The questions I get asked most on a daily basis are about property values. Questions like:
- Is property holding its value in Barbados?
- What is the best price I can get for my property?
- What do you think I should pay for the property?
As a Chartered Accountant and a Chartered Valuer I have spent my professional career in asset valuation and assessing value is more difficult than ever. A valuer will tell you that “Value” is the price two parties will agree for a property if they are willing, knowledgeable, prudent and acting without compulsion. This is very much a transaction based definition. An economist will tell you that “Value” is the perceived benefits from ownership less the cost of acquisition. A more theoretical approach.
As we get older, oops, sorry, “more mature”, we tend to think about value more in terms of our personal enjoyment of an asset, maybe because we have less time to enjoy it. During the “noughties” most purchase decisions for visitors to the island were driven by personal enjoyment. Now there is more circumspection, more deliberation and more risk aversion. As a result, perhaps we have a more realistic market where buyers and sellers tussle over price to their very breaking points, before a deal is done. In this regard Barbados is no different to most other places in the world. So the economics and motivations may have changed but what remains wonderfully and irrefutably the same, may be even better, is the “value proposition“. Barbados is a spectacular place to own a home. Wonderful people, year round warm weather, great swimming, shopping, sports, restaurants, nightlife, easy air access. No civil wars, low crime levels, no overregulation, equals no hassle. We sit equidistantly between the culture of stress and the fear of being too remote. In Barbados you can choose how busy or inactive you wish to be, and most regular visitors choose both in equal measure.
Many successful business people have chosen to live and work here and find it easy to do so. In part the reason they have made that choice is that they know they can develop or buy a home built with the highest standards of craftsmanship, they can automate the home for enjoyment and for business and they understand that they can find the highest levels of service here to maintain the property and their lifestyle. I often reflect that the very top end of the market remains as solid as a rock. The 20 or 30 most expensive houses on the island are never on the market, and each year there are several more Ultra High Net Worth Individuals (those worth more than US $30m for the uninitiated) who choose to come and build multi-million dollar homes here. I believe it is because they understand that the value will endure, that economic cycles will come and go but the “Value” will remain. Fashion is temporary, style is permanent. So the opportunities in real estate can be best identified by seeking out the long-term value, not the short-term gain. Look for the “best in class” and get the best deal possible. You might find a cheaper property nearby but is it the real deal? Does the value have longevity? For that reason my “hot opportunities” are the quality in the best developments. Three good examples are the new marina community at Port Ferdinand, and the beauty and tranquility of the Apes Hill Club and Royal Westmoreland golf communities. Here are a few good tips for the value seeker:
- Seek out experienced developers
- Make sure there is a professional management structure
- Ensure the construction is of high quality
- Examine the maturity of the product – don’t be first or last through the door
- Assess whether the development will be a long-term success, so you can preserve value
- Seek out the best professional advice
If you can tick all these boxes, then think about whether the price seems right. The price/value equation is more about the value than the price. In my travels across the Caribbean I come into contact with developments which look good on paper but are not likely to be sustainable. They will enjoy a brief honeymoon of success but the fundamentals of the location or the structure will not ensure sustainable value.
The real estate sector has been very important to Barbados and though the last few years have been more difficult they have thrown up some excellent opportunities. So turning to the developer rather than the home buyer, it is important to note that Barbados has an excellent incentive structure in place for the willing investor. These include duty-free construction, exemption from most taxes including a 15 year tax holiday and excellent concessions for development utilizing renewable energy and green technologies. These concessions apply to individual home construction as well as multi home developments. The local construction sector has a cadre of excellent consultants and high quality builders, and development pricing is very competitive.
So whether you are looking to buy a home, develop a hotel, a residential or commercial complex, and you are considering other places, remember that “Value” means more than “Price” and Barbados has all the ingredients of Value.