For over a decade, Barbados has been at the top of the list for investors looking for a vacation home in the Caribbean. But it isn’t the stable pricing and strong returns that have kept the industry going – it is the belief in a lifestyle, a community, and our way of life that keeps […]
By Tania Wardle
January 12, 2013
For over a decade, Barbados has been at the top of the list for investors looking for a vacation home in the Caribbean. But it isn’t the stable pricing and strong returns that have kept the industry going – it is the belief in a lifestyle, a community, and our way of life that keeps people coming back.
The investment proposition has been quoted time and again:
No alien landholding license requirements
Excellent infrastructure, airlift and communications technology
Internationally competitive taxes
Property taxes 0.6% of value for unimproved lands and capped at US$30,000 with further incentives for rebates for villas
No capital gains tax
2.5% property transfer tax (PTT)
Stable, democratic government
Attractive development incentives offered through the Tourism Development Act and the Special Areas Development Act including duty free concessions for building materials, tax holidays and exemption from payment of PTT
A well-developed tourism industry supporting further development of vacation accommodation
The real clutch is that Barbados offers an enviable lifestyle evidenced by our people our population has one of the highest percentages of centenarians in the world. Just 166 square miles, we’re a mere spec on the world map, yet for generations Barbados has been the destination of choice for the elite: A-list celebrities, world leaders, and multi-millionaires.
We build impressive buildings, but it’s our lifestyle, our people and community that add the premium on value and separate us from the rest of the Caribbean’s homogenous sun and sea offering.
Barbados is an island playground fit for a king with 5 championship golf courses, soon to be 2 marinas, world class water-sports, one of the best reef surfing breaks in the world, a capital city with a UNESCO World Heritage Designation, 4 polo fields, and a top class shopping facility, including luxury brands like Louis Vuitton and Ralph Lauren. The common denominator of most items on this list is they were all initiated as part of real estate developments targeted at second home buyers. Communities with lifestyle amenities started the trend and continue it today.
Sandy Lane started to build our reputation for luxury in the 1960s with its golf course, beach facility and hotel. It continues to hold its value in the minds of the consumer as one of the most recently successful developments despite the economic downturn. Three decades later, Port St. Charles and Royal Westmoreland followed with a private marina and another championship golf course. These developments coincided with an increase in foreign inflows from real estate from 1% of GDP to 8% of GDP in 2007, fuelling a boom in the construction industry that trickled down to the rest of the economy and contributing over US$240 million in foreign inflows from purchases alone.
There is no denying that the subprime mortgage crisis in 2008 impacted housing markets across the world as investor confidence shrank. Prior to 2008, investors achieved annual increases in value of 5 to 10%, as the market experienced rapid expansion in prices in the mid-2000s. In recent years, average prices have fallen, resulting in great opportunities for investors.
As an appraiser, it is a simple exercise to measure the value of the bricks and mortar, but in an industry where quality is the norm, the challenge is in putting a figure to the value of the lifestyle offering of the developments. The evidence is in the transaction prices and sales. Despite the slowdown, it is notable that lifestyle communities have weathered the storm best with Royal Westmoreland, Sandy Lane, Ocean 2, Port St. Charles and St. Peter’s Bay outperforming smaller second home developments with inferior lifestyle offerings.
Our seasoned developers continue to invest in the development of the industry, with a strong belief in the Barbados brand, adding even more lifestyle offerings as demonstrated by the new Port Ferdinand development, an 86 unit luxury marina community that will offer more amenities on site than any other development that has come before.
Now standing at over 2000 units, a little known fact is that the roughly 800, actively rented villas contribute 2300 bedrooms of the accommodation stock or 50% of the hotel room stock. Having doubled the share of visitors staying in villas between 2003 and 2011, the rental proposition is improving, which is good news for investors. Condominium developments like Ocean 2 and Beach View have added a total of 124 suites, ranging from 1 to 3 bedrooms each, to the accommodation stock and achieved occupancies in excess of 75% per annum, offering returns that more than cover owners’ expenses each year with a profit.
In Barbados it’s not just about the bricks and mortar. We build impressive buildings, but it’s our lifestyle, our people and community that add the premium on value and separate us from the rest of the Caribbean’s homogenous sun and sea offering.
Join our community and enjoy the good life, the investment benefits are just the cherry on top.