Gov’t to consider law for real estate investment trusts | News
Prime Minister Andrew Holness says his administration is considering a bill to facilitate real estate investment trusts (REITs) in Jamaica.
“REITs are something that we have actually been discussing internally in the government and it is being considered,” he said.
Holness gave the keynote address at a recent symbolic groundbreaking ceremony for the development of the US $ 3.7 billion Class A corporate building “One Belmont” on Belmont Road, New Kingston.
The Prime Minister noted that “our research shows that the real estate asset class has grown about 5.2 percent even during the pandemic,” and stated that this is “amazing”.
“So real estate is very important … and a very resilient asset to have in your portfolio, even during the pandemic,” he continued.
Holness said that if the real estate industry continues to grow during the pandemic, it will “drive” it [Jamaica] out of the effects of economic activity and lead to a stronger and better recovery ”.
Sygnus Group’s co-founder and president Berisford Gray highlighted the benefits of the proposed REIT legislation, noting that REIT legislation would “attract international capital to Jamaica”.
“You would have emerging markets and investors coming to invest in Jamaica. With specific laws governing REITs, whether they are private or public vehicles, there is great value in pooling real estate, bringing in the ordinary investor, bringing in the pension funds and giving them a long-term view of the asset class, “he said explained.
PROMOTING RENEWAL
Pointing out that public REITs account for 5.5 percent of the economy in the United States, Gray noted that “that’s about $ 1.5 trillion in value held by public investors in the US market “.
“Imagine a world where the Jamaican public owns 5.5 percent of the value of real estate trusts; That would likely be about $ 800 million publicly traded value that ordinary investors, pension funds and others can get out, ”he argued.
In addition, Gray said Jamaica’s real estate portfolio “can be packaged into a REIT sponsored by the government or a public-private partnership.”
In this regard, the Prime Minister said he would encourage the renovation and construction of residential and commercial properties.
“There are some beautiful buildings in downtown Kingston. [But] one of the complaints we have [have] The government had to deal with the health environment in the offices, ”he said.
Holness noted that there are a lot of sick buildings “because we haven’t replenished our commercial building stock anytime soon”.
“So I am totally in favor of renewing our building stock; it is necessary [and] important that it is done, ”he added.
Holness, however, stressed the importance of people’s understanding that the lack of adequate infrastructure, while a “mandatory constraint” for [the country’s] Growth ”, the renewal and building process“ cannot be arbitrary ”.
He said the government had taken note of complaints about the methods used by developers that “alter the nature of the areas and invade privacy.”
In addition, it was important to consider that new, modernized buildings could potentially lead to disagreement about “perceived high quality buildings and obsolete and inflexible secondary stock that could suffer from a decline in demand”.
As a result, he announced that his administration would provide guidance on how to deal with the various questions raised.