Barbados’ vacation home market is booming. Sales activity is at levels comparable to the early 2000’s when British buyers took advantage of a very strong pound to buy in large numbers. Even though the pound is not anywhere as strong as it was then, the stars have aligned to stimulate a very strong market not just of UK buyers but also Canadians and others. A great deal of wealth has been created over the last five years because of very strong financial markets driven by near zero interest rates. Not only has this benefited investment portfolios but it has stimulated strong business activity in private businesses, the owners of which constitute a large proportion of vacation home buyers.
Barbados has managed the pandemic better than most. The COVID case counts are very low and the island is seen as a safe place to live. Many buyers choose the island for a second home because of the outdoor lifestyle. The amenities are world class. Bars and restaurants offered open air settings and of course our climate and air quality create a healthy environment. Added to that the lifestyle and amenities mean there is much more to do than on many other Caribbean islands.
There are a number of other factors which make buying more appealing than in the last big boom. The enabling environment has changed. Barbados has liberalized its exchange control regime such that there is no restriction on exporting proceeds of sale off island. This negates the need for an expensive offshore special purpose vehicle to own the home. Secondly, Barbados is a very attractive tax jurisdiction. The maximum rate of corporation tax is 5.5%, which is internationally competitive.
The market for villa and condo rentals is extremely strong and growth in this segment is outstripping growth in hotel room stock. There is a multitude of online mediums for renting villas and condos these days and by using channel manager software, rental rates can be changed on multiple booking engines simultaneously, in seconds. The major rental agencies, like the one I am involved in - Altman Real Estate, use these resources to fill gaps and optimize yields.
For those who want to build a home to rent this can all be done duty free under the Tourism Development Act which provides for duty and VAT procurement of building materials and furnishing of homes. The overall savings are significant.
The development community has led the way in producing very high-quality residential offerings at all price levels and with differing amenities. Exciting new west coast offerings include “Ocean Grove”, “Porters Place” and “Porters Escape”. Ocean Grove is the latest in the Grove Hotels offering which has three condo hotels which generate excellent yields for buyers looking to enjoy a holiday home whilst benefiting from professional management. At the upper end of the market, Apes Hill is being redeveloped by the new owner to include a redesigned 18 hole golf course, a 12 hole, floodlit driving range and short course, a performance center and world class club facilities. Royal Westmoreland continues to thrive and is planning new subdivisions. On the beach, new condo developments are taking place and these include the Hyatt Ziva Residences and the Pierhead Residences, both of which start in 2022 and will reshape the capital city Bridgetown
Barbados is a world leader in renewable energy solutions and has set a goal of having its national grid powered entirely by renewables by 2030. A lofty goal but very achievable as the private sector has taken the lead on planned solar installations. Investors in renewables are making excellent yields by selling power to the grid. Most developers put renewable energy at the top of their priority list because they know it is the responsible thing to do and buyers expect sustainability in any development they are considering. And, of course, our year round climate is perfect for harvesting solar energy.
Barbados’ Prime Minister, The Honourable Mia Amor Mottley QC, MP, has become a leading advocate for climate change. Her speeches to the UN and at COP 26 in Glasgow were ground-breaking and she recently received the UN Earth Champions Award for 2021. Her team has pioneered a plan for commercial enterprises to have access to “Special Drawing Rights” from governments to invest in renewable energy.
In addition, her pioneering concept of the ‘welcome stamp’ brought thousands of visitors to the island to live and work and did a great deal to mitigate the negative impact of the pandemic on the island’s economy. The big beneficiary was the property sector.
So, if you are considering a vacation home, Barbados ticks all the right boxes. Fiscal incentives, low tax rates, relaxation of exchange controls on onward sale, but most importantly a highly skilled construction sector, world class amenities and the perfect climate. We can help you through that decision.