Virgin Gorda’s Bright Future
- February 20th, 2019
- in PROPERTY
After Hurricane Irma ripped through the British Virgin Islands in September 2017, Premier Dr. Orlando Smith estimated that about 70 percent of the territory’s buildings suffered some degree of storm damage.
That figure was partially derived from a “situation report” issued by the Department of Disaster Management, which provided additional estimates on the catastrophic level of damage Irma did specifically to the BVI’s housing stock: Nearly 600 homes destroyed, with some 3,600 others suffering various degrees of damage from the record-setting Category Five storm.
Such devastationa raised serious questions about the future of the territory’s housing market.
“[After Irma], we were all very concerned about what was going to happen with the BVI,” Edward Childs, a director at Smiths Gore’s BVI office, said last October.
It quickly became clear, however, that there would continue to be a serious need for real estate professionals in the territory: For several months, international clients needed assistance securing their homes and finding contractors, and both residents and businesses in the BVI needed to find new housing, according to Childs.
And after that initial scramble, 2018 also gave way to a flurry of activity on the residential market, especially for buyers interested in affordable, partially damaged “as is” properties.
“Many properties owned by such people are their second or their third or even fourth properties, or retirement homes, and many owners of these properties have very little interest, really, in wanting to coordinate a construction project in what for them might be a foreign country,” said Paul Mellor, a senior associate at Harneys who specialises in property matters, at a real estate event last May. “There are opportunities for good value out there.”
Before Irma, the lawyer explained, buyers often secured the best deals by investing in undeveloped property and constructing homes on it. After the storm, however, buyers had the opportunity purchase as-is properties in more expensive areas or with more extravagant homes at lower prices, he said.
The dramatic change to the market led to a shift in buyer demographics: There’s been a greater percentage of local buyers since the hurricane than there was prior to September 2017, according to Maritha Keil, the managing director and lead broker at BVI Sothebys International Realty.
“Contractors who have done well were interested in building or buying apartment buildings for workers, but most of the sales were from clients buying cash for properties that were either undamaged or really great deals where the owners decided to keep the insurance,” said Keil.
The flood of interest in as-is purchases of distressed properties subsided by late 2018, though BVI buyers continue to have an enlarged presence on the market, according to Lucienne Smith, a real estate broker at Smiths Gore.
“BVI buyers have proven to be astute investors and if they have not found something, they are happy to sit tight and see how the market and overall recovery/economy develops,” Smith said. “Many owners who have not sold are now considering lower offers than before as they are keen to be free of the constraints and worries of ownership which is ensuring ongoing activity.”
Though many of the territory’s distressed properties have already found buyers, there are still opportunities to acquire a great site or renovation project, she added.
However, buyers interested in purchasing the as-is bargain homes have typically needed really strong financial backing to convince banks to provide them with a mortgage, according to Keil.
Overall, international investor interest in properties on Tortola has begun to gain some momentum, though foreign investors tend to only be open to repairs – not major rebuilds, Ms Smith explained. Investors have shown interest in properties on Tortola worth up to $3 million, though typically they’ve been more focused on those hovering around the $1 million range, the broker added.
Virgin Gorda also saw an initial surge of young, energetic “bargain hunters” who closed on damaged homes on the sister island and are currently rebuilding and renovating them to more hurricane-resilient standards, according to Bernadette George, a residential broker for Smiths Gore based in their Virgin Gorda office.
“The interest of the bargain hunters (less than $1 million) – both local and foreign – has tapered off, and the interest of middle to higher-end buyer ($1 million to $3 million) is just beginning to trickle back in,” Ms. George said. “The recovery from hurricanes Irma and Maria is on-going and with elections looming and a strained political landscape, it is expected that these buyers will hold off on buying for a while longer.”
Villas in well-known vacation rental spots – primarily Leverick Bay – have been the prime sellers on Virgin Gorda, Ms. George explained. Additionally, condos at Olde Yard Village – due to a lower price point – have seen interest from local buyers looking to invest in first homes or rental properties, she added.
Ms. Keil noted that at Sothebys, they had seen a spike in inquiries regarding the Virgin Gorda market around Christmas, and they expected more potential buyers to visit this winter and spring than last fall.
Keil felt positively about the prospects of the territory’s housing market going forward.
“As things become more stable and restaurants and hotels begin to rebuild and open, buyers will be returning and the island’s housing economy will begin to become stronger. All to be expected after such a devastating storm as we experienced.”
Childs also felt optimistic about the market – though he called on government to help ease the process.
“As the recovery process continues, visitor numbers will increase, fueling the interest in real estate from overseas investors,” Childs said. “However, as persons involved in the real estate industry, we would look to government to refine the regulations for foreign ownership and make the BVI a more attractive location for investment.”