Even the Caribbean is not immune to the global financial crisis. The US Virgin Islands experienced tremendous growth from 1997-2007 — with home prices more than doubling — but that run has come to an abrupt end. To learn more about real estate on the US Virgin Islands see the following article from Global Property Guide.
The housing market in the US Virgin Islands has now crashed. In 2008 property prices and sales dropped sharply, because about 80% of foreign property buyers in the territory come from the US, where the contagious global crisis started.
In St John, the average home sales price dropped 24% to US$1.5 million in 2008, from US$1.98 million in 2007, according to Islandia Real Estate. The average price of condominium units rose slightly by 3.6% to US$634,923 over the same period.
In St Thomas, the average sales price for all homes, condominiums and land fell 15% in 2008, from a year earlier, according to realtor Marsha Maynes. The average price of two to three-bedroom single family residences was about US$600,000; two-bedroom oceanfront condominiums were priced around US$400,000.
In the less developed St Croix, the average home sales price rose 9.9% to US$511,532 in 2008 from a year ago, based from Coldwell Banker Virgin Islands report. However, the condo market has been badly affected by the crisis, with average price falling 18.8% to US$217,196 in 2008.
The first quarter of 2009 shows a continued downward trend in property prices and sales in USVI. This contrasts sharply with strong house price increases over the past decade.
Property prices in the USVI rose 135% for homes and 165% for condo units from 1997 to 2007, based on figures from the USVI Bureau of Economic Research. This was mainly due to strong foreign demand and booming tourism and construction sectors during the period.
Despite the housing market crash, real estate prices in the US Virgin Islands are still among the highest in the Caribbean region. St John has the most expensive residential properties in the islands, followed by St Thomas.
The economy of the US Virgin Islands is largely dependent on tourism, which generates about 80% of GDP. There were about 2.4 million tourist arrivals in 2008, down 6.7% from more than 2.6 million a year earlier. Around 679,000 tourists stayed-over in the islands in 2008.
The USVI’s economy was sluggish from 2001 to 2005, with average GTP growth rate of just 1.2% per year. However in 2007, USVI experienced a robust economic growth with annual average gross pay rising by 3.2% to US$36,510. Unemployment rate dropped to 5.9% in 2007 from 6.2% a year earlier, due to strong tourism and construction sector, increasing business investment and growing financial services industry.
Property sales plunge
In 2008, property sales plummeted in the US Virgin Islands, as homebuyers became more cautious and delayed their property purchases.
In St. Croix, home sales dropped 50.4% in 2008 compared to a year earlier, to 139 units. In St. John, the total number of homes sold also fell by 21% over the same period, to 23 units.
Residential property sales peaked in 2004, when there were 587 homes and 551 condominium units sold in the whole islands. Since then, property sales have been falling sharply. In 2007, home sales fell 5.4% from a year earlier while condo sales dropped by 38% over the same period.
The value of private residential construction permits in the whole territory increased by 16.9% in 2008, following a drop of 20.5% in 2007. In St Thomas and St John, the value of residential permits grew by 23% in 2008. In St Croix, the value of residential permits issued also increased 7.3% over the same period.
The total value of approved permits for private residential construction was around US$210.5 million in 2008. Of which, US$135.5 million was issued in the islands of St. Thomas and St. John. In St Croix, the value of private residential construction permits was US$75 million.
Residential construction peaked in 2006 when the value of permits granted in the islands reached about US$226.4 million.
Affordable housing
The Virgin Islands Housing Authority (VIHA) provides affordable rental houses for low-income families, elderly and disabled persons. About 15% of the total housing stock in the islands was under public housing schemes.
Currently, VIHA manages about 3,500 public housing units. Of which, 2,168 housing units are located in St. Croix and the other 1,912 units are in St. Thomas.
Residents participating in VIHA’s public housing program must pay a Total Tenant Payment (TTP) of at least US$50. Tenants have the option to choose the method on how their rental payments will be computed, either the income-based rent or the flat rent per bedroom size.
