World Residential Markets

World Residential Markets
 
Location by Location: The Caribbean

7 September 2015, by Yolande Barnes

The Caribbean is home to some of the world's most exclusive residential markets.

 

 

 

The Caribbean is a diverse region and home to 30 territories that include sovereign states, overseas departments and dependencies. The region’s real estate markets are just as varied, but the prime markets are dominated by second home buyers from overseas.

Some of the world’s most exclusive residential markets can be found in the Caribbean. Saint Barthélemy, or St Barts has long been a playground of the rich and famous, while the Barbados Platinum Coast has a global reputation among the ultra wealthy. For the ultimate trophy asset, the Caribbean also offers private islands. Richard Branson’s Necker Island is one of the most famous.

Tourism is all-important to the Caribbean economy and the region is a popular overwintering destination for the northern hemisphere. As a consequence, the prime residential markets of the Caribbean are closely tied to the success of North American and European economies. Residential values fell by up to 30% across the Caribbean during the North Atlantic debt crisis, but recent years have seen a return of buyer interest in the Caribbean’s second home markets.

This has been largely due to the turnaround in the US economy and a more positive outlook from American buyers as a result, coupled with the return of some UK and European buyers. Prices in the Caribbean seem now to have bottomed out and transactions are beginning to pick up.

While tourism is important, some island markets benefit from more diversified economies. In both the Cayman Islands and British Virgin Islands more than half of GDP is generated by the financial services sector and they are both ranked in the top 40 financial centres globally. This brings with it high paid jobs and residents relocating for business and employment thus supporting a prime residential market for long-term residents.

Some Caribbean islands are more reliant on mass tourism than others. Figure 28 shows that none of the islands we look at in more detail here fall into the mass tourism category, even though overseas buyers are important in their prime property markets. Tourism comprises 36.2% of the economy in Barbados, 26.2% in the Cayman Islands, and 24.5% in St Kitts and Nevis, according to the World Travel and Tourism Council.

FIGURE 28

Tourist arrivals and growth

 
Figure 28

Source: Caribbean Tourist Organisation

Barbados

Barbados is an independent state and member of the Commonwealth, home to 285,000 residents. Tourism is the mainstay of the Barbados economy, with the UK being the largest source market and accounting for a third of all arrivals (there are direct flights to ten UK cities and Concorde previously served the island). It also benefits from a position outside the principle Atlantic hurricane belt.

Both the tourist market and in turn the market for additional homes is mature and well established. More than half the holiday homes available in Barbados (more than 1,500) are located in specially developed residential communities. These offer a range of amenities including polo grounds, golf courses, water sports, marinas, spa centres, restaurants and boutique shopping.

Buyer preferences are generally for turnkey properties. Interest in properties that are more difficult to manage and maintain, especially the renovation or rebuild markets, is now substantially smaller than prior 2008.

Property prices fell by up to 20% during the global economic downturn, but the best properties held their value and the island remains one of the most expensive markets in the Caribbean. The prime Barbados market is well established and occupiers tend to hold their properties long term. Most foreign buyers are British, followed by Americans, but other European buyers are growing in presence, along with Canadians.

The island’s Platinum Coast has international cache and is the haunt of UHNWIs from around the globe. Exclusive, world famous resorts such as Sandy Lane are located here, as is the Green Monkey, reported to be one of the most expensive golf courses ever built. Royal Westmoreland is another popular high-end development on the island.

 

 
Barbados has one of the most expensive golf courses ever built

Cayman Islands

Cayman offers its residents a secure, low-crime environment, coupled with good infrastructure and international schools making it appealing for families. With a population of just 57,000, 96% live in Grand Cayman, the largest of the three islands, the remainder on Cayman Brac and Little Cayman, 89 miles to the northeast. It is one of the richest countries in the Caribbean.

Cayman is a British Overseas Territory but enjoys strong links to the US, the major tourist source market (accounting for more than three quarters of tourist arrivals) and one of the largest foreign resident groups. The government plans to leverage this link by establishing ‘Health City’, a medical tourism facility aimed at the North American market. The government has also established ‘Cayman Enterprise City’, a special economic zone planned to attract new technology, finance and education investment. This is hoped to diversify the islands’ economy, which is dominated by the financial services sector, which currently accounts for 55% of the island’s GDP. Cayman is ranked 39 in the Global Financial Centres index.

Tourism is the island’s other major economic contributor, which grew by 10.8% in 2014, among the fastest rate in the region. The industry is supported by flight links to 12 North American cities, and London, as well as regional destinations. It is also one of the most popular stopovers for cruise passengers in the region.

The Cayman Island residential markets are a mixture of condominiums and single family homes. Seven Mile Beach is characterised by condominiums popular with second home owners seeking lock-up-and-leave property.

Cayman’s strong financial services sector means there is a buoyant relocation market. Those moving to the island may rent initially, but for those staying longer term single family homes are favoured, particularly in the north of the island. While the island’s real estate markets suffered during the global economic downturn, reaching their lowest point in 2010, they saw some improvement in 2013 and 2014.

Development plot sales are enjoying a resurgence, as are condominium developments on Seven Mile Beach. Watercolours, a 60 unit development with direct beach frontage and hotel style-amenity, is representative of the continued shift up-market in island real estate.

St Kitts & Nevis

St Kitts and Nevis is a twin island federation with a combined population of some 55,000 inhabitants. The islands’ economy traditionally depended on the growing and processing of sugar cane. This has been replaced by tourism and financial and business services in recent years. A large new Marriott resort and casino opened in St Kitts 2003, the first facility of its scale on the islands. The main airport, Robert L Bradshaw International, was upgraded to accommodate wide-bodied aircraft in 2006 and now attracts scheduled flights to London.

The global financial crisis came late to the islands and the residential markets remained largely unaffected until 2010. After this, transactions slowed and price falls of 20% were reported in the prime sector. The two islands have different market characteristics, St Kitts the busier of the two islands with easy airport access, Nevis being quieter and more expensive. Villa schemes attached to hotels are popular among additional home buyers, as are secluded standalone properties.

The islands’ residential markets have for many years been supported by the St Kitts & Nevis citizenship by investment programme. Initiated in 1984, the scheme was designed to accelerate the transformation of the country from a sugar-based economy to a service-based one and stimulate economic growth more broadly.

For the real-estate route, foreigners must purchase a property of at least $400,000 in an approved real estate development (along with various other government fees). In return recipients are granted visa-free travel to 130 countries including the UK, Schengen area countries, Hong Kong and Singapore.

Overseas buyers have traditionally hailed from the UK, US, Canada and Europe, but the visa investment programme has seen the Chinese, Russians and those from the Middle East rise in prominence. While many will invest the minimum $400,000, the super-prime market is growing, catered for with the recent addition of a private jet terminal at the main airport.

placeholder

Key Contacts

Yolande Barnes

Yolande Barnes

Director
World Research

Savills Margaret Street

+44 (0) 20 7409 8899

 

Paul Tostevin

Paul Tostevin

Associate Director
World Research

Savills Margaret Street

+44 (0) 20 7016 3883

 

Subscribe to Savills research

 

Would you like to be notified via email about new property research?