Barbados – One of the best regions for sun and profit
With the Bajan economy now finally on the slow road back to recovery, is now the best time to take the leap into this Caribbean market? With the U.K. visitors now returning to Barbados, many locals are looking at this turn as a sign that the local economy is back on track. A favourite island […]
By Canadian Real Estate Wealth
July 13, 2014
With the Bajan economy now finally on the slow road back to recovery, is now the best time to take the leap into this Caribbean market?
With the U.K. visitors now returning to Barbados, many locals are looking at this turn as a sign that the local economy is back on track. A favourite island for short and long-term stays, the Central Bank recently announced that the number of visitors from the U.K. increased by 8 per cent in the first quarter of the year, with arrivals from other European countries also rising by 14 per cent.
The economy is not expected to grow significantly this year, but a gradual, sustainable recovery, driven by the foreign exchange sectors, is expected in 2015 and 2016.
Canadians are taking note of this resurgence, many of whom are getting into the markets before prices rise again. The strong Canadian currency against the Bajan dollar also strengthens buying power.
Over the next three years, over CD $2.45 billion is expected to be invested in tourism, infrastructure and financial inflows – all of which may prove to be the catalyst for further growth. Barbados’ revival has been slow, with the number of transactions and prices now stabilizing in the wake of the global economic crisis. The resilience of Barbados’ real estate market compared to other Caribbean countries during the global crisis has also been cited by many.
While there were 10 to 15 per cent price drops in some parts of the island since 2008, beachfront homes fell by just 5 per cent while others with prime locations only recorded minimal drops. Beachfront houses can cost approximately US$600 to US$2,500 per sq. ft., while inland homes are priced at US$250 to US$1,000 per sq. ft.
The country’s economic and political stability is one of the key factors that attracts international buyers, says Savills’ Caribbean director James Burdess. Low crime, communication links and transport are also the main pull factors, he adds.
Barbados has long attracted the high-end visitor, from celebrities and soap stars to high net-worth individuals, and hence why the island boasts some of the most expensive and lavish luxury properties in the Caribbean.
The price-tag may be high but so are the rental rates. For example, at the established Royal Westmoreland on the west side of the island, a one-bedroom apartment costs, on average, US 400k but can command a nightly rent of between 392 to 858 per night (from low to high season).The gated community complex is already home to a number of Canadian buyers.
Incentives and Deals
With Canada’s three key banks – CIBC, Scotiabank, RBC – all located on the island, the buying process there is simple, and in a bid to attract the Canadian investor, a number of incentives are being launched to help facilitate such high-end purchases.
For example, Royal Westmoreland, will oversee the first two years of rental management and associated running costs, cover the land tax, waive the club initiation fee and include the annual social club membership. Following that period, the individual owners can employ one of the many property management companies within the region to oversee their investment.
The 700 acre plus resort is also launching a special shared ownership program this October. “We did very well with repeat renters but it was hard to make that purchasing step into full home ownership straight away, especially considering the commitment, both for time and finances a full ownership home takes in Royal Westmoreland,” explains Kim Goddard, director of sales at the complex. “Shared ownership was created as a new product to work as a bridge where the clients can purchase a share of a new freestanding villa with all of the amenities and membership perks for only the time justified at this point in their lives.”
Buyers can then trade in the shared ownership property for another at the current selling price to their current buying price. Therefore, the buyer captures the capital growth in that intermediary period of ownership.
Security and Safety
As with all shared ownership programs, investors naturally worry about security, deeds and the type of clientele such schemes attract. “This is being sold more in line with the shared ownership offered by Four Season and Ritz Carlton, as another division of property sales, sold without the undesirable and expensive sales tactics of traditional shared ownership,” says Goddard. “We tend to attract a sophisticated client so we give the clients everything upfront allowing them to make an educated decision. We structured it through a third-party trustee, placed in the Isle of Man, so it’s governed under U.K. commonwealth property law, similar to Canada. The trustee ensures this free hold share cannot have debt on it so it’s totally independent and secure.”
To create the sense of exclusivity, they are only constructing five shared ownership villas on 22,000 sq. ft. of land, each measuring 3,700 sq. ft. with a large private pool. The choice of investment properties on the island is naturally significant, with many choosing between beachfront condos or gated communities. The buying decision, says Goddard, comes down to personal preference for privacy and security. Limited planning for zoning means that many new hotels and condos are in mixed retail and local residential areas and hence the penchant amongst many to choose matured, gated communities to control their surroundings and visual beauty.
Horror stories about unfinished developments and ownership in foreign countries always play on an investor’s mind. This issue is not lost on residential resort owners in Barbados. Royal Westmoreland, for example, has a build requirement on bespoke home sites sold for development ensuring the further development of the resort community and avoiding land banking. “The resort is over 20 years old, so it’s well established and we have had an active resale market that has lent comfort to investors that they can exit when needed,” says Goddard. “We have had more sales and higher dollar sales this year when compared with the last five years showing that the market for luxury, resort communities in Barbados is really performing.”
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