From Property Wire

The real estate market in the Caribbean was affected by the global economic crisis of 2008 and is slowly recovering with the main locations for overseas buyers set for a more positive 2017.

Some challenges remain in the residential property market, most notably an oversupply in some areas and uncertainty over how Donald Trump’s presidency will affect the region, according to the latest analysis report.

The report from international real estate firm Knight Frank, which has offices in the region, points out that the Caribbean’s economic ties remain firmly linked to the United States but China’s influence in the region is accelerating

Indeed, in the decade up to 2012 there was a 500% rise in Chinese foreign direct investment in the region and with economic indicators in the US improving, consumer confidence has reached a nine year high, resulting in a 7% rise in the Caribbean’s tourist numbers in 2015.

The report explains that the relationship between tourism and real estate activity in the Caribbean is a close one as investors find reassurance in shorter void periods, which feeds through to higher purchaser demand.

It also explains that the average value of luxury homes across key second home hotspots in the Caribbean slipped by 1% in 2015 suggesting prices are at, or close to, their floor. Looking ahead to 2017 Mustique and St Barts are forecast to see sales rise while in the Bahamas, Barbados and the British Virgin Islands it is believed that activity will be about the same as in 2016.

And while, for some, the repercussions from the decision by the UK to leave the European Union, Trump’s electoral victory, currency shifts and in some cases, lingering oversupply may add an element of uncertainty, for others they represent a buying opportunity.

The Bahamas, made up of 700 islands, has one of the Caribbean’s more mature property markets with New Providence, home to the capital Nassau, and Grand Bahama amongst its most developed and remain strongly influenced by US buyers.

Areas such as Old Fort Bay, Lyford Cay and Albany rank highly with luxury buyers. Mirroring much of the Caribbean, property prices fell 30% to 40% in peak to trough terms since 2008 but the annual rate of decline slowed to less than 5% in 2015.

St Barts as recorded steady sales in recent years, due in part to the weakness of its currency, the euro. US dollar buyers purchasing a home in October 2016 saw an effective discount of 21% compared with three years ago, due solely to the strong dollar and weak euro.

The report says that sensible pricing has fuelled demand from a broad mix of European and US buyers and this has supported prices in the last two to three years. Widely considered the St Tropez of the Caribbean, St Bart’s architecture is more modern and less colonial than that of neighbouring islands, with areas close to Gustavia and the Baie de St Jean high on buyers’ wish lists.

The British Virgin Islands which has three main islands of Tortola, Virgin Gorda and
Anegada, along with over 50 other smaller islands has seen growth due to demand from the yachting fraternity. North Sound on Virgin Gorda, which encompasses Oil Nut Bay and Mosquito Island, stands out as a pocket of recent growth with a super yacht development at the YCCS yacht club and the ongoing renovation of Little Dix Bay Hotel adding to the renewed optimism in the market.

Mustique is part of Saint Vincent and the Grenadines and has only 100 villas which are in demand from the rich and famous seeking privacy, security and exclusivity. Properties rarely come on the market and when they do they are much sought after.

As a result prices have proved resilient since 2008 with marginal price growth recorded since 2014. Sales volumes have been strong over the last 18 months with a number of new properties brought to the market in 2016.

On Barbados sellers have been lowering their asking prices, on average by 15%, to entice British buyers who have been effectively hit by a 17% plunge in currency against the dollar since June 2016. Some 70% of buyers are from the UK so the price has to be right to attract them. Particularly below the US$3 million mark the market has been sluggish and prices are being reduced accordingly.

Every Caribbean island is distinct in its look, lifestyle and allure and each island’s property market performs in its own way, driven by different forces, according to Edward de Mallet Morgan, head of Knight Frank’s Caribbean department.

‘Some markets, notably Barbados, are starting to move again after a period of stagnation, others, such as Mustique, St Barts and the Bahamas, are recording the strongest sales figures in years,’ he said.

‘But there is something that unites the Caribbean as a whole in the minds of overseas buyers and that is aspiration. Its palms and white sands epitomise the romance of beachfront or island living, and to have a home among them inspires a sense of success and achievement,’ he added.

For more on this story go to:  http://www.propertywire.com/news/global-news/caribbean-property-market-starting-recover-sales-pick-post-global-downturn/