Tourism is down, unemployment is up and the economy isn’t making any great strides, but local Barbados realtors are confident things are right on track with home prices and sales one the Caribbean island. The numbers show that prices have slipped, but only by a few percentage points as buyer remain attracted to Barbados. Solid infrastructure, low crime, beautiful weather and a vibrant island culture are just a few things keep buyers coming back. Although stop-over tourism has slumped the island’s rental market still continues to thrive and interest in luxury properties has hardly wavered. For more on this continue reading the following article from Global Property Guide.
The property market in Barbados is surprisingly stable. True, average residential prices haven’t yet recovered the 15% to 25% loss they incurred since 2008. True, tourism has slumped. True, unemployment in Barbados continues to rise. True, inbound flights are down. True too, construction and investment are both down.
Yet local realtors remain resolutely optimistic. Sales volumes are just starting to pick up, believes Harry Manning, owner of real estate firm Harry Manning Associates. "It´s a very stable place – economically and politically – it has a familiarity to it for British buyers with low crime, good roads, hospitals and schools and excellent communication from US and Europe. It has a depth of culture which means buyers can winter there without going crazy," says Savills’ Caribbean director James Burdess.
The resiliency of Barbados’ real estate market continues to attract buyers – especially compared to the other parts of the Caribbean which have experienced greater price fluctuations, according to Chesterton Barbados chairman Kieran Kelly. He also notes that, although there have been 10% to 15% price drops in some parts of Barbados since 2008, beachfront homes fell by just an average of 5%, while some prime locations didn’t experience any price decline.
The fact is, that the Bahamas are special. Barbados has the most expensive luxury properties in the Caribbean, with prices ranging from US$4 million to US$40 million. For the extremely wealthy, there are houses that come with US$75 million price tags.
Beachfront homes can cost approximately from US$ 600 to US$ 2,500 per sq. ft., or US$ 6,420 to US$ 26,750 per sq. m., estimates Kelly. Inland homes are priced at US$250 to US$ 1,000 per sq. ft.
Most foreign buyers in Barbados are British, followed by Americans. Due to its strong currency, the number of buyers from Canada is growing. In 2012, Germany and other European countries, as well as Trinidad & Tobago, accounted for a greater number of tourist arrivals.
In March 2013, inflation had slowed to around 3.3% p.a.. The IMF expects inflation to slightly increase to 4.9% in 2013.
Declining tourism sector
In 2012 tourism slumped, with a 6.2% decline of stop-over visitors, according to the Central Bank of Barbados. The closure of the Almond Resorts, as well as the UK’s Air Passenger Duty, and the reduction of the number of flights out of US and UK by two major carriers, contributed to the decline. There was also a 16.4% decrease in cruise passenger arrivals in 2012. Tourism is one of the main economic drivers of Barbados, accounting for 11.8% of the country’s GDP in 2012, according to the World Travel and Tourism Council. The tourism sector employs 15,000 people, 12.1% of total employment.
UK visitors declined most, with a 9% drop, with Barbados losing a British Airways flight from Gatwick. The number of visitors from the US also dropped by around 8.8%, followed by other Caribbean Community (Caricom) members, with a 8.1% decline. The Canadian market, which recorded an improvement during the first half, had also fallen by 0.6% by the end of 2012. On the other hand, visitors from Germany increased by 7.5%, while visitors from other European countries were up 0.5%.
There was a 16% decline in foreign real estate project investments in 2012, affecting the construction sector, which saw a 3% activity drop.
During the first quarter of 2013, Barbados´ economy contracted by 0.4%, and is expected to remain flat during the rest of the year, according to the Central Bank of Barbados, after no growth in 2012, 0.4% average growth 2010-2011, and a 4.1% contraction in 2009.
Unemployment in Barbados continues to rise, and was 11.7% at end-2012, up from 10.8% in 2010.
