Caribbean property in demand from wealthy buyers
|Friday, 08 February 2013|
The Caribbean property market has weathered the global economic downturn and although there was a dip in sales volumes there has now been a spike in inquiries from prospective buyers.
Leading international property consultants Knight Frank says in its latest Caribbean insight report that the area is increasingly popular with rising number of wealthy buyers from Russia, the CIS and Latin America.
With the number of high net worth individuals in Brazil and Russia forecast to rise by 59% and 76% between 2011 and 2016, their presence is likely to be increasingly evident on Caribbean shores.
More closely influenced by the US economy, than that of the Eurozone, improving US indicators in late 2012 are expected to act as a bellwether for the Caribbean in 2013, the report points out.
‘Prime prices have fallen by 10% to 20% since the financial crisis but the rate of decline is slowing and we expect some markets to experience price growth in 2013,’ it says.
‘The Barbados Government's move to loosen residency permit rules to attract high net worth individual investment in 2012 may be a trend we see replicated elsewhere in the region,’ it adds.
The firm’s global property search website found that Grand Cayman, Barbados and St Barts saw the largest rise in online property searches in the final quarter of 2012 compared to a year earlier.
In 2011 online searches for Caribbean homes peaked in the summer months while in 2012 there was a noticeable spike in searches in the final quarter.
US residents searched for the highest priced properties in 2012, on average homes priced at $4.9 million. In Barbados and the British Virgin Islands 63% and 54% of searches respectively related to homes priced below €5 million.
The report reveals that in the first half of 2012, some 230 properties were sold across the Cayman Islands with a total value of $151 million, largely mirroring trends in 2011. Prime prices fell marginally by around 5% but prices in the most desirable locations such as Seven Mile Beach have held up.
Foreign buyers represent around 85% of luxury property purchases on the islands, with most activity confined to Grand Cayman, and most buying and seeking permanent residency. In 2012, Grand Cayman represented 18% of all Knight Frank Caribbean enquiries, up from 13% in 2011.
Wealthy buyers are attracted to the Cayman Islands as they are the world’s sixth largest banking centre and the number one hedge fund jurisdiction, demand from wealthy buyers with offices in New York and Miami is consistently strong as these cities are a three hour and a one hour flight away respectively.
The British Virgin Islands are also very popular and both the top end of the market and the $3million to $5 million bracket have been performing well. The sale of homes priced from £1 million to $3 million are patchier as buyers push for often unachievable discounts.
Knight Frank predicts that the development of North Sound which includes Oil Nut Bay, Yacht Club Costa Smeralda and surrounding islands, to spark more foreign interest in 2013.
Prime prices on St Barts, often described as the St Tropez of the Caribbean, remained largely static in 2012. High quality, contemporary villas are most in demand, both on the waterfront and inland, and the €2 million to €8 million price bracket is currently the strongest.
Gustavia, Saint Jean, Gouverneur and Flamands continue to be the main focus for international buyers. Together, these areas in the north and west, account for around half of the island’s property sales with interest from French, Belgian, South American, and increasingly US buyers.
In Barbados demand, particularly from British, Italian and Canadian buyers strengthened in 2012. Favoured areas include Sandy Lane, Royal Westmoreland and waterfront property along the West Coast in areas such as Holetown, Gibbs Beach and Mullins Bay.
In 2012, nearly 50% of all our Caribbean enquiries related to Barbados. The island continues to appeal to a younger demographic than some of its Caribbean neighbours, many drawn to the relaxed lifestyle, and first class surfing.
Although prices have been supported by the finite nature of supply, usually only 5% to 10% of the island’s properties are on the market at any one time, asking prices have come down although the evidence is that prices achieved have been static.
Properties priced between $2 million and $8 million are currently seeing the strongest demand. The island is favoured by French, Belgian, Swiss and British buyers, many are attracted by the island’s unrivalled privacy and security.
‘The combined effect of globalisation and the climate of austerity has led many wealthy investors to seek out the world’s best properties in the world’s best locations, in particular those that offer the most tax efficient environment and lowest transactional costs,’ says the report.
‘The Caribbean ticks all these boxes, and generally enjoys a backdrop of political stability, legal transparency, as well as increasing accessibility,’ it concludes.
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