By Daryl Kelly, Managing Director, Chestertons Barbados
Barbados has always been a popular destination for wealthy international buyers, thanks to its year-round warm weather, world-class beaches, restaurants, golf courses and its association with luxury. For buyers investing in the island, the top priority is lifestyle—but the country’s economic and political stability, low crime, communication links and transport are also some of the key factors that continue to attract international buyers.
During 2016 and 2017, Barbados continued to be the favorite vacation destination in the Caribbean and experienced record-breaking tourism arrivals, and this trend has continued throughout 2018. A decade after the 2008 global recession, Barbados is on an upswing with boosted economic confidence after the 2018 election. This has mobilized many developers to increase supply of accommodations to cater to the demand. Since 2016, tourist arrivals rose by 6.7 percent year-over-year to a historic high, according to the Barbados Statistical Service. In 2017, Barbados reported a record 5-percent increase compared to 2016, itself an all-time high for the island.
While the United Kingdom has remained the largest source market for Barbados, accounting for 33.5 percent of the market, the United States has contributed a strong 28.4 percent of arrivals. That was an 11.7-percent increase over 2016 and the highest for the US market since 1987.
As UK visitor numbers increase, many are looking to this as a sign that the local economy is back on track. Along with stable weather conditions, due to the island being located outside of the hurricane belt, many large investors are seeing Barbados as a safe haven over other neighboring islands, such as the British Virgin Islands, St. Maarten and St. Barts (Barthelemy).
The knock-on effect of this heightened demand is a wave of new restaurants, cafes and nightlife providing an improved level of service to international standards on an island that boasts some of the most expensive and luxurious properties in the Caribbean. While price tags may be high, so are the potential rental returns. Nevertheless, in recent years, prices have dropped between 20 to 30 percent, resulting in properties becoming increasingly more affordable. This shift in price has resulted in more sales and a fresh new generation of homeowners who are here to stay.
Hotel condos have become increasingly popular offerings; successful income-generating properties with fully managed, hassle-free ownership—effectively running the development with the efficiency of a hotel, allowing owners to maximise returns but still enjoy their properties as holiday homes while on the island. A prime example being Garden Grove, located opposite the well-known Lone Star Restaurant on the west coast, which Chestertons sold out within a week of its launch.
Big brands are also taking notice and snapping up large development sites, preparing for a better Barbados, which is just around the corner. Hyatt, one of many examples, has recently secured a beachfront site with plans to build a large-scale, luxury beachfront hotel. Success stories do not end there, with high-end brands such as Royal Westmoreland and Sandals further expanding their operations to meet demand.
These large transactions confirm that a certain confidence is returning to the market. Buyers who have been contemplating the Caribbean for years, and who are perhaps unsure about investing in Europe or who are deterred by the cooling market in the United Kingdom, are feeling that now is the time to reconsider the region.
Barbados is not only a lifestyle destination, as investors have benefited from their long-term property holdings and year-round rental income in addition to the island’s no capital gains tax and no inheritance tax laws. The island’s properties are proving to be extremely profitable businesses, with many covering their costs and delivering very attractive rental returns.
Properties such as The Dream, which was recently listed in October 2018, is a prime example of a successful beachfront rental villa, in high demand. The Dream’s rental rates range from US$4,000 to $15,000 per night. However, it is not just beachfront that is in high demand; luxury-gated resort communities such as Royal Westmoreland offer five-star amenities, including a newly renovated beach club exclusive to owners and their guests and a world-class Robert Trent Jones Jr. golf course with fairway and panoramic sea views throughout.
The Dream, The Garden, St. James, Barbados
Starting at $56,000, Royal Westmoreland offers freehold fractional ownership, allowing buyers to purchase just the time needed and still enjoy the lifestyle afforded by an exclusive club membership. Investors can enjoy the luxury of returning to a Royal Westmoreland villa each year, which offers the perfect stepping stone between rental and full residential. Bespoke villas such as Morpheus House, located on the exclusive ridge of Jasmine Heights, can be purchased for $4,750,000. The resort has seen an uplift in new builds as quoted by the director of sales, Kim Goddard. “We have had more sales and higher dollar sales this year when compared with the last five years, showing that the market for luxury, resort communities in Barbados is really performing.”
Morpheus House, Royal Westmoreland, St. James, Barbados
Outside of the gated communities, bespoke luxury villas such as Drake House can be purchased for $3,750,000. The contemporary Drake House sits on an acre plot and provides open-plan living, unrivaled panoramic sea views and is located on the glamorous Holders Polo Ridge, only two minutes from the coast and all of the popular west coast amenities.
Drake House, Holders Hill, Barbados
Further north, Speightstown has recently boomed with multiple beach clubs, cafes and restaurants, such as 1-Eleven, Hugo’s and the world-renowned Nikki Beach Club at Port Ferdinand Marina, where penthouses start at $2,795,000.
The legendary Sandy Lane name still offers the most prestigious address in the region. This estate is reserved for buyers seeking privacy, tranquility andspace with views across one of the most iconic golf courses and coastlines in the world. Development opportunities start at $2,395,000 with Glen Eagles, a signature 77,000-square-foot property offering both sea and fairway views. Finished luxury homes such as Oriana can be purchased for $8,000,000 and offers 14,500 square feet of living space, featuring a media room, large gym, sauna, large music studioand air-conditioned storage, two offices, lounge, kitchen, laundry, staff quarters and five en-suite bedrooms. The elegant grounds benefit from a large covered entertainment patio, Jacuzzi and swimming pool.
Glen Eagles, Sandy Lane, St. James, Barbados
Overall, the outlook for 2019 is promising, despite a number of external factors affecting UK, Canadian and US investors, such as the UK’s Brexit decision, US President Donald Trump’s tenure and currency fluctuations. But one thing is for certain: Barbados represents an excellent opportunity for the discerning buyer.
Oriana, Sandy Lane, St. James, Barbados
Confidence in the economy and recovery will endure for another few years, and Barbados, backed by the International Monetary Fund’s endorsement of the BERT program, has paved a path for full recovery—during which property prices will soar to their former glory, and obtaining a property in Barbados will once again hold a hefty price tag, with potential capital gains set to be substantial.