In order to regain the lost cruise ship market, Barbados will be sending a delegation headed by Tourism Minister Richard Sealy, to the United States. The government´s main promotion agency, the Barbados Tourism Authority (BTA) will also be split into two institutions, one focusing on marketing, and the other in charge of product development. Other plans included in the Barbados Tourism Master Plan (2012- 2021) which starts in June 2013 are:
- Improvement of transport systems
- Infrastructure and product development
- Improved regulatory framework for the plan
- Physical environment that covers land use patterns
- Marketing and promotion
- Training for employees
An estimate of US$ 11 million will be spent by Barbados in pushing the "Barbados Island Inclusive Package" initiative, which starts April 2013. Part of the funds will be used as cash incentives to visitors in the form of vouchers.
Mortgage market and interest rates
Only a few mortgage lenders will lend to non-residents. Non-residents can get mortgages with loan-to-value (LTV) ratios ranging from 50% to 70% (minimum loan of US$ 100,000), with maximum terms of around 15 to 20 years:
- 70% LTV for US dollar mortgages up to US$ 1.5 million;
- 60% LTV for mortgages ranging from US$ 2.5 million to US$ 5 million; and
- 50% LTV for mortgages more than US$ 5 million.
In order to qualify for a local-currency mortgage, borrowers must have a continuous residence of three years, according to Central Bank of Barbados. Foreign borrowers who don’t qualify can only obtain foreign currency mortgages. Over the past few years, US dollar loans had been attractive, especially for UK and European nationals. Their interest rate is linked to three-month US LIBOR.
Foreign buyers often end up obtaining financing externally, because mortgage interest rates in Barbados are often higher than in European and North American countries.
Total outstanding mortgage loans for private dwellings in Barbados rose from 12% of GDP in 2002 to 29% of GDP in 2012, and now stand at BBD 2.623 billion (US$ 1.31 billion), according to the Central Bank of Barbados.
Since 1975, the Barbados dollar has been pegged to the US dollar at BBD2 = US$1.
Thriving rental market
Barbados has a robust and thriving rental market, due to the significant number of tourists visiting the country every year. Mortgage rates in Barbados are also usually high, which makes renting more attractive and affordable than getting a mortgage loan.
Long-term rentals usually occur during important holiday weeks such as Christmas, Easter, and New Year. Long-term rental properties are difficult to find in Barbados during the winter periods from November to April, and rents are much higher than usual.
Rents vary enormously between properties and location—apartments vs. houses vs. villas, furnished vs. unfurnished, inland vs. beachfront, West Coast vs. South Coast vs. East Coast. Rents for beachfront properties are higher than inland properties.
The least expensive long-rental prices can be found on the East Coast, while prices are slightly increasing in the South Coast. The most expensive properties are generally on the West Coast.
Rent prices for unfurnished properties start at around US$ 1,250 per month for a three-bedroom house, and at US$ 1,500 per month for a four-bedroom house. Furnished houses can be rented starting at around US$ 1,500 per month for a three-bedroom house, and at US$ 1,750 per month for a four-bedroom house.
On the West Coast, a three-bedroom house costs at around US$ 3,000 per month. A four-bedroom house can be rented starting at US$ 1,750 per month, and US$ 3,750 for a five-bedroom house. Rents for a three-bedroom house can go up to BBD 12,000 (US$ 6,000) per month on the South Coast and up to BBD 15,000 (US$ 7,500) per month on the West Coast.
Luxury villa rentals range from US$2,500 to US$100,000 per week.
The famous West Coast
The West Coast, also called Platinum Coast, extends from the outskirts of Bridgetown (the country’s capital) in the south to Harrisons in the parish of St. Lucy in the north. Homes of famous celebrities and super-wealthy foreigners can be found here.
Some of the well-established resorts in Barbados, which continuously attracting business elites, royalties and celebrities, can be found in the West Coast. Among the most famous ones is the Sandy Lane hotel and residences, a member of The Leading Hotels of the World (LHW) since 2009. Sandy Lane is known for being one of the most exclusive and finest resorts in Caribbean. It is also known for its associated golf course, and is the home of one of the most expensive golf course ever built designed by Tom Fazio – The Green Monkey. Homes are priced starting at US$3 million.
