Overview of Real Estate in Barbados

Background

Barbados is a property owning democracy with 350 years of history of property ownership.  There are approximately 90,000 households and most property is owned freehold.  Title is evidenced by deeds filed in the land registry and every transfer to title requires a conveyance which is recorded in the land registry.  Properties are developed in accordance with a series of regulations and guidelines established continuously since 1972.  Every new property, or addition or change to an existing property, requires planning permission. 

During development, the Town & Country Planning Department also requires periodic inspections.  They issue a certificate of compliance on completion of works.  This certificate evidences that the development is in accordance with planning codes and regulations.  Purchasers of properties normally require sight of these certificates of compliance to satisfy themselves that they are buying a property which is compliant with those regulations.

Recent History

In the last ten years there has been a boom in the development of new residential and commercial properties.  This has been fuelled by economic growth, prosperity, cheaper and more readily available finance and a large number of competent building contractors.  Even at the lower income levels of society, there has been a rapid increase in the percentage of families building permanent freehold properties and a departure from the moveable chattel houses which were sited on rental lands in the past. 

This has been stimulated by the housing policies of successive governments.

Real Estate Today

Residential Properties

Approximately 10% percent of the island's 40,000 hectares, is in residential use.  The dense population areas are in the parishes of Christ Church, St. Michael and St. James.  These parishes make up what is referred to as the urban corridor and comprise approximately 15% of Barbados' island mass.  A very high percentage of residences are single family homes sited on freehold lots.  Apartments and townhouses are rare except in luxury residential communities. 

The luxury residential communities are a mixture of beachfront condominiums and off beach town houses and single family homes which are mostly found in amentised master planned communities.  There are approximately 2,000 luxury residences which are mostly owned by non nationals with a further 2,300 available for sale or planned but unreleased.  Of these existing or planned units, 860 are single family homes, 2,300 are condominiums and 800 are townhouses.  As a result of the scarcity of beachfront land and the general trend towards more active lifestyles, much of the recent development has been in the master planned communities which are focussed around golf, polo and yachting amenities.

Commercial Properties

Most commercial development is located in the urban centres of Bridgetown, Oistins, Warrens, Holetown and Speightstown.  There has been a recent trend towards higher standards of office development accommodation.  This is driven by the growth in the offshore services, economic growth and prosperity.  Similarly, with warehousing, there has been significant growth and there is more to come.  Most of the island's manufacturing and light engineering is conducted from warehouse type buildings.

Trends in Supply and Demand

As a result of the trend towards better office accommodation, there has been significant upgrade from B and C grade buildings to A grade buildings.  Hence, there is an over supply of lower grade office accommodation and there is still an undersupply of higher grade office accommodation.

Retail

There has been considerable pressure on retail in recent times, because of poor trading conditions brought about by world recession.  As a result, there is likely to be little expansion of the retail supply in the near future.

Warehousing

Despite the increase in the supply of warehousing in recent years, there remains some capacity for new warehousing which will need to be met in the short-term.

Pricing

The following table indicates pricing benchmarks for property in Barbados:

New Developments

Over the past twelve months, the effects of the economic downturn around the world have washed onto the shores of Barbados and have, especially over the past six months, made their presence known in the Barbados Real Estate market.  The 2009 Barbados real estate market can be described to date as thin-the total number of transactions has been reduced across the board: luxury, residential, property investment have all been affected by the changes in lending practices and the changes to the buyer profile.  We are seeing first time buyers who have been left out of the booming market until recently approaching cautiously, with the majority of the local demand coming for small plots of land or single family homes.

The characteristics of those looking to purchase real estate have changed. The buyer is now less spontaneous, more opportunistic, more specific on what they are looking for and how much they are willing to spend, and are demonstrating a higher level of due diligence before they purchase.  In general vendors are showing themselves to be moderately responsive, with those who own leveraged properties obviously the most willing to bargain. 

The Luxury Market:

Property prices in the luxury residential side of the market have discounted on average by 25-30% against 2008.  Buyers who rely on mortgages for luxury purchases are no longer buying as a result of changes to banks' lending practices. The low value of the Pound (relative to the USD and BBD) throughout the earlier part of the year was also a major factor for the buyer to consider.

Beachfront Properties:

There is significant inventory of apartments, so buying opportunities favour those who are looking for beachfront investments of this type. 

The Residential Market:

The residential market is also experiencing discounting, but less than what is being reported for the luxury end of the market. Banks have lowered their residential mortgage rates by 1-2% over the past year. The decrease in interest rates, coupled with the discount in property prices, makes this an opportune time for buyers-especially in cases where the sellers may be distressed and looking for a quick sale.

Property Investment:

Major Caribbean banks have reduced the lending limits for real estate loans and in some cases have eliminated real estate loads for the time being. The current lending limit does not allow for any new developments to take place, unless they are fully funded.

Forecast for 2010:

We anticipate that with a strong Pound, low interest rates, Europe coming out of recession, Canada standing on strong footing and Barbados being the choice destination that the number of property transactions should increase throughout 2010.

Web & Other Resources

Q&A Contact

If you have a question about any information on this page please contact Mr. Terry Hanton terry.hanton@altmanbarbados.com

Editor

Terry Hanton - Managing Director, Property Consultancy Services Inc

Terry Hanton is a Chartered Accountant who specialises in consultancy services to the real estate and hospitality sectors. He is also a member and accredited valuer of the Barbados Estate Agents & Valuers Association (BEAVA), and previously held the position of Vice-President of this Organisation. Terry has over 10 years of experience in conducting valuations for residential and commercial properties. From 1984 to 1996, he was the Finance Director of St. James Beach Hotels Plc., a Barbados based hotel group which was listed on the London and Barbados exchanges.

In addition to his role at Property Consultancy Services Inc., he is the Director of Sales of Altman Real Estate, which has allowed him to maintain an intimate knowledge of the real estate market.

From 1998 to 2008 he was Project Director of the Sugar Hill Development which is a resort community located in Barbados, owned by David Lloyd and a syndicate of investors. The project is a tennis community consisting of 100 homes on 52 acres. The investors are nonexecutive, and Mr. Hanton was responsible for executing the project in its entirety. He is also a past Director of Needhams Point Holdings Ltd. as well as of several property development companies.

He has conducted feasibility studies, market research projects and business valuations and has also provided project management, and property investment advice and financial and accounting services to a broad range of clients.