BCQS DIRECTOR SANJAY AMIN GIVES HIS INSIGHT INTO THE CARIBBEAN ECONOMIC SCENE GOING IN 2015

You are a professional involved in many aspects of business across the Caribbean. What is your opinion on the general economic position of the region as compared to the start of 2014?

WITH THE UK AND US COMING OUT OF A RECESSION, THERE ARE DEFINITELY POSITIVE SIGNS FOR THE CONSTRUCTION INDUSTRY AND THE REAL ESTATE SECTOR. IN BARBADOS, WE FEEL THAT THE 3RD/4TH QUARTER OF THIS YEAR WILL YIELD SOME GOOD NEWS. THE ECONOMIES OF MOST OF THE OECS COUNTRIES ARE STILL IN THE BALANCE BUT WE HOPE THAT THERE WILL BE A PICK UP IN 2016. THE TURKS AND CAICOS RESORT MARKET IS SHOWING SOME POSITIVE SIGNS AS IS THE MARKET IN THE CAYMAN ISLANDS. GUYANA AND TRINIDAD CONTINUE TO DO WELL.

Many residential and commercial construction projects either stalled or disappeared post-2008. Is there evidence that they are coming back?

YES, THERE ARE SEVERAL RESORT PROJECTS IN TURKS AND CAICOS THAT ARE ALIVE AGAIN AND I BELIEVE THAT SOME OF THE STALLED PROJECTS IN BARBADOS MAY COME BACK IN THE LATTER PART OF 2015 OR EARLY 2016. MOST OF THE FUNDING FOR THESE PROJECTS IS COMING FROM PRIVATE EQUITY TYPE COMPANIES AND NOT FROM LARGE ESTABLISHED BANKS WHO ARE STILL NERVOUS ABOUT THE RESORT SECTOR. THE CANADIAN BANKS ARE STILL APPREHENSIVE BUT THE INDIGENOUS BANKS ESPECIALLY THE TRINIDADIAN BANKS ARE STILL WILLING TO “TAKE A LOOK”.

Banks operating in the region have taken a severe hit in recent times and as a result they have reduced their lending, downsized their operations and introduced a tough lending culture, which has made it very difficult for businesses and customers to bounce back. Are banks part of the problem or part of the solution to economic recovery?

 THERE WAS A VERY GOOD ARTICLE WRITTEN IN THE GLOBE AND MAIL ABOUT THE AMOUNT OF DEBT THAT THE CANADIAN BANKS HAD TO WRITE OFF IN THE CARIBBEAN IN THE LAST RECESSION.  THE PERCENTAGE OF IMPAIRED OR “TROUBLESOME” LOANS FOR THESE BANKS WAS VERY HIGH IN THE CARIBBEAN AND WAS DISPROPORTIONATE TO THE TOTAL IMPAIRED LOANS FOR THESE FINANCIAL INSTITUTIONS. THIS HAS CERTAINLY RUNG ALARM BELLS AMONGST THEIR SHAREHOLDERS WHO MAY BE QUESTIONING WHETHER THE CANADIAN BANKS SHOULD STILL OPERATE IN THE CARIBBEAN. SO TO ANSWER THIS QUESTION, BANKS IN MY OPINION WILL BECOME PART OF THE SOLUTION BUT IT WILL TAKE TIME TO BRING BACK THE CONFIDENCE OF THE HEADY DAYS THAT EXISTED PRE 2008.

Tourism is at the core of Caribbean economic prosperity and although there have been mixed results across the region in the past 12 months there are plenty of positive signs. Has the hospitality industry come to terms with adversity and now making the all-important changes necessary to prosper in challenging times?

I THINK THAT THE HOSPITALITY INDUSTRY HAS HAD TO DO A LOT OF THINKING OVER THE LAST 6-7 YEARS BUT IT IS QUITE TESTING TO MAKE CHANGES WHILST THERE ARE CHALLENGES TO RAISE FINANCE. HOWEVER, I THINK THAT THE LAST SIX MONTHS HAVE SHOWN THAT OCCUPANCY LEVELS AND ADR’S ARE ON THE INCREASE AND WE SHOULD SEE THE HOTELS DOING MORE TO MAKE THE NECESSARY CHANGES ESPECIALLY IN BARBADOS.

Many hotels have closed but at the same time others have opened or expanded their operations? Why is there such inconsistency?

THE HOTEL MARKET CONTINUES TO FACE CHALLENGES IN THE FACE OF STIFF COMPETITION FROM BOTH THE REGION AND INTERNATIONALLY. IT IS A VERY COMPETITIVE MARKET PLACE AND THOSE HOTELS WITH INTERNATIONALLY RECOGNISED BRANDS AND ECONOMIES OF SCALE ARE IN A POSITION TO EXPAND. SMALLER HOTEL COMPANIES OR FAMILY OWNED HOTELS HAVE GREATER CHALLENGES RAISING FINANCE AND ARE UNLIKELY TO BE ABLE TO COMPETE ON ADVERTISING OR MARKETING SPEND.  THIS CREATES A CYCLE OF REDUCING REVENUES, WHICH IN TURN HITS THE BOTTOM LINE RESULTING IN A LACK OF CAPITAL EXPENDITURE ON THE PRODUCT, WHICH MAKES THE HOTEL LESS COMPETITIVE.

