Mustique and St Barts lead property market recovery in the Caribbean
Buyers from the United States have been returning to the Caribbean property market with certain locations such as Mustique and St Barts recording positive annual price growth.
Mustique, the island made famous by the Queen’s sister Princess Margaret, has just 100 villas and it saw strong sales activity in 2017 with a property sold at circa $35 million recording the highest price for several years.
The latest analysis of real estate in the region from international property firm Knight Frank also points out that some 70% of the Caribbean was not badly hit by the 2017 hurricane season and there is a lot of demand emerging.
One example of this is a rise in demand from Chinese property investors. The report explains that this is due to stronger opportunities for investment and trade co-operation being formed between Chinese companies and the Bahamas.
According to Edward de Mallet Morgan, head of the Caribbean desk at Knight Frank, there is also the potential for European buyers, including British investors, seeking a second home in a warm climate to look more closely at the Caribbean as a safe haven destination after the UK leaves the European Union in March 2019.
He also pointed out that new direct flight routes from Europe are making the Caribbean more accessible but future currency shifts are likely to influence the scale of interest from real estate investors.
‘The Caribbean has long been sought after for its laidback charm and sociable lifestyle set against a backdrop of some of the world’s most exquisite beaches and landscapes. They are the reasons people keep going back, often developing an affinity for one island above any others,’ said de Mallet Morgan.
The report highlights the situation in Barbados where the property market has been going through change in recent years, with prices slipping year on year, almost back to 2008 levels.
However, that means it is the most affordable it has been in years and buyers seem happy to make sensible offers but also owners need to be sensible with negotiations. Some British owners are benefitting from the exchange rate, recouping any loss they make from a lower sales price in the gains from the dollar to pound currency exchange.
Also, the report says that a couple of big deals recently, around US$10 million, suggests a certain appetite has returned to the market. ‘Buyers who have been contemplating the Caribbean for years, and who are perhaps unsure about investing in Europe, or who are deterred by the cooling market in the UK, are feeling that now is the time to reconsider the Caribbean, the report points out.
‘Mustique is looking particularly robust, having seen a record number of sales in the last two years, with some of its biggest houses changing hands. Like Barbados, it has also seen a huge rise in the number of rental enquiries. A noticeable trend is that American buyers are back in Mustique, with the recent purchase of a large villa marking the first sale to an American on Mustique in almost 10 years, with others under offer to American buyers,’ it explains.
On Barbados it is expected that the opening of the Nikki Beach club on the west coast near Speightstown is set to attract a new youthful beach club scene akin to St Tropez or Miami and this could be a big draw for buyers, particularly for some older buyers whose children may now feel this is a reason to revisit Barbados and spend family holidays together.
The report suggests that for buyers in St Barts, Mustique or Barbados, the priority is the lifestyle while in Bahamas it’s tax. A wider range of nationalities than seen on other islands choose the Bahamas specifically for its fiscal element.
But overall, the performance of the Caribbean’s prime residential property market varies significantly from island to island. ‘In recent years momentum has been firmly focused on the island of Mustique, the Bahamas, in particular New Providence and Paradise Island, and prior to Hurricane Irma, St Barts,’ said Kate Everett-Allen, head of international research at Knight Frank.
‘These islands have all recorded strong sales activity, the only constraining factor being their lack of inventory. Elsewhere, the BVI and Barbados have experienced weaker market sentiment. In the decade post the global financial crisis prime prices across the region declined on average by about 30% but some islands such as St Barts and Mustique have recorded positive annual price growth in the last few years,’ she added.