Guyana’s economy is set to have an explosive next decade. Over the last five years, roughly eight billion barrels of recoverable crude oil reserves have been discovered off its shores, located in the 6.6 million-acre Stabroek block. In May 2015, ExxonMobil discovered Liza, its first significant oil find, consisting of 90 metres of high-quality, oil-bearing sandstone reservoirs. Other successful finds followed, such as Payara in January 2017, and in total there have been seventeen wells drilled with production starting in December 2019. This deal between Guyana and ExxonMobil, in which the country will receive a 2% royalty on gross earnings and 50% of the oil proceeds, has been estimated as producing $170 billion in revenue over the next few decades. This represents a particularly momentous situation for Guyana, a country with a population of 790,000 and GDP of $5.17 billion in 2019. Before the Covid-19 pandemic wreaked havoc on economies worldwide, the IMF had predicted that the country would experience a dizzying 86% growth in 2020, far higher than the 4.4% achieved in 2019. Regardless, optimism remains high: predicted 12% growth in 2021, 49% in 2022, and a GDP of $14.08 billion by 2025.
Local demand surge
The impact on Guyana’s real estate market can be viewed through two lenses. First, the discovery is a boon for the local Guyanese population. ExxonMobil has declared that more than 50% of its current workforce in Guyana is made up of local citizens, 1,700 jobs have been created and approximately $180 million spent at Guyanese businesses since 2015. In a country where the national gross income per capita was around $5,100 in 2019, compared to $66,000 in the US, this is a significant investment. The company also stated that Guyanese staff have undertaken over 350,000 hours of training in Brazil, the US, Canada and Singapore. Small and medium-sized local businesses have been supported by the establishment of the Guyanese Business Development Centre. Steady wage and job growth is expected, boosted by a more highly skilled workforce, and will be particularly well-received by the 7,000 locals who lost their jobs when ex-president David A. Granger closed the unprofitable cane-processing plants in 2018. This growth is likely to lead to a surge in real estate demand by locals, in particular in Georgetown, the country’s coastal capital.
High foreign interest
Guyana also stands to benefit from foreign direct investment in the country. The oil discovery will continue to bring a wealth of engineers, geologists, lawyers and executives to the country. These individuals will need short and long-term accommodation. According to the Guyana Chronicle, many major international hotel chains, such as the Sheraton and Hyatt Hotels Corporation, have already taken an interest, attracted by the country’s potential for increased visitors and wealth creation. One real estate specialist, Afa Zada, has noted that developers from Turkey, Korea, Dubai and other parts of the world have approached her to enquire about land regulations and prices. It has also been reported that Georgetown homeowners have been contacted directly by oil companies who are offering high cash rental payments for multi-year leases. An expected long-term oil boom combined with a persisting housing shortage is also leading some oil companies to consider constructing their own developments. The Wall Street Journal even reported that a marine life conservationist had begun referring to Georgetown’s Oleander Gardens as Oily-ander because of the number of luxury apartments being built for oil executives. In short, foreign demand escalating in the coming years looks almost certain.
Georgetown, Guyana’s capital. Image: www.travelagentcentral.com
Current state of the market
In the last twelve months, low housing supply and accelerating demand have pushed up property prices and rental costs. This trend is unlikely to abate given steady local and soaring foreign enthusiasm. However, the potential for a frothy market aside, one of the key issues for Guyanese real estate is that the local market is arguably not yet foreign investment-ready. Afa Zada pointed out the lack of a comprehensive property database, a difficulty compounded by unclear property regulations. A dearth of reliable information could constitute a significant obstacle to Guyana’s real estate market, even taking into account the high levels of interest.
The Guyanese economy and real estate market will undoubtedly experience substantial change over the next few years and decades. Ex-president David A. Granger at the time even declared a new national holiday, National Petroleum Day, on December 20th. However, the Guyanese real estate market will not feel the full impact of this highly lucrative oil boom until clear regulations are drawn up. Investors will remain cautious and market access will be stymied until confidence can be placed in the country’s property data and rules.