Chief of development financing for The Jamaica National Group, Carlton Earl Samuels, says the growing local interest in the short-term rental accommodation market is not likely to change the approach which financial institutions, such as JN Bank, take to fund real estate properties.
Responding to issues raised about the impact of Airbnb on the real estate market in Jamaica, at the recent RAJ Symposium 2018 in Kingston, Mr Samuels said financial institutions which provide mortgages, including JN Bank, are likely to continue to finance purchases based on the “certain” income stream of the borrower.
“Unless the borrower has some history, or track record that underscores the income from the investment, the lender is likely to discount the projected income; and rely on the borrower’s fixed income stream, to determine if they can afford the loan,” he advised.
“Therefore, if you’re just entering the market, your projected income is likely to be discounted and reliance placed on your certain income stream, such as: your salary from employment; or the income from the business, if you’re a business owner,” Mr Samuels underscored.
The size of the short-term rental market in Jamaica has grown rapidly in the past two years, catalysed by Airbnb, a home sharing platform, which allows persons to book accommodations online in community settings in several countries around the world.
According to media reports, Jamaicans earned in excess of US$9.7 million, or more than J$1 billion as Airbnb hosts in 2017, representing a year-on-year growth rate of approximately 49 per cent.
Stakeholders anticipate a further increase in growth, as more Jamaican property owners seek to convert their real estate assets into short-term rental accommodations, to cash in on the growing industry, which currently numbers some 3,100 hosts and about 5,900 active listings.
Communities in the capital city of Kingston; the North Coast, and other resort and tourist areas, such as: Negril in Westmoreland and the parish of Portland, are some of the popular Jamaican destinations for persons who book through Airbnb.
