The dark cloud that has been hanging over the world markets for the last few years eventually seems to be lifting. Evidence of this can be seen in the fact that the IMF has forecasted that the global economy will show growth by 2.9% in 2013 and 3.6% in 2014.
Not to be outdone, the local economy, after declining over the period 2009 to 2011 at an average of 2.3%, now appears to be turning around. Based on preliminary data, the Central Bank of Trinidad & Tobago has estimated that the economy grew, albeit slowly, in 2012 (1.2%) and 2013 (1.5%). Consequently, bearing in mind the somewhat mild recovery and with inflation seemingly under control, the Central Bank maintained its accommodative policy stance and left the repo rate unchanged at 2.75% where it has remained since September 2012. This has led to record-low mortgage interest rates that resulted in a double digit growth in demand for real estate mortgage loans.
All of this was not lost on private investors. After a self-imposed moratorium on the construction of commercial real estate for 4-5 years, there are now several signs that commercial development has picked up throughout Trinidad and Tobago.
In the north, construction is underway on:
- 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.
Furthermore, the government announced that it is working on a strategic plan for the development of the 4C’s (Couva, Chaguanas, Carapichaima & Charlieville) and UDECOTT has stated that it has a mandate to construct 74 projects at a total cost of $19B.
Bearing in mind all of the above, the future of the local economy and the commercial real estate market appears bright for the first time in about five years. The major risks would seem to be the fall in international energy prices and the spiralling murder rate. Investors however seem to be hopeful, at least for now, that the government will take the necessary steps to mitigate these risks and ensure that growth continues in these two spheres.
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