Another popular development, the Royal Westmoreland, offers a prime location near the island’s exclusive west coast. Royal Apartments can be purchased starting at US$ 395,000 for one-bedroom flats with balconies and ocean views, up to US$ 995,000 for three-bed apartments. Royal Villas are priced at around US$ 1,200,000 to US$ 1,450,000.
In the Apes Hill Club luxury development, which enjoys views of both the West and East Coasts, lots can be purchased starting at US$ 350,000. Exclusive estate lots are priced starting at US$ 1,950,000.
In Saint James, one of the developments in the area is The Grove, the residential component of the Limegrove Lifestyle Centre, the first mixed-use development in Barbados. The Grove’s three-bedroom Hillside Villas with approximate floor area of around 3,440 sq. ft. can be bought at around US$ 550,000 to US$ 800,000.
Set directly on Paynes Bay Beach in St. James, the Waterside offers luxurious beachfront condominiums and penthouses with prices ranging from US$ 675,000 to US$ 2,800,000. Other condominiums and apartments in the St. James area could cost from around US$ 450,000 up to around US$ 6,000,000.
In Port St. Charles, a luxury residential marina development, offers beachfront properties at around US$ 3,450,000 to US$ 4,950,000. Lagoon-front villas are priced from US$ 695,000 to US$ 2,600,000.
Barbados’ newest marina development, Port Ferdinand, offers two to four-bedroom condominiums that can be purchased starting from US$ 2,150,000 to US$ 6,500,000.
In Mullins, St. Peter, prices of inland condominiums and townhouses start at US$ 399,000.
Developments on the South Coast
The South Coast, which begins at Carlisle Bay in Bridgetown and heads towards East Point on the Atlantic east coast, is less busy and has a more local feel. It caters mostly to the mid-market and has seen tremendous growth, with numerous developments already completed and delivered.
The Crane Resort and Residences, built in 1887, is one of the oldest resorts in Barbados. Its residential component has expanded over the years, and new villa-style residences have been completed in 2009. Full ownership price of a one-bedroom residence costs at around US$ 631,000, while a two-bedroom residence could cost from US$ 914,000 to US$ 2,580,000.
The Palisades development in Enterprise, which consists of 16 townhouses and one cliff-top house, enjoys extensive ocean views of the South Coast. Prices of residences start at US$ 750,000.
Ocean One is a 21-unit beachfront condominium in Maxwell. This stylish condominium has two-bedroom and three-bedroom units that can be purchased starting at US$ 1,100,000. Ocean two, located in Dover, is a newly completed condominium-hotel which offers freehold ownership. It offers 50 one-bedroom units priced at US$ 400,000, and 20 two-bedroom units at US$ 640,000.
Another condominium development in Maxwell is The Residences at Lighthouse Bay, which offers three-bedroom units starting at US$ 875,000. Maxwell Beach Villas offers two bedroom apartments with price range from US$ 725,000 to US$ 800,000.
In the 54-unit Sapphire Beach Condominiums, 2-bedroom units sell for US$ 699,867 and 3-bedroom units sell from US$ 890,050 to US$ 1,063,091, depending on unit size.
The Somerley development, a mixed-use complex that allows owners to gain rental income from a tenant, is offering two-bedroom and three-bedroom units with prices ranging from US$ 550,000 to US$ 875,000.
In The Palm Beach Condominiums, prices of two- to three-bedroom units range from US$ 1,050,000 to US$ 1,200,000.
East Coast to remain “local”
The East Coast on the Atlantic side of Barbados is better known for its rugged beauty. Because of huge Atlantic waves crashing along the shorelines, swimming is not advisable. However, beaches on the east coast are popular for walking, surfing and beachcombing.
Much of the eastern coastline is protected land and part of a National Park. Hence, though foreign investment interest in the area has significantly increased in the past years, it is difficult to obtain building or planning permission from the government.
Some of the popular East Coast beaches include the Bathsheba beach, Cattlewash beach, and Crane beach.
In The Little Good Harbour in St Peter, an unfurnished three-bedroom beachfront house could cost US$ 2,200,000.
This article was republished with permission from Global Property Guide.