Propelling to Progression – A BVI Property Market Overview
- July 1st, 2013
- in PROPERTY
Photography provided by Smiths Gore
It has been encouraging to see the return of US investors to the residential property market in the BVI during the winter months. With the American market emerging from recession—albeit based on modest growth that continues to be constrained by European woes and a slow-down in the Chinese economy—US investors are starting to look once again at the ‘second home market.’
In contrast, European investors, who had been more active in recent years at the higher end of the market, have been quieter this season.
For the past four years, the section of the BVI residential market which has suffered most has been the price band between $1.0M and $3.0M with the number of sales falling by over 80%, from 11 sales in 2008 to 2 sales in 2012. Interest from US investors this season has generally focused on this price range, which will have brought some respite to vendors who have otherwise not seen much activity.
In contrast, the sale of real estate under $1.0M has been buoyed by the activity of local investors, whose share of this sector of the market increased when overseas investors all but disappeared after 2008.
Virgin Gorda’s position as a luxury destination has been underlined, with key developments at Oil Nut Bay and Moskito Island offering investors a level of real estate investment not previously found in the BVI property.
While these exclusive markets will generate their own publicity and create new markets for the North Sound area, these developments will also benefit Virgin Gorda and the BVI as a whole.
With these projects still in their early phases of development, the continued growth of the real estate market on Virgin Gorda looks promising. A survey by CheapHotels.org, recently found Virgin Gorda to be the most expensive destination in the Caribbean for lodging based on hotels and resorts with a minimum of three-star accommodation, ahead of both Anguilla and St Barts, who were second and third respectively.
On Tortola, the local market has remained somewhat active below the $1.0M price band, but there has been little activity in higher price ranges.
As a result, vendors have generally been willing to consider more realistic pricing recommendations or price reductions when properties have been on the market for some time.
Nevertheless, with a significant amount of inventory available on the market, vendors will need to maintain a realistic approach to pricing until the demand/supply equation stabilises. Since the recession, we have experienced the cyclical nature of recovery where positive economic indicators in the winter months are countered by fears of recession during the summer.
As a result of the failure of several significant projects in the region, investors are more aware than ever of the risks associated with investments and the slow pace of recovery in the major economies has impacted the Caribbean.
This year, with the US economy maintaining its recovery, we are hopeful that the real estate market will remain stable and the next high season will continue to experience more activity in the market.
It remains a buyer’s market for the moment, but the increase in activity in real estate indicates that international investors are once again looking at the ‘second home market.’
While the sales pace will remain modest and vendors should be conservative with pricing, we are optimistic that the real estate market will show more signs of a sustained recovery through the balance of the year.