of the above.
In the north, there are:
- A 5-storey, 40,000 sq. ft. office building at Queens Park West (Cost $50M).
- A 6-storey 68,000 sq. ft. office building at Queens Park East (Cost $100M).
- Three, 6-storey office buildings in St. Clair (Costs unknown).
In the south, construction has started on two mega malls:
- C3 Centre with 6 levels and comprising 600,000 sq. ft. (Cost $450-500M)
- South Park Mall with 200,000 sq. ft. of leasable area (Cost $300M)
In Tobago, there is the $400M Milsherv office accommodation project while in the central region, there is the proposed $900M upgrade to the Centre City Mall.
In addition, the Central Bank of Trinidad and Tobago’s September 2014 Business Confidence Survey (BCS) reported that the corporate sector is cautiously optimistic about the near-to- medium term prospects.
Consequently, the short term outlook for the local economy and the real estate market is cloudy and filled with uncertainty. It now remains to be seen to what extent the local economy will be affected by all of these events.