The Caribbean real estate market is once again catching the interest of luxury home buyers, but some islands in the region are still struggling, says James Andrews, senior managing director for Integra Realty Resources.
While many resort-residential projects in the region are still reporting slow sales, new development trends are emerging, Mr. Andrews told WPC News.
"What's being developed is more upscale properties," he said.
Even all-inclusive projects are increasingly targeting luxury customers rather than the middle market.
"Developers have been waiting for an opportunity to get back into the market"
"Before the Sandals-type operations were geared towards a relatively affordable segment, now Sandals has acquired a property in Grenada that will be a luxury all-inclusive property," he said
Overall, asking prices for second homes in the region have remained the same through the economic crisis, averaging $1 million for lots and $3 to $5 million for built homes, Mr. Andrews says. The mid to lower priced properties which don't offer amenities like a golf course or marina have suffered the most, he said.
Different islands in the Caribbean have been affected in different ways by the global economic crisis. Barbados relies heavily on the European market and has been impacted by Europe's struggle to recover, while western Caribbean buyers tend to be 90 to 95 percent from the U.S., which recovered quicker.
Islands such as St. Kitts and Nevis also benefit from their residency programs for international home buyers, he said.
Although traditional lenders in the region continue to be wary, developers are starting to return.
"Developers have been waiting for an opportunity to get back into the market and reinvigorate the trends that were robust prior to the economic downturn," Mr. Andrews said.
One of the largest projects in the Caribbean, Baha Mar in the Bahamas is set to open in December 2014 with 2,200 rooms in four hotels. The project is financed by the Export-Import Bank of China and is being built by China State Construction America.
Despite the activity, a recent study by IRR found sales "flat" on many islands. But many projects are reporting closed deals, IRR reports:
The Viceroy Anguilla has reported approximately 6 to 8 sales per year based on the last 18 months with an average sales prices around $1,000 per square foot.
The Bakers Bay, Abaco, Bahamas, a small island development, has sold a total of 173 out of 375 lots since 2008, or about 25 lots per year. Prices are between $1.0 and $4.0 million, or about $27-$85 per square foot.
The ultra-luxury residential development Oil Nut Bay, Virgin Gorda, BVI has an average of nine sales a year since 2010. Prices for the resort lots have ranged from $2 million to $13 million, for lots ranging from less than one acre up to 17 acres.
Construction for the Baha Mar development in the Bahamas, is past the 33 percent mark. Sales reached over $100 million in 2012, with deposits on more than 50 of 307 homes priced from $1.2 million to $12 million.
The Reef Atlantis reported 12 closed sales in 2013. Absorption over seven years is about 395, or 56 per year. There are about 100 units remaining with average prices of $1,100 per square foot.
Grand Cayman's Seven Mile Beach condominium market is "virtually flat," with 25 sales totaling $25.6 million in the first six months compared with 25 sales of $24.9 million in the same period for 2011, IRR says. Prices average $560 per square foot.
The condo market on Grace Bay Beach in Providenciales, Turks and Caicos reported 20 sales in 2012, compared to 12 in 2011. There were 18 sales in the first 5.5 months of 2013. Prices range from about $400 to $700 per square foot.
Although the sales numbers are not dramatic, the consultancy sees positive signs for the market. Until lenders become completely comfortable in the region again, "mixed-use residential resort projects will have to be funded by unconventional sources like private equities," Mr. Andrews said.