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Caribbean Real Estate Proves Its Worth during Difficult Times
April 7, 2010Article by Ray Withers
Who woulda thunk it: that the Caribbean real estate market would be one of the best performers in the world during a global recession. During the so-called credit crunch, Caribbean property has survived incredibly well, with lifestyle buyers coming into to grab bargains, and now wealthy buyers snapping up prime Caribbean real estate as a hedge against financial instability and currency devaluation.
During the overseas property boom years — between 2004 and 2008 — credit was flowing and people were happy to buy property in a far flung destination on the basis that the rental from the property would help them make the mortgage repayments. Needless to say, buyers were coming from everywhere, from all walks of life, and from all creeds and classes, but everyone was an investor.
At this time, the Caribbean was actually losing out to many other destinations, which were thought to be more lucrative investments. That is one potential reason for other destinations seeing more overseas property purchases than the Caribbean; another is that the wealthy were busy getting wealthier from the stock markets, and that it was predominantly the lower income buyers that were active.
The most likely reason however, is in a word: IFAs. Most wealthy people — those who are buying Caribbean property now — have an Independent Financial Advisor. During the boom times, IFA’s are known to have been avoiding property, because it was seen as coming near to its peak, and bubbles were forming everywhere. Now, with inflation looming large, fears over currency devaluation, and property values down by between a quarter, a half and even more, property is looking like a much better investment.
Caribbean real estate has been chosen as one of the favourites for a multitude of reasons also. Among the main reasons put forward: the fact that the Caribbean’s growth comes mainly from tourism and services, it has remained largely outside the financial securities sector, and therefore is insulated from the instability. And/or the Caribbean way of life; that people are treating themselves to make up for the misery they have endured in the last 2-3 years.
Whatever the reason, there has been an undeniable increase in sales of Caribbean real estate to foreign buyers. Reports of increased activity culminated last week, when Austria-based Candelisa Resorts, in partnership with international agent Cluttons sold out the first phase of the Weston, St James Resort in Barbados in just 3 days, and with no advertising apart from word-of-mouth.