Confidence seems to be returning to the real estate market but there’s still a good distance to go. says Haydn Hutton, one of the top executives at Terra Caribbean, in the latest edition of the company’s publication The Red Book.
Mr. Hutton, whose report always forms the benchmark article of the publication, says this year capital may start flowing back into the Barbados market, but we can “look for continued softening in the over-supplied segments.”
He adds that “It would appear that after ten years of sluggish market conditions, and with a noted increase in trading volume and sentiment over 2018, we can say that the trajectory of the market appears to be changing.”
He says that the return to confidence has been due to the change of the government, noting that, using an analogy to Wall Street, “the proverbial bell rang in the form of 30 seats, an IMF program, successful debt re-profiling, and an unprecedented corporate tax reform.”
“That return of confidence to the market is reflected in the fact that sales volume was up in each quarter year-on-year following the election bell.”
Overall transaction volume went up by close to 10% in 2018 over the previous year.
Still, Hayden Hutton says we are an “under-informed market generally,” with too many holes in data availability. So this year Terra Caribbean made a special effort to nail down the contribution to sales volume in the foreign luxury market -basically, anything on the west coast and priced over US$1 million. Terra puts that figure at just below US$150 million in 2018 alone.
However, in 2018 there were no sales of “Trophy Villas”, which Terra defines as any property priced at over US$15 million. The closest contender was a sale of a beachfront property with cottage attached for US$8.5 million.
The top five most expensive ones Trophy Villas in Barbados are listed at a total of US$156 million, putting the average price at just over US$30 million each.
Instead of trophy villa sales, the high end of the market accounted for about US$150 million in revenue on 90 sales.
The take-away from this, says Mr. Hutton, is that the market “is simply not as deep as we may think at that level.” Instead, he is predicting that Barbados’ developers will go back to building hotels, as they did “prior to the condo boom of the mid-2000s.”
Caption: Villa Tamarindo, located on the St, James coast is priced at US$28 million.