THE PROPERTY RECESSION in Barbados has been marked by a reduction in transactions and not a fall in prices, says managing director of Terra Caribbean Andrew Mallalieu.
“New entries come from a wider prosperity and growth in the market – not seasonal moves or short-term market-driven real estate transactions,” he said.
Mallalieu noted that while some property owners might have lost value, they had not found themselves in a situation where they were forced to sell.“We have the strong influence of the Canadian banking system to thank for this situation in large part but this has also helped to mask some of the problems that the local market is facing,” he said.
The real estate valuer noted that since the island does not see numerous foreclosures, fire sales or short exposure times and quick deals, “we are insulated from some of the harsh truth”.
In an article in Terra’s annual publication The Red Book, he said property prices had fallen an average of 20 per cent from their peak and given that our society was not as mobile as in larger countries, there were no new entries to the market looking to buy at the new prices.
He said an improvement in the local real estate market depended on improvement in the local economy but the amendments to the VAT rate and the removal of investment incentives and deductions for tax purposes would cause the economy to contract.
Mallalieu noted that while the market was clouded with uncertainty for the next year or two, the value of the United States dollar to pound sterling favoured the sterling, and tourism traffic had improved with forward bookings of high-end villa properties showing sharp recovery.
He added that the foreign market had also shown some signs of recovery in the past six months.