Brazilian and Italian buyers are leading a new mini boom in the Caribbean property market with the start of 2013 seeing an increase in interest in real estate in the region. The Caribbean has seen property prices fall around 10 to 20% since the economic downturn of 2007 and sales also fell off. However, six years on from the first signs of the financial crisis, the Caribbean looks to have weathered the storm, according to the latest analysis report from international real estate consultants Knight Frank.
The firm has also recorded a spike in inquiries about property that started at the end of 2012 and it says this may bode well for the market in 2013. Long favoured by buyers from the United States, Canada and Europe, the firm’s global property search website which generates around 700,000 hits per month, has detected an increase in interest from buyers in Latin America, particularly from Brazil, as well as from prospective buyers from Italy, Russia and central Europe.
Property searches by Brazilian and Italian nationals increased the most between 2011 and 2012. Grand Cayman, Barbados and St Barts saw the largest rise in online property searches in the final quarter of 2012 compared to a year earlier.
In 2011 online searches for Caribbean homes peaked in the summer months, in 2012 there was a noticeable spike in searches in the final quarter. US residents searched for the highest priced properties in 2012, on average homes priced at $4.9 million. In Barbados and the British Virgin Islands 63% and 54% of searches respectively related to homes priced below €5 million.
More closely influenced by the US economy, than that of the Eurozone, improving US indicators in late 2012 are expected to act as a bellwether for the Caribbean in 2013. ‘Prime prices have fallen by 10% to 20% since the financial crisis but the rate of decline is slowing and we expect some markets to experience price growth in 2013,’ the report says.
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It also points out that the Barbados government’s move to loosen residency permit rules to attract investment in 2012 may be a trend that is replicated elsewhere in the region and this will boost sales. ‘Not since 2007 has the year started so positively. That said, the prime Caribbean market continues to lag the recovery seen in US prime cities such as New York and Miami, but it has been the large hotel condo developments which have been most heavily affected with many mass market developments shelved,’ the report says.
‘The positive news is that those developers that are not reliant on bank finance have either continued or restarted high end or trophy projects in the more active markets such as St Barts, the Bahamas and Barbados,’ it explains.
Tax issues are also likely to have a bearing on the market in 2013. ‘In 2012, the scramble amongst high net worth individuals for safe havens was intensified by the introduction of austerity driven property taxes in Europe, including the UK, France, Spain and Portugal, which has led some to review their investments from a tax perspective and although the Caribbean has yet to benefit significantly, it may have an increasing bearing on buyers’ decisions in 2013,’ the report says.
‘The combined effect of globalisation and the climate of austerity have led many wealthy investors to seek out the world’s best properties in the world’s best locations, in particular those that offer the most tax efficient environment and lowest transactional costs. The Caribbean ticks all these boxes, and generally enjoys a backdrop of political stability, legal transparency, as well as increasing accessibility,’ it adds.