2009 0403 barbados real estate market profile


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2009 0403 barbados real estate market profile

  1. 1. Barbados Real Estate Market ProfilePublished on:Friday, April 03, 2009Written by:Global Property GuideThe Barbados real estate market has held up very well throughout the financial crisis.Thanks to its high end clientele the island was buffered better than most to withstandthe effects of the downturn. While Barbados real estate is very expensive, the countryhas a lot to offer. For more on this, read the following market profile from GlobalProperty Guide.The property market in Barbados remains buoyant. In early 2009, demand stayed strong,despite the global crisis.Property price increases have been about 10 percent to 15 percent annually over thepast years, according to Cluttons Barbados. At the upper-end market, prices of luxuryhouses have appreciated more than 15 percent per year, Cluttons adds."Barbados has in the past always performed well, as more established and internationalmarkets decline — and then Barbados again benefits, as these more internationalmarkets bounce back." says Tim Morgan, managing director of Cluttons Barbados.Barbados’ property market accelerated in 2006/07, fueled by a construction boom onthe west and south coasts. In addition, the 2006 World Golf Championships-World Cupand the 2007 World Cup Cricket finals, both hosted by Barbados, drove property pricesup further.Property is more expensive in Barbados than in other less developed Caribbean islands.Property prices range from BB$3.95 million (US$2 million), to BB$79 million (US$40million).
  2. 2. While luxury houses and villas still dominate the market, it has diversified in recentyears. Apartments and condominium units priced under BB$1.98 million (US$1 million)are now common.A former British colony, Barbados’ tourists and foreign homebuyers are primarily British.Despite the UK’s economic downturn, British investors maintain a major presence. Localresidential property demand is also strong.Barbados has enjoyed average annual GDP growth of 3.5 percent from 2003 to 2007.However, growth slowed to 1.7 percent in 2008, due to declines in tourism andconstruction, and a slowdown in manufacturing.Inflation soared to 9 percent in 2008, up from 4 percent in 2007, driven by sharp worldfood and fuel price increases, and an April 2008 reduction of gas and diesel fuelsubsidies.Mortgage market and interest ratesBarbados’ mortgage market has expanded rapidly over the past decade. From 9.3percent of GDP in 1997, total outstanding mortgage loans for private dwellings grew to24.4 percent of GDP in 2008.In 2008, total mortgage loans for private dwellings rose 13.6 percent to BB$1.84 million(US$0.93 billion), according to the Central Bank of Barbados.
  3. 3. Barbados has around ten mortgage lenders, but only five lenders to non-residents.Loan-to-value (LTV) ratios typically range from 50 percent to 70 percent for non-residents, with a maximum term of 15 years.Non-residents’ mortgage loans must be foreign currency-denominated, and approvedby the Central Bank of Barbados. US dollar loans have been attractive over the past fewyears. Their interest rate is linked to three-month US LIBOR.Since 1975, the Barbados dollar has been pegged to the US dollar, at US$1 = BB$2.Foreign buyers often end up obtaining financing externally, because mortgage interestrates in Barbados are often higher than in European and North American countries. Froma historic low of 6.3 percent in 2004, average mortgage rates rose to 8.25 percent in2008.Thriving rental marketBarbados has a thriving rental market. During the peak season, from November to April,long-term rental properties are practically impossible to find in Barbados, and rents aremuch 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.Three-bedroom unfurnished apartments typically rent for BB$1,481 (US$750) per month.On the other hand, three-bedroom furnished apartments are available for aboutBB$2,963 (US$1,500) per month.For obvious reasons, rents for beachfront properties are higher than inland properties.The least expensive rental properties can be found on the east coast. The mostexpensive properties are generally on the west coast.
