The real estate market in the British Virgin Islands (BVI) caters to the super-rich, which has allowed it to hold up well during the global slowdown. BVI is busier than ever, and with more airlines looking to add BVI as a destination, business should continue to be good. For more on this, read the following article from Global Property Guide.
The property market in the British Virgin Islands (BVI) is still seen as an investment hotspot by the super-rich, despite the global crisis.
In 2009, property prices were stable. Foreign demand for luxury houses has stayed strong, and banks are still willing to lend to qualified homebuyers.
The BVI real estate market has grown steadily in recent years. Prices of villas and land have risen by around 8% to 10% per year over the last decade, according to Coldwell Banker BVI.
The average price of three-bedroom houses along the Caribbean coastlines is now around US$1.2 million, while five-bedroom houses sell for about US$2 million.
In 2009, “the BVI is as busy as I have ever seen it in 30 years, with buyers looking for their Caribbean dream home,” says Pamela Romney of Island Real Estate, Ltd.
“British Virgin Islands real estate has held its value over time. BVI banks are lending and you can get fixed mortgages! Non Belonger Land Holding Licenses are going through faster than ever.”
Several factors have helped the BVI’s property market stay resilient, despite the slowdown in financial services and tourism since the second half of 2008.
- It only takes a few dozen buyers to keep the BVI property market alive and busy, since the market is relatively small.
- Real estate prices have risen steadily in the past years, but without the highs and lows experienced in many property markets.
- Property buyers in BVI, especially foreign homebuyers, typically purchase in cash.
- Foreign property ownership and real estate developments in BVI are strictly regulated by the government. The government has focused on restraining over-development, so there’s no backlog.
Twin pillars of the economy
The BVI’s economy is one of the most prosperous in the Caribbean, with an average annual GDP growth of 9.5% from 2004 to 2007. Economic growth is highly dependent on financial services and tourism. Financial services account for almost 50% of national income, while tourism generates around 45%.
In the mid-1980s, the BVI adopted legislation which rapidly expanded international financial services. The BVI is now considered perhaps the best-respected offshore centre, with over 550,000 registered companies.
However, new international business company incorporations in BVI were down 20% in 2008, as a result of enhanced regulatory scrutiny of offshore financial centres. In addition, tourist arrivals were down 3.4% from a year earlier.
Despite this, the economic outlook for the BVI remains good. More air flights to BVI in mid-2009 are planned. American Eagle intends to double its flights into Beef Island from San Juan, to six daily flights starting May 1, 2009. In addition, American Airlines plans to add more flights to BVI, starting May 2, 2009.
“this expanded capacity means more travelers can experience all that we have to offer,” says Perla George of the BVI Tourist Board. “To say that we are ready to welcome all of these new visitors is an understatement.”
Strong construction sector
Construction activity in the BVI remains strong:
- Construction of a luxury resort in Oil Nut Bay, located on eastern Virgin Gorda, commenced in January 2009.
- North Sound Yacht Club, also in Virgin Gorda, is already under construction. It features a state-of-the-art marina with 23 slips for mega-yachts, villas, retail boutiques and dining.
- The Moorings Village at Wickhams Cay 11 opened in February 2009.
- The Refuge, a posh and secluded villa community at Brewer’s Bay, is also under construction. Three-bedroom villas are listed for sale at US$2.5 million.
- The Scrub Island Resort, which will offer luxurious private residences, is scheduled to open in July 2009.
The government strictly regulates the construction sector. The islands have learned from other Caribbean countries’ mistakes, particularly from the over-development of neighboring St. Thomas in the US Virgin islands.
Free rental market
Prospective tenants and landlords are free to negotiate their rent. The parties may also freely agree on the terms for rent increases.
The long-term rental market is fuelled by the migrant labour force. Most rental villas are located in western Tortola. A few villas are also located in Road Town, and east Tortola.
The average rent for a one-bedroom apartment is US$1,200 per month, and a two-bedroom apartment rents for around US$1,900 per month. Gross rental returns for houses are poor in BVI, reaching a mere 2.85% on average, according to latest Global Property Guide research.
Tedious buying process
All overseas investors need a Non-Belonger Land Holding License (NBLHL) to purchase property in BVI, which usually takes two years to obtain. The NBLHL application is administered by the Ministry of Natural Resources and Labour.
Since belongers have the first choice of any property for sale in the BVI, the Ministry requires that the property the foreigner wishes to purchase must be advertised locally for four consecutive weeks in a local newspaper.
If a foreigner wants to buy undeveloped land, he is required to build a single family home, worth not less than US$250,000, within 3 years. If he fails to do so, the government can impose a fine up to 40% of the sales price.
In addition, undeveloped land cannot be resold until the development commitment has been fulfilled, or a penalty paid to the government.
The objective is to prevent speculative buying of undeveloped property. As a result, the BVI real estate market is not subject to booms and busts, because of the lengthy and tedious buying process.
Foreign owners who want to rent out their property, need government permission. Present BVI policy is against granting foreigners permission to rent out property. Unless the property is located in an established rental area, or it has already a rental history, the application is unlikely to be approved.
Tortola, the city-centre
Tortola is the largest and the most populated island in the BVI. The island is known for its pristine white sand beaches, aquamarine waters and yacht charters.
In Road Town, the capital, three-bedroom townhouses sell for about US$325,000. In Drake’s Village, located in Nanny Cay area, three-bedroom units are priced at about US$650,000.
In Belmont, property prices range from US$350,000 to US$2.5 million. On the southern side of Tortola, luxury houses are sold for about US$3.75 million.
Virgin Gorda, classy and exclusive
Secluded, peaceful, and exceptionally beautiful, Virgin Gorda is considered the BVI’s highest-end property market.
Virgin Gorda’s premier resort is Little Dix Bay, opened in 1964 by Laurence Roosevelt, with 98 rooms on the beach. Five years ago, Little Dix Bay started to build more villas on the surrounding land. In the Rosewood Little Dix Bay, three-bedroom villas sell for about US$3.3 million, while four-bedroom villas are priced at around US$4.2 million.
Other Virgin Gorda resorts include Biras Creek, Bitter End Yacht Club, Leverick Bay, and Nail Bay. In Nail Bay, house prices range from US$350,000 to over US$10 million.
“The idea is that Virgin Gorda will be kept for the high end,” says Chris Smith of Coldwell Banker BVI. “The people who buy here would be unlikely to buy in Tortola”.
Other notable resorts on other islands include the ecological paradise Guana Island, Pearl Island Resort and Sir Richard Branson’s private island resort, Necker Island.
This article has been reposted from Global Property Guide. You can view the article on Global Property Guide’s international residential real estate website.