It appears that at least one Caribbean island could be experiencing a dampened appetite with its property on the international market.
According to the International Property Journal, “International residential purchases on the once-popular islands of Trinidad and Tobago are grinding to a halt in the wake of new regulations…”
Trinidad’s appeal had been growing on the international property market with unique properties and condominium developments available for purchase.
It is noted by the International Property Journal that in 2007, the government enacted a new law requiring foreign buyers on Tobago to acquire a license. Since then, not a single license has been issued.
This development is being viewed as a serious impediment to a once flourishing property market. In fact it is an interesting situation given the current global financial crisis, and an international market where property destinations are trying to be as competitive as possible, it is an interesting challenge for the twin island republic.
A Trinidadian based lawyer has opined, “The regulators have been very slow to finalize a transparent procedure for obtaining the licenses.”
In Trinidad non-resident non-nationals can still buy up to one acre of land without a license, as long as they use an internationally traded currency. But industry observers fear that a controversial new property tax law proposal may further diminish interest from overseas investors.
According to the Global Property Guide in Trinidad and Tobago the local and foreign demand “plummeted” in 2009. “After enormous price increases from 1991 to 2006, Trinidad and Tobago’s property market suddenly cooled, and has been falling for the past two years,”
Property prices on the islands rose 157 percent from 1991 to 2006, thanks in part to the growth of the petroleum and construction. But the islands have been losing favor.
A UK based international property portal states, “Trinidad and Tobago was very popular with buyers from the UK, Canada and the U.S it seems the combination of the global slow down; reports in violent crime and new laws have dampened the appetite from international buyers.”
The largest property development and tourism project along Barbados west coast should be back on track early in 2010.
The widely debated property, Four Seasons Resort and Residences which broke ground in 2007, came to a screeching halt last June but now plans are afoot for its restart.
But now the plan to get the multi-million dollar property underway will largely involve the Government of Barbados, well-known government advisor and investment banker Avinash Persaud and partial financing from one of the island’s finance houses.
According to local media reports the new deal will involve a refinancing plan, which was reached with lenders, creditors, private residence owners, shareholders and developers. The agreement, which was confirmed by Prime Minister David Thompson, who is also the Minister of Finance, involves Government supporting the refinancing efforts to complete the project.
Interestingly, the new arrangement in part will allow Government to gain an equity share in the project, while guaranteeing the repayment of the loan, with strict conditions being in place.
The plan includes a US$60 million facility from Ansa McAL Merchant Bank and its Barbadian affiliate, Consolidated Finance, that allows for a repayment of the Bank of Scotland loan, the acquisition of the Esso land to complete the site, a settlement with creditors, and the recommencement of construction.
The Black Rock site of the Resort has seen little to no activity over the last few months after word spread that it was in financial difficulty in mid 2009.
The creation of a new management board is among the top priorities of the deal. That new board will be under the guidance of the Executive Chairmanship of Prof. Persaud, with the support of the new Lenders, Private Residence owners, existing shareholders and the Government had been working on the project for a few months, prior to the announcement. Professor Persaud has over 20 years of experience in investment banking before becoming an advisor to governments and institutions around the world. He was recently ranked No. 2 in the world of public intellectuals on the financial crisis by Prospect Magazine.
It is believed that the resumption of the project will underpin Barbados’ brand as one of the luxury destinations in the world, boost investor confidence, provide substantial local employment, facilitate skill transfers and generate foreign exchange revenues.”
The point was made that the arrangement would ensure that the project was properly managed and the benefits of the deal will bring advantages to the tourism product of the country. He also stated that the deal represented the best possible scenario for Barbados and the project. “The Government of Barbados must use its resources intelligently and sparingly.
Under Professor Persaud’s plan, the Government of Barbados will guarantee repayment of the loan as long as the project is run under strict conditions and will in return be awarded an equity stake in the project, a ‘golden share’ to guarantee our interests versus other shareholders and a charge on the assets of the most significant development to occur in Barbados for some time. When these dark days of global economic challenge are behind us, we will come to see this moment as one of our finest hours.”
The original completion date for the project was 2011. The project is set to feature some 275 rooms comprising hotels and private residences.
Amid good expectations for the property market in Barbados and the Caribbean by some estimates, other global markets appear to be witnessing some measure of positive signs as well.
According to a UK-based property portal, the UK residential property prices have increased to their highest level since November 2007 and are now almost 6% more than a year ago, according to the latest real estate index.
Prices were up 0.4% in December, the eighth monthly increase in a row, and are now just 12.2% down from their peak in October 2007, says the index from the Nationwide building Society.
The UK Nationwide’s chief economist Martin Gahbauer said a year ago such a rise was unthinkable and he put it down to pent up demand in the market place and cash rich buyers driving the market forward.
The data shows that, unless there is another sharp move lower, UK house prices have recovered more quickly and fallen less far than many analysts predicted.
But the rate of price increases is slowing.
Meanwhile in the US, as explained by another publishing house, the average home prices are now equal to prices in Fall 2003. The headline estimate of a 30% fall still to come is based upon a trendline derived from data between 1987 and 2000. The presumption is that the values after 2000 are bubble values and that they should be excluded.
Another UK based real estate firm has explained that property is set to return to investors’ portfolios in 2010 as the asset class becomes popular with investors once more.
In Barbados according to real estate experts, 2010 should be a balanced year for both buyers and sellers. One of the most noted developers in Barbados has argued that it will not simply be a good time for buyers but that sellers should see some benefits as well and it is likely to be a more balanced market for the industry.
