Notes From The Margin

November 19, 2007

Is The Barbados Property Market A Bubble?

We on the margin have been observing the skyrocketing prices of real estate in Barbados, especially on the Platinum coast. We can well understand the logic of investing in real estate particularly on the coast in Barbados, after all there’s only so much land and they aren’t making any more of it. Traditionally real estate has been seen to be… as safe as houses.  (sorry for the pun) the old bajan saying of “Land don’t spoil” has been a truism that traditionally could be counted on as readily as the sun coming up tomorrow.

The legions of real estate agents will tell you that land has never declined in value in Barbados. In fact the tremendous appreciations in property values has attracted international attention, with international agents who market to the affluent UK market.  Now here’s where things get interesting….

The price of premium property in Barbados is out of the reach of all but a very few Bajans. And further if we’re honest much of it is already owned by BVI corporations to get around the issues of property transfer tax. The reality is that the demand for Barbados property is being driven not by the Barbados market but by the UK economy.  Suddenly things don’t look so rock solid any more.

If we then factor into the picture the possible effects of a global economic slowdown (keep an eye on that sub prime mortgage crisis) it is VERY possible that in such a scenario, Barbados’ overvalued beachfront could become just so much seawater and sand.

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3 Comments »

  1. Interesting perspective. I can’t help but agree – every time I talk to an estate agent, I can’t help but get the feeling that they’re seriously talking up the market and then some. They have a vested interest in doing so and if the UK hits turbulence, I think that the West Coast at least will be in trouble. I’ve also noticed over the last year or so a large number of unsold properties on the West Coast with for 12 months or more. A sign of an illiquid market or a sign of a crash to come ?

    Comment by james — November 20, 2007 @ 8:42 pm | Reply

  2. Interesting. I am from the Uk and looking at investing in a property in the Caribbean. I have been visiting as a holiday maker for the past 10 years and am ready to buy into the market. However the sub-prime mortgage crisis is staring to bite in the UK. The buy-to-let market is already proving a problem. For me it is case of wait and see. The rates property have been going up in Barbados and now neighbouring islands like St Lucia is scary for would-be investors.

    Comment by Babs — November 25, 2007 @ 6:04 pm | Reply

  3. Try looking on the southeast and east coasts of Barbados. This is the windward side of the island…..much cooler and I think more beautiful. The area is less crowded and real estate prices are a fraction of what they are on the west coast. Drive over to the west coast for dinner and you will be glad to return home to the cool breezes on the east side. Development is starting to take off lately as people discover how nice the east side is; just look at what’s happening at the crane.

    Comment by Don Reeser — March 16, 2008 @ 11:11 am | Reply


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