  4. 4. Rents for three-bedroom houses located on the west coast, start at BB$(5,925)US$3,000 per month, four-bedroom houses at BB$6,913 (US$3,500) per month, andfive-bedroom houses at BB$7,406 (US$3,750) per month.Pricey west coastThe west or “Platinum” coast, from the outskirts of Bridgetown (the country’s capital) inthe south to Harrisons in the parish of St. Lucy in the north, is home to famouscelebrities and super-wealthy foreigners.The sea is very calm, and good for swimming. The area has a lot of fine diningrestaurants.The west coast has experienced a massive construction boom in the past years.Residential properties in the area are among the most expensive in Barbados, withprices typically ranging from BB$3.95 million (US$2 million) to BB$19.75 million (US$10million).In 1961, the Sandy Lane Hotel opened on the west coast, and had a tremendous impact.Nestled among mahogany trees directly off the beach, this magnificent hotel and itsassociated golf course gained a reputation as one of the finest resorts in the Caribbean.It has welcomed royalty, celebrities, and the business elite, and indeed Tiger Woods,who got married there in 2004.The Royal Westmoreland, established in mid-1990s, is another premier golf resort thatoffers luxury homes and holiday villas. One-bedroom apartments currently sell forBB$1.02 million (US$515,000); two-bedroom penthouse apartments for BB$2.27 million(US$1.15 million); and three-bedroom penthouses for BB$3.28 million (US$1.66 million).In the Parish of Saint James, the west coast’s exclusive high-end area, beachfront villas,with five bedrooms or more, sell for over BB$7.9 million (US$4 million), according torecent Global Property Guide research. Three and four-bedroom villas sell for at leastBB$1.98 million (US$1 million).In the Mullins, St. Peter, inland townhouses and condominiums are priced from aroundBB$1.48 million (US$750,000).
  5. 5. In Port St. Charles, a luxury residential marina development located just north of thehistorical Speightstown, resale prices of beachfront villas were around BB$7.9 million(US$4 million) and prices for one-bedroom apartments start from about BB$1.98 million(US$1 million).South coast’s mid-marketThe south coast, which begins at Carlisle Bay in Bridgetown and heads towards EastPoint on the Atlantic east coast, is less busy and has a more local feel.As the west coast became increasingly crowded, the south coast has seen tremendousgrowth, with numerous developments under construction.Property prices range from BB$691,250 (US$350,000) to BB$3.95 million (US$2 million).In The Palm Beach Condominiums, prices for condo units 2,200 square feet and largerstart at BB$1.88 million (US$950,000).In the Sapphire Beach Condominiums and White Sands Villas, two new developments inthe south coast, one-bedroom units sell for BB$1.38 million (US$700,000).Unspoiled east coastThe east coast, on the dazzling Atlantic side of Barbados, is better known for its ruggedbeauty. Because of huge Atlantic waves crashing along the shorelines, swimming is notadvisable. However, beaches in the east coast are popular for walking, surfing andbeachcombing. Recently, foreign interest has been growing."Traditionally, the east coast has always been a local buyers market. Its where peoplewould move to in summer after the crop harvest was over, with their pigs, chickens andmaids, to escape the heat in the west," says Sam Mahon of Bajan Services. "But its anemerging trend now among people who live on the west coast to have a day house inthe east, somewhere to go for Sunday lunch, and this side of the island is also slowlybecoming of interest to the tourist market."However, because much of the eastern coastline is protected land, it is difficult to obtainbuilding or planning permission from the government.“A large part of the east coast is national park,” says Sam Mahon. “Property was cheaphere until four or five years ago when prices started to leap. With little new stock beingbuilt, people who bought here in the past five years have done well, yet propertyremains very affordable compared with west coast prices.”
  6. 6. In The Merricks Beach Resort, located in the parish of St. Phillip, one bedroomapartments are priced around BB$850,000 (US$430,380).Prices for Palmetto Bay ocean suites range from BB$692,000 (US$350,380) toBB$776,420 (US$393,124).This article has been reposted from Global Property Guide. You can view the article onGlobal Property Guides international residential real estate website.