Have property values bottomed out and perhaps starting to rise in some areas or is it too early to make this call?

“NOBODY RINGS A BELL AT THE BOTTOM OF A BEAR MARKET” GOES THE OLD WALL STREET ADAGE. IT IS VERY DIFFUCLT TO IDENTIFY A BOTTOM IN THE MARKET AND THESE ARE ONLY USUALLY SEEN IN HINDSIGHT. THE MARKET CONTINUES TO FACE MANY CHALLENGES. IT IS TOO SOON TO STATE WHETHER THE UK OR THE US IS EXPERIENCING SUSTAINED ECONOMIC RECOVERY DUE TO THE CONTUING POLICY OF LOOSE MONETARY POLICY. THE EUROZONE HAS ONLY RECENTLY FOLLOWED SUIT WITH THEIR OWN QUANTATIVE EASING PROGRAMME, SO THIS IS LIKELY TO IMPROVE ASSET PRICES AND CONFIDENCE IN THIS REGION AS WELL.  HOWEVER, IF MARKET SENTIMENT AND CONFIDENCE CONTINUE TO IMPROVE, THEN THIS WILL HAVE A POSITIVE IMPACT ON DEMAND AND WILL HELP SUSTAIN A MORE HEALTHY PROPERTY MARKET.

PRICES IN SOME OTHER COUNTRIES ARE SHOWING A MINOR INCREASE ESPECIALLY CAYMAN ISLANDS AND TURKS AND CAICOS ISLANDS. AS STATED PREVIOUSLY, SOME OF THE OECS COUNTRIES ARE STILL EXPERIENCING DIFFICULTIES AND PRICES STILL REMAIN STATIC. MEANWHILE, IN THE OIL RICH STATE OF TRINIDAD, PROPERTY PRICES HAVE INCREASED IN THE LAST TWO YEARS.

You are heavily involved in formalizing and raising the standards in your profession. Has anything significant happened in the past 12 months to enhance the process?

YES, THE ROYAL INSTITUTION OF CHARTERED SURVEYORS RECENTLY MADE REGISTRATION MANDATORY FOR ALL VALUERS OPERATING IN THE REGION. THIS SHOULD INCREASE QUALITY AND ACCURACY OF VALUATIONS WHILE INCREASING CONSUMER CONFIDENCE IN THE PROFESSION. BEING ON THE VALUER REGISTRATION SCHEME FOR AN RICS SURVEYOR MEANS THAT AN INDIVIDUAL OR COMPANY CAN BE AUDITED BY THE REGULATIONS DIVISION OF THE RICS FOR COMPLIANCE WITH INTERNATIONALLY RECOGNISED VALUATION STANDARDS (RED BOOK). THIS IS A MAJOR STEP TAKEN BY THE RICS AND THERE ARE ONLY A FEW COUNTRIES IN THE WORLD THAT HAVE ADOPTED SUCH RIGOROUS STANDARDS.

ALSO, THE RICS RECENTLY INTRODUCED THE INTERNATIONAL PROPERTY MEASUREMENT STANDARDS (IPMS) IN CONJUNCTION WITH SEVERAL INTERNATIONAL BODIES INCLUDING THE IMF AND THE APPRAISAL INSTITUTE IN THE US. THE CHALLENGE AT THE MOMENT IS THAT MEASUREMENT OF AREAS FOR THE PURPOSES OF VALUATION OR LEASES FOR COMMERCIAL PROPERTIES VARIES FROM COUNTRY TO COUNTRY AND IN SOME CASES ESPECIALLY IN THE CARIBBEAN, IN INDIVIDUAL COUNTRIES. IPMS WILL AIM TO RESOLVE THESE CHALLENGES THAT THE GLOBAL REAL ESTATE MARKET CURRENTLY FACES.

 

BIO…

Sanjay Amin, BSc, FRICS, ACIArb, Director of the BCQS Group based in Barbados. Sanjay has been providing project and cost management services since the mid-eighties working for Gardiner & Theobald in London and throughout the Caribbean working for BCQS since 1997. He is responsible for the Eastern Caribbean region, Barbados and Trinidad & Tobago and has worked on a variety of projects including commercial, residential, resort, and public sector related work.

Sanjay is a Fellow of the Royal Institution of Chartered Surveyors (RICS) and is the Caribbean Board Chairman. He was recently appointed to the RICS Global Governing Council. The council is collectively responsible for setting the long-term direction for RICS that will shape the future of the profession. He is also an Associate of the Chartered Institute of Arbitrators in London.

He can be contacted by telephone at 246 428 8091 or by email at samin@bcqs.com

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