For the income-based rent, TTP is 30% of the monthly-adjusted income (annual income less deductions allowed by the regulations) or 10% of monthly annual income of a household, whichever is higher.
USVI’s small private rental market
There is a very limited supply of long-term private rental properties in US Virgin Islands, since most landlords choose to cater to short-term wealthy vacationers and holiday makers.
Most rental apartments are located in St Thomas and St Croix. However, St John has the most expensive rental houses and villas in the territory.
One-bedroom apartments in the islands rent for about US$1,000 to US$1,800 per month. On the upper-end market, three to four-bedroom beach houses cost from US$3,500 to US$7,000 per month.
In Emerald Hill, located in St. Thomas, a one-bedroom residence rents for US$1,200 per month.
In Frenchman's Bay, also in St Thomas, a two-bedroom cottage rents for US$1,500 per month.
Rental apartments in the islands are often part of a larger house where the landlord may likely live in a unit next to the tenant. Recently, condominium units located near hotels and resorts in St Thomas and St Croix are already increasing.
Long-term rental residences in USVI are usually not advertised, except to locals. Most landlords only put a “for rent” signage in front of the rental apartments.
St. Thomas, the “Rock City”
St Thomas is largely mountainous and home to USVI’s capital and largest city, Charlotte Amalie. St. Thomas is an ocean lover’s paradise. Hillside houses usually have magnificent views of the ocean. Snorkeling, scuba diving and windsurfing are popular tourist activities.
Recent residential developments in St Thomas include:
- The Preserve at Botany Bay - 360 acres of land designed to be a high end, exclusive community which consists of plans for 150 homes/lots. Lot prices start at US$950,000.
- Drake’s Seat - development of luxury single-family residences
St. John, the “Love City”
St. John is known for its well-preserved natural beauty and picturesque hills dotted with lavish villas. Unlike the overdeveloped St. Thomas, real estate developments in St. John are restricted. The island is the wealthiest and most expensive of the US Virgin Islands.
St John is home to the territory’s National Park, which protects more than half of St John’s land area. The National Park includes some of the best beaches and coral reefs in the world.
There are 14 condominium developments in the island and 3 more are under construction. Some of these developments offer full ownership while others are operated as timeshares or fractional ownership. Most of these residential projects are located in Cruz Bay.
- Pond Bay – a 15-acre development consists of 50 furnished three-bedroom cottages and villas and other recreational facilities.
- The Westin St. John Resort & Villas – construction began in July 2006. Currently, it has 92 studio, one-bedroom, two-bedroom, and three-bedroom villas for sale.
St. Croix, the “Twin City”
St Croix is the largest island in the US Virgin Islands, which offers pristine white-sand beaches, varied terrain and landscape and superb restaurants. St Croix is more laid back than the other two islands.
St Croix is nicknamed the Twin City because of its two main towns: Christiansted and Frederiksted. Christiansted is more developed with numerous restaurants and hotels. The town has preserved its 18th-century Danish-style buildings constructed by African slaves. On the other hand, Frederiksted is the main port for cruise ships in St Croix.
Resorts and condominiums are mostly located on the north shore. Recent developments include:
- Mashantucket Pequot Tribal Nation – a 800 acre waterfront land planned to be developed as a mixed use community with a golf course, casino, hotel and residences.
- Carambola Beach Resort – the resort is undergoing a $20 million renovation managed by the Renaissance Hotels & Resorts.
- A development of 1,200 acres of land near the west-end of St. Croix by a Russian company Vitiol, which includes residential and timeshare development with golf course and other luxury amenities.
- Wyndham® St. Croix Golf Resort and Casino – Wyndham Hotels and Resorts unveiled the development of a $250 million complex, which is scheduled to open in 2010.
This article has been reposted from Global Property Guide. You can view the article on Global Property Guide's international residential real estate website.
