Residential values fell by around 30% across the Caribbean during the North Atlantic debt crisis, but 2013 saw a return of buyer interest in the Caribbean’s second home market.

This was largely due to the turnaround in the US economy and a more positive outlook from American buyers as a result. Prices in the Caribbean seem now to have bottomed out and transactions are beginning to pick up; 2014 should offer buyers a window of opportunity to secure a bargain.

Tourism is the lifeblood of the Caribbean economy, a popular over-wintering destination for much of the northern hemisphere. Many of the residential markets of the Caribbean are also heavily influenced by the islands’ former colonial links or relative proximity to the United States, which is the closest international buyer market.

Barbados, an ex-British colony, continues to enjoy the patronage of high profile buyers from the UK and beyond. Exclusive, world famous resorts such as Sandy Lane on the island’s West Coast are the main attraction for the world’s ultra-wealthy.

As a mature market, more than half the holiday homes available in Barbados – in excess of 1,500 – are located in specially developed residential communities. These offer a range of amenities including polo grounds, golf courses, water sports, marinas, spa centres, restaurants and boutique shopping. These features are tangible benefits, attractive to both end-users and investors.

Buyer preferences are generally for turnkey properties – this is because very few buyers are likely to occupy their Caribbean home for more than a small part of the year. Interest in properties that are more difficult to manage and maintain, especially the renovation or rebuild markets, is now substantially smaller than prior to the global recession.

Buyer interest has now grown again, particularly in the most well-known and prominent islands. High quality, serviced resort developments have been the star performers across the Caribbean, such as St Lucia’s Sugar Beach and the Pink Sands Resort on Canouan in the Grenadines. A dearth of new development during the downturn means that there is little or no new supply available and so 
off-plan sales have resumed in the most established markets. Even the sale of individual development land plots is showing early signs of a come-back in some locations.

Reasons for buying in the Caribbean are becoming more diverse: tax, lifestyle, investment, family ties, even flexible working arrangements, are part of the real estate story. On Cayman, a new medical tourism facility is anticipated to drive economic growth and underpin the residential markets for years to come.

Other islands are positioned earlier on the investment curve. The Antigua and Barbuda Citizenship by Investment Program provides qualification for citizenship through a $400,000 investment in real estate (or an investment in the national development fund or business). The scheme has already resulted in significant activity from Chinese investors. Antigua follows in the footsteps of St Kitts and Nevis, which has a longstanding visa scheme established in 1984.

Other major Caribbean markets include the Bahamas, consisting of more than 700 islands and cays, the closest Caribbean country to the United States and a major recipient of US investment. Such close ties to the US meant that the Bahamas saw particularly large price falls between 2007 and 2010 (up to 40%), but the market has since stabilised and sales volumes have started to recover as buyers seek to secure deals.

The British Virgin Islands (BVI), part of the Virgin Islands archipelago, consist of Tortola, Virgin Gorda, Anegada, and Jost Van Dyke, along with over 50 other smaller islands and cays (only around 15 of the islands are inhabited). Unlike other parts of the Caribbean, there are few large resorts on the BVI – instead, individual properties dominate the market. Without direct flights to the US mainland or other major destinations, most buyers discover the BVI through sailing, attracted to its low-key and understated lifestyle.

The BVI residential market peaked in 2007, and as a third or even fourth home market (rather than a second home market) supported by the strong offshore finance sector, there was no major price crash, although transaction volumes suffered.

Recent developments offering townhouses on the waterfront, such as Nanny Cay Marina, have sold well in the last year. Yacht Club Costa Smeralda on Virgin Gorda, the sister club to the famous northern Sardinian resort, may well raise the island’s international profile. The vast majority of buyers hail from the United States, with Canadians and some British also present.

In the southern Caribbean, just 160km north of Venezuela, lies Grenada. The island’s relaxed, laid-back character attracts British and some Canadian purchasers, although the market is much more domestic than some. Low entry values are offset by comparatively high transaction costs (a 10% licence fee applies for foreign buyers on purchase and a 15% land transfer tax applies on sale). As a consequence many buyers choose to make the island a permanent home, and it is particularly popular with retirees.

Taken from
Spotlight: Prime Residential Retreats 2014