Strategically Barbados is a wise choice and the time to buy is now. This is declaration of one the island’s property consultants who is also Director of Sales of Altman Real Estate, about the state of play of foreign investment in the real estate sector in Barbados.
Terry Hanton makes this assessment in a self penned article entitled: The Strategic Value of Foreign Ownership of Real Estate in Barbados. While giving his analysis of the market, Hanton points out “…there is a strong sense that the real estate market worldwide will recover in 2010. The estimates of recovery are founded in trends in the demographics of populations and will be linked to more conservative lending practices and to an overall economic recovery which seems to have already started.”
Additionally he contends that as an asset class, an investment in real estate now, whilst prices are low, would seem to be strategically wise. He also explains that deposit and savings rates (“safe havens”) are still very low and will probably be for the foreseeable future. So, an investor with a mid to long term capital growth strategy will find it difficult to beat inflation in near cash investments.
In looking to answer the big question – why would it be wise to invest in Real Estate in Barbados? The property consultant argues that, maybe for the first time in the last 30 years, prices in Barbados have fallen.
He explains that the fall in prices is pretty much across the board including: lot sales, single family homes, condominiums and commercial properties, etc. So there are bargains to be had and many of this year’s buyers have been savvy and opportunistic.
It is explained that the main characteristic of the buyer for 2009 is that they have already been shopping around for a few years and they know exactly what they want and how much they think they should pay for it. This is in stark contrast to the spontaneous buyers of the boom years when holidays were a time to spend money. Barbados has a history of capital appreciation averaging over 10% per year, over the past 15 years. When prices stabilise, value growth should re-emerge given the scarcity of good sites and beachfront land in particular.
According to Hanton, the supply of real estate targeted at the foreign buyer has reduced. Many planned projects have been put on ice and a few have been shut down by the banks or by the developers. There were concerns two to three years ago that there may be as many as 3,000 foreign-targeted properties chasing an annual demand of about 300 sales. Simple arithmetic tells us that 10% absorption per annum makes for unsuccessful developers. Now the supply is a little above 1,500 units, which is far more manageable and indicates that buying the right property at the right price will result in good capital appreciation.
Finally, and most importantly, a careful assessment of the qualities Barbados has to offer leads to the simple conclusion that an investment here is far safer than in many of the island competitors. Barbados’ success in the luxury real estate market inspired many ‘wannabe’s’ to enter the market but most have failed. There are many reasons for their failure: for example, the volume of airlift and the demographic of their visitors; but most importantly it is the quality of the lifestyle. When a foreign buyer makes a choice of which island to buy in, he or she does not want to be a prisoner in the community they choose.
They want to interact with the local population and they want to feel safe and be part of a community of kindred spirits. They also want to enjoy the shopping, the restaurants, go to a show or hone their skills in their chosen sport at the best facilities available. Barbados has these qualities in spades; most of the other island destinations simply do not.
