Tea Jamaica Real Estate Submarket

The general market for goods and services is made up of many submarkets. When left free to operate without private or government interference, each submarket and the general market as a whole should theoretically regulate itself by the laws of supply and demand.

One of the submarkets of the general market for goods and services is the Jamaican real estate market. Although the real estate market differs from other markets in several distinctive ways, it acts much like all markets with respect to changes in supply and demand, but with a slower response time. It has the appearance of being a single, simple entity when, in fact, the real estate market is made up of many complex submarkets. This would also include rental housing in Jamaica. This would be known as a parent category.

Real estate is a commodity like wheat, gold, and sugar. By combining the other factors of production with land we can produce wheat, gold and sugar or buildings.

Major Jamaica Real Estate Submarkets

Most authorities agree that the top five Jamaican real estate submarkets are:

1. Residential rental housing in Jamaica;

2. Commercial;

3. Industrial;

4. Agricultural;

5. Government and special purpose properties

Each of these five categories is further divided into smaller submarkets. For example, “residential” as a major submarket can be broken down into minor submarkets as follows:


2. Suburban; Y


Each of the minor submarkets can be further divided into single-family and multi-family homes, which could then be classified as owner-owned and rental. The point is that what appears to be a large but simple housing market is actually a complex structure of many individual submarkets, each contributing to the overall market.

The characteristics of the real estate market.

If the real estate market were allowed to operate without interference or restriction, each person would be able to use his property in whatever way produced the greatest return. This could result in one person’s use of Jamaican property causing another person’s property to lose value. Obviously, we cannot allow the land to be used for whatever purpose the owner deems best for his or her private benefit.

For example, if you live in a fancy upscale residential subdivision and your neighbor bought two undeveloped lots adjoining your property to use as a pig farm or for a paper mill with its foul odors, the social costs to you and the rest of the subdivision would far exceed its neighbor’s private gain. Therefore, the real estate market cannot be allowed to operate free of all controls and restrictions.

Listed below are five main characteristics that affect ownership and sale that set real estate apart from other markets.

1. The market is local; the product is immovable.

2. It is slow to respond to changes in supply and demand.

3. There is a relative permanence of the improvements; the earth is enduring and fixed in its location.

4. The market is not organized and has no central control; there is no standard product or central information.

5. Government controls influence the market through zoning, building codes, taxes, etc.

Local in Nature: The real estate market is rarely local in nature compared to other markets. The reason, of course, is that the land and its improvements are immovable. For example, we cannot transport sugar cane land from Westmoreland to Kingston. If we were in the tomato market, we could transport our produce to where the demand might be greatest. However, despite the demand for housing in Area A, we cannot produce an apartment complex or single-family subdivision on land located in Area B and move it to where there is greater demand.

Slow Response: The real estate market is unusually slow to respond to changes in supply and demand. Very often the number of houses (supply) in an area starts to fall short of the demand, however, since the design, land acquisition, site preparation and construction phases of real estate are so time consuming As demand responds, the market floods. The balance between supply and demand is thus destroyed because the supply of houses in the city exceeds the demand at that time.

Enhancement Permanence – The Enhancement Permanence feature is also closely related to the above features. The typical bungalow housing unit has a long economic life compared to other commodities. Once we have built an office block we stick with it when perhaps we could have invested our time and money in a hotel. Therefore, the permanence of the improvements created eliminates many alternatives available to the markets.

Decentralized nature: Another feature of the real estate market is the lack of a single central exchange to deal with real estate across the island. If you want to buy 100 shares of General Motors, California, the product will be the same as General Motors, Florida. However, if one wishes to purchase 100 acres of beachfront property in Westmoreland, Jamaica, the product will be different in many ways from beachfront property in Portland. This focuses attention on the two main reasons why there is no central real estate exchange.

First, the product cannot be standardized. No two tracts of land are the same. Even two lots next to each other on a street have different geographic locations on this earth. This concept is known as heterogeneity or inhomogeneity.

Second, no one central database or information source reports on all real estate in Jamaica. In addition, care must be taken when using information about properties in one area to evaluate properties in another. If one wants to know about real estate in any place, it is best to go to that particular place and look for local information.

Government Controls – The fifth and last major feature of the real estate market, government controls play an extraordinarily important role compared to other markets. Most people are familiar with direct controls, such as zoning and building codes that govern the construction and use of property.

Governments also exercise indirect controls, such as the monetary policies of the Central Government. For example, if the government reduces the overall money supply to reduce the rate of inflation, higher rates for mortgage bans in turn drive many potential buyers out of the Jamaican real estate market. This has a big impact on the wording of a rental agreement in Jamaica.

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