Life’s a beach
Famed for its relaxed lifestyle, picturesque beaches and low tax rates, the Caribbean region offers good returns for big-money investors. Rosanne Barrett reports
‘‘The right pricing opens the door to new interest among new investors or buyers. With interest rates low and people looking for a solid place to invest, the Family Island and Nassau markets are both good’’
The Caribbean region encompasses more than 7,000 islands organised into 27 countries. Some of these countries welcome foreign investment, others don’t; some are developing fast, others are not. But the one thing that binds them together is their natural beauty and booming tourism industries.
Within the Caribbean region the property market is most developed in the nations of the Bahamas, Barbados, Antigua, Trinidad and Tobago, St Kitts and St Lucia. Many of these nations are popular with investors looking for luxury condominium or tourism projects. But like everywhere else in the world, the property market has slumped, leaving some developments unfinished and prices no longer at a premium.
Founder and president of ERA Dupach Realty, Peter Dupach says the Bahamian property market is relatively healthy and has not suffered the huge plunges of other Caribbean nations. “In some cases, [prices] are really coming back to where they should have been or where they were before the bubble,” he says. “The right pricing, as we look at it, opens the door to new interest among new investors or buyers. With interest rates low and people looking for a solid place to invest, the Family Island and Nassau markets are both good.”
According to Dupach, some international investors’ second homes have fallen in value by up to 30 percent in the crisis, but the majority of Bahamians are not having to sell. “We now have a buyer’s market with a new kind of buyer,” he says, “one looking for a deal at a time when there are deals out there and interest rates are low. This should be a very reasonable year and we have our eye on the prize for next year.”
The Bahamian property market declined late last year after reduced demand from U.S. and British investors. The government does not keep official house price figures, but anecdotal reports suggest the market fell by about 20 percent. Reports from local newspaper The Nation say sellers are reluctant to lower their advertised price but will often accept a lower transaction price. In prime areas, home buyers can expect to pay between US$2,221 (HK$17,200) and US$8,374 per square metre, while luxury condominium buyers will pay between US$3,085 and US$5,159 per square metre.
One of the major attractions of the Bahamas, apart from the weather, is the low tax regime. Foreigners who own property can receive permanent residence and therefore pay minimal tax. There is no income tax or capital gains tax. What’s more the Bahamas’ tenancy laws are pro-landlord and rental returns are about 8 percent due to the huge holiday rental market, catering to the almost 5 million tourists who visit each year.
Prices vary greatly across the Bahamas. The most populous island is New Providence, the location of the capital city, Nassau, where luxury houses are priced between US$3 million and US$20 million. Further out on the second most populous island, Grand Bahama, the average price of a house is US$1.5 million. On the other populated islands, called the Family Islands or Out Islands, buyers can pick up a waterfront home for less than US$500,000.
While some major construction projects have stalled temporarily in the Bahamas, such as the Ritz Carlton project on Rose Island and the Aman Resort at Norman’s Cay in Exuma, many luxury developments are still coming up. ERA Dupach Realty is offering a waterfront, 300-square-metre, four-bedroom, four-and-a-half bathroom villa at the February Point development on the outlying island of Exuma for US$2.95 million. There are lush gardens and a private marina on the 808-square-metre block.
Celebrities such as Sean Connery, Johnny Depp, Bill Gates, David Copperfield and John Travolta are all reported to have homes in the Bahamas, and the sky is the limit for Bahamian property prices. Golfers Tiger Woods and Ernie Els have both invested in the luxury Albany Estate development at the southwestern tip of New Providence. (Albany Manor was used as a location in the 2006 James Bond film Casino Royale). The project is slated to have an 18-hole golf course, designed by Els, oceanfront homes, and cottages and apartments set around a US$500 million marina. High-flyers can buy townhouses for US$40 million each or an apartment for US$3 million. Construction started last year, and the development is expected to be complete by 2012.
One island offering the same natural beauty as the Bahamas, and with even more luxury, is Barbados. Here, despite the downturn affecting the second-home market for British and American buyers, the property market continues to “tick over”, according to real-estate agent Cluttons Barbados. Chairman Kieran Kelly says the market has been maintained by people looking for investments other than stocks, and as it is “ultra-luxury”, it does not swing from boom to bust. “Things are fine. We’ve gone from strong to ticking comfortably along,” he says.
In a recent report, Cluttons found the market has remained buoyant, property prices overall are still rising by 10 percent to 15 percent a year. The Institute for Public Policy Research in London found that 27,000 British people have second homes in Barbados and Kelly says American investors are becoming more interested in the market. Awareness has grown in the U.S. since Tiger Woods married there and Barbados-born pop star Rihanna hit the big time.
The international property market in Barbados is dominated by luxury homes and villas and these continue to out-perform the rest of the market. But mid-range properties are now becoming more widely available. While Barbadian properties are more expensive than those on other less-developed Caribbean islands, Kelly says there are some bargains to be had.
“Some developers are willing to look at discounts because of the exchange rate [that has worsened for British investors], but it really depends on the developer,” he says. “Beachfront Barbados is what they call the platinum class. [In the downturn] the interest has slowed but sales are continuing. Inland you could find discounts of up to 20 percent.” The realtor adds that luxury beachfront condominiums (from 250 square metres) sell for upwards of US$2.5 million, but an entry-level apartment could start at US$800,000 on the beachfront. Again there are no restrictions on foreigners buying property.
Kelly says the future is bright for investors in Barbados. Over the coming decade he expects strong growth given all the high-end developments due for completion. A Four Seasons development should start construction by the end of August and a Banyan Tree boutique hotel is also in the pipeline. “People are definitely looking at the Caribbean and because the supply is limited, we’re safe,” says Kelly. “We’ve become a bit of a haven really.”
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