The world’s economy is still struggling to regain momentum. Sluggish growth in advanced economies, weak global trade and diminishing capital flows have resulted in the World Bank revising its 2016 global growth forecast down to 2.4 percent from the 2.9 percent pace it had previously predicted. It goes on to state that, looking ahead, the prospects of global growth remain muted. Also making matters seemingly worse are the increasing number of recent terrorists’ attacks, as well as Brexit (the decision by Great Britain to exit the European Union).
These conditions, coupled with low global energy prices and reduced local energy output, have had a severe impact on the local economy where Real GDP was -1.0 in 2014, -2.1 in 2015 and is forecasted to be -2.3 in 2016. According to the Central Bank of Trinidad & Tobago, this anaemic economic performance has brought about declining consumer and business sentiment, as well as an increase in the number of people being retrenched.
All of these factors have resulted in a significant drop in the demand for commercial real estate rentals and it is currently estimated that there are over 300,000 sq. ft. of vacant, commercial office space available for rent in and around Port of Spain. Consequently, there has been a marked decline in rental rates now being quoted which has an adverse effect on the market value of these properties.
As can be expected, market participants in the real estate market appear nervous and the outlook for the immediate future does not look bright. It would seem that the market could be in for a rough period until such time as there is a recovery in energy prices and an improvement in world economic conditions.
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