By Patrick Hoyos
BRIDGETOWN, Barbados, Friday May 27, 2016 – With Royal Westmoreland recently achieving the highest sales in its history, and Sandy Lane Hotel constructing “super” villas valued at over US$25 million each, the villa and apartment product in Barbados “continues to offer a compelling alternative to the traditional hotel product, particularly in the luxury segment of the market,” according to Hayden Hutton, chief operating officer of Terra Caribbean, one of Barbados’ leading real estate firms.
Writing in the 2016 edition of the company’s annual real estate publication, The Red Book, Hutton describes the rise in demand for luxury travel to Barbados over the past three years as “phenomenal,” with villa occupancy and average daily rates continuing to increase.
But while the rise in demand is encouraging, he writes, the “supply side of the equation” should not be overlooked, because sellers will not be able to charge higher prices until “any excess supply is absorbed.”
In fact, Hutton notes that a “staggering” US$1.15 billion worth of beachfront property on the west coast is still listed for sale, and property developers are hoping that the increase in demand for rentals will also lead to more sales.
Providing a breakdown of that US$1.15 billion, Hutton states that over half (57 percent) are villas, and almost 40 percent are apartments, with just four percent being land alone.
In addition, over two-thirds (70 percent) of the inventory is made up of properties listed at US$5 million or more, while 27 of the properties have asking prices of US$10 million or more. Overall, the unsold inventory on the west coast consists of 144 apartments, 62 villas and 10 pieces of land.
The average list price for an apartment on the west coast is US$3.1 million, while for a villa it’s US$10.5 million, and for land it’s US$206 per square foot. However, notes Hutton, as these all reflect list prices, the actual achieved prices may be lower.
“Ten years ago, supply was chasing demand; however, today the market is still sitting on ten years of inventory with the condo market the most exposed,” Hutton writes.
A decade ago, he adds, there was a swing towards condominiums, but “the pendulum now seems to be swinging in favor of the villa product,” with plans for 100 new apartments having recently been cancelled.
Hutton says any prospective purchaser should not wait too long “since most of the larger developments on the beach are well-capitalized” and they should therefore take advantage of what he terms “the current low levels of pricing.” (The Broad Street Journal)