First Rock finalises plan to restructure as Real Estate Investment Trust, plans further expansion in Latin America

 


 First Rock Real Estate Investments Limited (FRIE) continues to look at new markets as real estate development slows and construction contracts in home market Jamaica.

Despite the uptick in demand for commercial real estate, the construction industry in the island has contracted each quarter in 2024. FRIE states that this is attributable to high interest rates which have limited access to capital and impacted the viability of some construction projects. Also, a 7.6 per cent decline in housing starts by the National Housing Trust, the Government’s largest provider of housing, contributed to the decline of the industry.

In comparison, in Cayman the real estate market is described by the company analysts as a seller’s market. Property inventory in Cayman is low compared to the demand for properties and it seems new developments do not present themselves frequently enough.

Also, in comparison it was noted that Costa Rica’s real estate market has been either stable or appreciating and is experiencing a surge in demand from foreign investors seeking sustainable and eco-friendly properties amidst the country’s commitment to environmental conservation. 

"Regions like Guanacaste and the Pacific Coast are seeing high demand that often outstrips supply, creating a seller’s market." it was noted.

First Rock  concluded 2024 with total assets of US$57 million and shareholders’ equity of US$26 million. Despite this strong balance sheet position, the Group recorded a net loss attributable to shareholders of US$9 million, primarily due to unrealized fair value losses on financial instruments, foreign exchange losses, and losses from the disposal of investment properties as a result of declining market valuations.

In comment, company Chairman Norman Reid outlined, “ This has compelled us to recalibrate and pivot to the changes in our business landscape: In 2025 we intend to move our business towards a Real Estate Investment Trust. The aim is to allow our investors the latitude to participate in profits without actually owning real estate. As the year progresses, we will give further and pertinent information on this initiative.

The pivot , he said, also includes the   “intention to diversify and strengthen our footprints in other territories within Latin America and the Caribbean. It is our hope that this initiative will result in more improved CAP rates and rental income. “

Noting also the absence of  dividend distribution for the past two years, he stated, “ In 2025 the intention is to return to dividend distribution. These initiatives form part of a deliberate strategy to ensure consistent income generation while advancing our mission to build a diversified, yield-focused portfolio. “

 

MARKETS OVERVIEW

Directors of First Rock say

 

First Rock indicates, “ The real estate market in Jamaica is expected to reach a value of US$90.90 billion by 2025. Residential Real Estate holds the largest market share, with a projected market volume of US$74.21 billion in the same year. It is anticipated to grow at an annual rate of 2.09% (CAGR 2025-2029), resulting in a market volume of US$98.74 billion by 2029.

“The housing market in the country is divided between affordable and luxury segments. Affordable housing demand is driven by population growth, urbanization, and strong local aspirations for homeownership. The market faces the issue of affordability and undersupply. In the rental market, long-term rental properties mainly accommodate working professionals, expatriates, and students. Additionally, a considerable portion of the market is dedicated to short-term rentals catering primarily to tourists and situated in key tourism hubs along the North Coast, offering access to shorelines and convenient connectivity. As government-led infrastructural projects advance, there is anticipation of increased rental activity along the South Coast as well. The commercial real estate market has been experiencing significant growth and development in recent years. Preferences have been shifting towards modern and well-equipped office spaces. Businesses are increasingly looking for office spaces that offer state-of-the art facilities and ample parking. Additionally, there is a growing demand for flexible workspaces that can accommodate remote working and collaboration.

 

Cayman

First Rock describes  Cayman Islands Cayman’s economy as booming as it is a diversified economy, with government budget surpluses and one of the world’s highest GDP per-capita rates.

There has been a huge delay in new constructions being given their Certificate of Occupancy (Co). Cayman has strict planning laws, and every stage of the building process must be inspected and signed off by the Planning Department. With only a few inspectors and many properties to inspect, the process of getting a CO once the property is finished takes more than six months.

As such, the rental market in Cayman is on the rise with new listings being snapped up in a short time after listing and rental prices constantly increasing. In 2023 the demand for housing came from new residents moving to Cayman. Approximately 13 new residents move to the island daily.

 

 

 The commercial real estate market is experiencing a shift towards smaller office spaces and shared workspaces as business adapt post-pandemic. in 2024 commercial sales saw a 91 per cent increase over prior year, driven by a 200per cent surge in industrial sales, a 55 per cent rise in retail units, and a 50 per cent increase in warehouse sales.

Costa Rica

Costa Rica Real GDP grew 4.3 per cent in 2024, down from 5.1 per cent in 2023 but still above estimates of potential growth (3 per cent-4per cent), driven by consumption and a dynamic export sector.

The analysts said that the real estate market in Costa Rica is expected to reach a value of US$362.62 billion by 2025. The country’s economic growth, political stability and friendly property laws are key factors that encourage foreign investment with foreign direct investment jumping by 42 per cent in early 2024.

They stated, “This surge highlights the confidence foreign investors have in Costa Rica’s market. Foreign buyers are especially from North America and Europe. Favourable exchange rates for these regions play a key role in making the country an attractive spot for those seeking reliable investments. Adding to the mix, Costa Rica’s stable politics and friendly property laws for foreigners are attracting international buyers. Among the different segments, Residential Real Estate dominates with a projected market volume of US$287.72 billion in 2025. This segment is anticipated to show an annual growth rate of 3.29 per cent (CAGr 2025-2029), resulting in a market volume of US$412.75 billion by 2029.”

United States

 

The U.S. net international investment position, the difference between U.S. residents’ foreign financial assets and liabilities, was -$23.60 trillion at the end of the third quarter of 2024, according to statistics released by the U.S. Bureau of Economic Analysis. Assets totaled $37.86 trillion, and liabilities were $61.46 trillion. At the end of the second quarter, the net investment position was -$22.55 trillion. Zoning in on the state of Florida, Florida had a real GDP growth rate of 3.5 per cent in 2024 and is projected to decrease to 3.0 per cent by 2030.

 

Caribbean Money Daily

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