Barbados real estate, which is the most expensive in the Caribbean, is showing signs of a rebound after a slight slowdown in 2009. New construction has resumed, and visitors are gradually returning to the traditionally thriving rental market. See the following article from Global Property Guide for more on this.
![filekey=|7616| align=|right| caption=|| alt=|Barbados real estate|]The property market in Barbados slowed in 2009 due to the global financial crisis, but property prices have remained mostly stable.
“Barbados’ strong history of increasing real estate values helped it stay strong through the last year without prices falling dramatically,” says Nick Guezen, director of real estate of Luxury Retreats, an elite broker in private villa sales and rentals in Barbados. “Sellers in Barbados had the means to wait out the storm, while buyers also waited patiently for prices to drop.”
Over the past few years, property prices in Barbados had an annual increase of 10% to 15%, with prices of luxury houses appreciating more than 15% per year.
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.
Luxury houses and villas still dominate the market, but apartments and condominium units priced between US$145,000 and US$1 million are now common.
Britons make up the largest group of tourists and foreign home buyers in Barbados, followed by Americans. Their numbers, however, have declined since the global crisis hit. On the other hand, Canadian tourists and home buyers in Barbados are on the rise.
Barbados’ economic recovery, however, is still uncertain. The country enjoyed a GDP growth of 3.3% in 2007. However, growth slowed to 1.5% in 2008, due to declines in tourism and construction, and a slowdown in manufacturing. As the global crisis worsened, GDP fell by 5.3% in 2009. In the first quarter of 2010, GDP declined by under 1% on an annual basis.
Inflation soared to 9% in 2008, due to sharp increase in world food and fuel prices. In 2009, inflation was maintained at 3%. By first quarter of 2010, inflation was 3.3%.
Hopes for tourism
Tourism accounts for 15% of Barbados’ GDP. The tourism sector suffered in 2009, with stay-over arrivals dropping by 8.5% and tourism receipts down more than 11%, according to the International Monetary Fund. Construction declined 4.5%, with tourism-related projects stalled. Unemployment rose to 10.1% in the first quarter of 2009, from 7.9% in the first quarter of 2008. In the first quarter of 2010, it rose again to 10.6%.
Visitors from the US have been gradually returning since the first quarter of 2010, drawn by luxury hotels’ discounts and promotions. There was an increase of 2% in arrivals in the first two months alone.
A significant number of Canadian visitors are also visiting the country, with an increased number of flights from West Canada. Arrivals from the UK in the first quarter of 2010, however, were affected by the volcanic eruption in Iceland.
Barbados still awaits stronger recovery. Hopes for improvement in tourist arrivals hinge on newly built real estate developments, as well as those still under construction.
The construction of new condominiums in The Crane oceanfront resort and residential development is expected to attract foreign visitors to the South Coast. Beachlands, a US$200 million luxury development, is also underway on the West Coast. Investors are also anticipating the completion of the Four Seasons Hotel and Private Villas. The massive project was halted in 2009 due to lack of financing. This year the government stepped in with a loan of $60 million from a Caribbean bank, so construction will continue. If all goes well, the development will be completed in 2011.
The government has also announced that it will offer public loans to encourage renovation of tourism-related facilities. These developments are expected to bring back stronger tourist inflows and encourage more foreign investments and financing.
Mortgage market and interest rates
Barbados’ mortgage market has expanded rapidly over the past decade. From 11% of GDP in 1999, total outstanding mortgage loans for private dwellings grew to 27.4% of GDP in 2009. By April 2010, it was up to 27.6%.
In 2009, total mortgage loans for private dwellings rose to BB$1.972 billion (US$0.97 billion), according to the Central Bank of Barbados.
Barbados has around ten mortgage lenders, but only five lenders to non-residents. Loan-to-value (LTV) ratios typically range from 50% to 70% for non-residents (minimum loan of US$300,000), with a maximum term of 15 years.
Non-residents’ mortgage loans must be foreign currency-denominated, and approved by the Central Bank of Barbados. US dollar loans have been attractive over the past few years. 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.
Since 1975, the Barbados dollar has been pegged to the US dollar at BB$2 = US$1.
Barbados has a thriving rental market. Long-term rentals usually occur during important holiday weeks such as Christmas, Easter, and New Year. During the peak season, from November to April, long-term rental properties are difficult to find in Barbados, 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 rental properties can be found on the East Coast. The most expensive properties are generally on the West Coast.
Rent for three-bedroom houses on the West Coast starts at US$4,200 per month. Four-bedroom houses can be extremely expensive, and start at more than US$10,000 per month during summer. Five-bedroom houses can be rented starting at about US$14,000 per month.
Luxury villa rentals range from US$2,500 to US$100,000 per week.
The rental market declined in 2009, but it is expected to pick up by 2011.
West Coast reigns
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.
“The West Coast is still by far the strongest market on the island, and perhaps the strongest in the southern, windward Caribbean,” says Guezen.
Luxury homes and luxury beachfront properties in the area are among the most expensive in Barbados, with prices ranging from US$2 million to US$40 million.
Well-established resorts continue to lure royalty, celebrities, and business elites to the West Coast. Sandy Lane hotel and residences is still among the finest resorts in the Caribbean and one of the most exclusive, also known for its associated golf course. Homes are priced starting at US$3 million.
The five-star Royal Westmoreland also continues to offer luxury homes. The Royal Apartments and Penthouses, which were completed in 2009, are priced from US$ 429,000 to US$ 1,900,000.
In the Apes Hill luxury development, which enjoys views of both the West and East Coasts, plots of land can be purchased starting at US$500,000.
In Saint James, the West Coast’s exclusive high-end area, the Weston Resort and Residences development has just been launched. Phase I has 21 units and Phase 2, which has recently been released, has 24 units. Price starts at USD $387,117.
Another new development in Saint James is The Grove, the residential component of the Limegrove Lifestyle Center, the first mixed-use development in Barbados. Each villa has 3,433 square feet of living space and is priced at US$1,325,000.
In Port St. Charles, a luxury residential marina development, resale prices of beachfront villas are around US$4 million and prices for 1-bedroom apartments start from about US$1 million.
In Mullins, St. Peter, prices of inland condominiums and townhouses start at US$350,000.
New 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.
Property prices typically range from US$350,000 to US$2 million.
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. Prices of residences start at US$425,000. Construction of condominiums is also ongoing.
Ocean One is a 21-unit beachfront condominium in Maxwell. The West Penthouse is priced at £2,200,000. Ocean Two is a newly completed condominium-hotel which offers freehold ownership.
The Palisades development consists of 16 townhouses, each unit costing US$850,000.
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$1,057,091, depending on unit size.
In The Palm Beach Condominiums, prices for condo units 2,200 square feet and larger start at US$950,000.
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.
In a recent statement by Prime Minister David Thompson, more tourism development will be allowed in the East Coast, owned by Barbadians. Efforts will also be made to ensure that the East Coast does not end up like the crowded and overdeveloped West Coast.
The Edgewater in Bathsheba is a new development consisting of duplex villas and apartments for sale.
In The Merricks Beach Resort and Residence in St Phillip, luxury apartments and villas are available for sale. All suites have a 2-year rental guarantee of 10% of the original purchase price.
In The Little Good Harbor in St Peter, ocean-view apartments and beachfront villas are priced from US$395,000 to US$1,870,000.
This article has been republished from Global Property Guide. You can also view this article at Global Property Guide, an international real estate analysis site.