NAME: MIRIAM K.

DOOKIE
STUDENT ID: 814002492

The property cycle of

Trinidad and Tobago.

According to the Royal Institution of Chartered Surveyors the property cycle is defined
as a logical sequence of recurrent events reflected in factors such as fluctuating prices,
vacancies, rentals and demand in the property market. In order for one to analyze the property
cycle of a country we must take into consideration its business cycle as there is a direct
correlation between both cycles. The business cycle is one in which presents fluctuations in the
economic activity of a country and thus it is easy to determine how it affects the property cycle
as economic conditions are a clear determinant of the demand and supply of property in a
country.
Dating back to 15 years ago the property cycle was said to be at its boom stage, which
essentially meant that there was rapid increase is real estate prices. This is in fact true as it was
between the time periods of 1991 to 2006 there was a bloom of natural resources which included
oil, natural gas and petrochemicals. The discovery of these natural resources would now mean
that the economy of Trinidad and Tobago was becoming fairly stable resulting in an increase of
demand for property by foreign investors. The concept of demand and price works hand in hand
since the increase in demand would result in the inevitable increase in price of a property. This
was indeed the case for Trinidad and Tobago as the Global Property Guide stated that house
prices increased by 400%. This increase in price does not only apply to residential property but
also commercial as most foreign investors invest in commercial land.
As quoted by the Global Property Guide The increase in foreign investment came much
more private housing developments in areas such as Port-of-Spain and Point Lisas. Luxury
apartments, townhouses, and gated communities became popular. Government housing projects
also expanded. Construction and labour costs soared. In the high-end property market, properties
sold for up to TT$20 million.
Following the boom phase of the property cycle was the occurrence of recession in 2007.
The result was an immediate downfall in the economy of Trinidad and Tobago. The cycle is now
said to be in the slump stage where interest rates begin rising and share prices begin to fall. As
global economic recession set in, demand fell sharply. This reflects one of the major factors that
affect real estate market- International economic status. This has a negative impact on Caribbean
countries since it now meant that investors were pulling out on investments and instead focused
their revenue on the rebuilding of their own countrys economy. As foreign investments fell
unemployment in Trinidad and Tobago rose (reaching 6.2%). Construction activities now had to
be slowed down or halted as steel and iron plants have been shut down.
With the many new developments that had been created prior to the recession meant that
the supply of properties increased. Furthermore, with the decrease of demand for property,
markets now had to decrease prices of property in order for them to be absorbed. In addition to
the recession, one of the Caribbeans largest privately- held conglomerate collapsed. The
tumbling of CL Financial brought about a major impact on the foreign investments taking place
in Trinidad and Tobago as investors now became doubtful and hesitant to invest into the country.
All these factors combined contributed to the decrease in property prices throughout the
Caribbean. The Global Property Guide reported that median house prices dropped by 9%. This
value later increased to 19% due to inflation.

Another major factor affecting the property cycle is a countrys GDP. Reports show that
in 2009 Trinidads GDP contracted by 3.5%. At this point there was an economic slowdown in
the Caribbean, sales volume dropped by 20% and as stated by Richard Saunders, President of the
Association of Real Estate Agents As the wider economy contracts, so too does the real estate
industry. In 2010, however, reports by the TTFM shows a 0.1% increase in the economy. This
may be as a result of the emergence of the global economy. Though this is a very small increase
it is the beginning of the third stage of the property cycle- gloom /recovery. It is important to
understand that the economy will remain sluggish over a period of time as it takes time for the
growth in developed countries to benefit Trinidad and Tobago.
Furthermore, in 2010 brought about a change in government and effectively a change in
government policies. After a period of decline the construction industry was able to get a boost
from the implementation of the development plan Vision 2020 which consist of mainly
construction projects. Coupled with this was the Jubilee oil discovery which took place in
2012. With the discovery of new oil meant a greater GDP for Trinidad and Tobago and
furthermore an increase in foreign investment. This triggers a link reaction in which demand and
price of property increases. It was also reported in 2013 by the Trinidad Guardian another oil
discovery by the Trinity Exploration and Production plc. Essentially, with these oil discoveries
and government policies meant an improvement in the countrys economy and effectively a rise
in share prices and commodity prices. Once this occurs, property prices will become relatively
more expensive and the construction sector would be expected to have greater employment
opportunities.
In concluding it is fair to say that as of 15 years ago the property cycle of Trinidad and
Tobago has achieved the boom, recession/depression phases of the property cycle and is
currently in the recovery stage.

BIBLIOGRAPHY
1.

"New oil discovered in Galeota." The Trinidad Guardian Newspaper. N.p., n.d. Web. 28
Oct. 2014. <http://www.guardian.co.tt/business/2013-12-10/new-oil-discovered-galeota>

2.

"Slow but steady improvement for Trinidad and Tobago's property market." Global
Property Guide. N.p., n.d. Web. 28 Oct. 2014.
http://www.globalpropertyguide.com/Caribbean/Trinidad-and-Tobago/Price-History

3.

"AfraRaymond.com." AfraRaymondcom. N.p., n.d. Web. 28 Oct. 2014.

http://afraraymond.wordpress.com/