PIOJ Growth-Inducement Strategy - Planning Institute of Jamaica

e more than compensated for by the revenue flow garnered from the expected second
sales which would occur. Moreover, the abolition of estate duty would likely boost
Jamaica’s development as an asset-management centre and the financial sector as a
whole.
It is further proposed that in order to treat with the cumbersome legal process involved in
probate, an arbitration mechanism be instituted for those estates which are not in dispute,
so that persons may realize a reduction in legal costs and time associated with the
process. For estates in dispute, those would revert to the normal legal process and be
determined either in the Resident Magistrates Court or Supreme Court depending on the
value of the estate. Under this new mechanism property valuations would be
streamlined and the unimproved value of the land on the tax roll at the point of
application for probate would determine the transaction value, thereby avoiding the
current time-consuming and often contentious valuation exercise which seeks to
retroactively determine values at the time of the owner’s death.
Current Status: This proposal could be implemented within three months. The impact
on investment and particularly the revenue flows from second sales would be immediate
and will likely prove to be a substantial boost for the local wealth management sector.
5. Jamaican Real Estate Investment Trust
The Government remains the single largest property owner in Jamaica (22 per cent)
through several state agencies including the Jamaica Railway Corporation. It is proposed
that a Real Estate Investment Trust (REIT) for publicly owned lands be established. The
REIT structure would be designed to provide a similar structure for investment in real
estate as unit trusts or mutual funds provide for stock market investments. The fact that
in Jamaica the State-owned real estate is substantially diversified across geographical
markets and property asset classes is substantially beneficial to the functioning of a REIT.
The asset classes cover office, industrial, retail and hotel and other tourism facilities.
This diversity helps to spread the risk in the portfolio as the property values are dynamic
and are determined by varying economic fundamentals in each sector or market segment.
The Jamaican REIT would continue to own this portfolio of large properties which, either
due to their size or strategic value, would be available or within the reach of the average
investor. These large investments would then be broken up into units of smaller value
that can be purchased by private investors who become unit holders. Thus, the Jamaican
REIT would be a unitized portfolio of property assets which would be traded freely on
the capital market and the value of the unit price would be determined by demand and
supply.
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