They came in at the peak of the market, although they themselves did not know it at the time. But I seem to recall some questions in the first issue as to how long could the boom last.
Here was a real estate broker publishing the expected brochure crammed with listings of houses and condos for their clients. But, oddly, did something else: they offered a detailed overview of the local property market.
I am, of course, referring to Terra Caribbean and their publication, The Red Book, the tenth annual edition of which was launched last week. The event was held, fittingly, at The Residences Capri, the boutique condo development overlooking Accra Beach and next to Champers at Skeete’s Hill, that little inlaid road between Worthing and Rockley on the south coast. That four out of the five Capri units priced between US$1 million and $2.5 million could have already been sold in a market that turns out to be at its lowest in a decade tells you something (a lot) about the high end of the real estate market.
But back to The Red Book: All of the euphemisms and pretty words we associate with real estate ads disappeared from the section they dubbed the Pink Pages, and instead we were given a credible overview of the real estate market. Even if the bubble had not burst – well, it was more like a balloon with a leak at the top – during the ensuing ten years, the Pink Pages of The Red Book would still have been invaluable. It represented a sharing of some of the information meticulously gathered by Terra from public records and data gathered in-house, which were then mixed with chief operating officer Hayden Hutton’s analytical skills and chief executive officer Andrew Mallalieu’s folksy insights into what moves a market and motivates a person to invest in property.
Other articles by staffers and guest writers provided a trade-magazine background to the two top executives’ drilling into what was really going on in the local real estate market.
I assume other real estate companies do their research and maybe it is as good or better. Maybe. But the fact is that Terra shared their overall findings with the public, and have provided an annual primer for journalists and anyone interested in the ups and downs of this vital market which underpins our economy, as much of the revenue spent is in foreign exchange.
For this, Terra Caribbean received a lot of well-deserved credit, and the Pink Pages section has now become the “bible” of the real estate industry. I would like to once more thank them for their contribution over the years. I think it has been substantial.
Having said all that, here’s a brief overview of one of the articles in the publication this year.
Reviewing the real estate market over the last ten years, Hutton said the company had taken a comprehensive look at achieved prices as opposed to listed or asking prices. It showed that property prices have fallen by almost 30 per cent on the foreign side of the market and around seven per cent on the domestic side since 2007.
That seven per cent decline in average prices for domestic sales would have been higher were it not for beachfront property, where demand held up better over the decade. According to Hutton, if you take them out of the picture, “the overall change in value in the domestic/local segment is (minus) -16 per cent through the period”.
At the same time, in buying land, locals purchased smaller lots of around 7 500 square feet (sq ft), on average, rather than lots in the 15 000 sq. ft. range.
This, he noted, had had a “substantial impact on those land developments which contemplated larger lot sizes, with many having to reduce prices substantially to compete”.
Beachfront villas, apartments and land fell on average between 25-30 per cent between 2007 and 2017, wrote Hutton, while luxury villas and land fell by about a third.
In terms of the number of properties changing hands, as reflected in change of ownership forms, said Terra, the number fell from around 4 200 in 2007 to around 2 500 in 2016.
Those totals account for nearly all foreign and domestic real estate purchase, and only leave out properties at the very high end, notes the company.
And so, has the market bottomed out? Will we see a gradual resurgence in the number of local and foreigners purchasing properties?
On the domestic side, Hutton said that “an unprecedented number of sales by mortgagee” had been noted over the past year. However, the updated figures seemed to suggest that the decline in transactions had levelled off, and hopefully, the market was now at the bottom.
However, the signals about what potential purchasers might do remained mixed, since buyers remained “generally circumspect” despite lending rates falling to a ten-year low, from around eight per cent in 2007 to around six per cent last year.
In fact, while the foreign side of the market does face major challenges, mainly due to uncertainty on the part of the United Kingdom purchasers over Brexit and the fall in the value of the pound sterling against the United States dollar and by extension the Barbados dollar, Hutton said the main “headwind” facing the market continued to be the economy.
He wrote that the combined ten downgrades to Barbados’ sovereign debt rating issued by Standard & Poor’s and Moody’s Investors’ Service over the past ten years were a significant factor in the decline of the real estate market.
Therefore, wrote Hutton, Terra could not yet predict a recovery in the market as the data supported only a “flat trajectory for the majority of the segments”.
As I said above, straight down the line, no holds barred, hopeful of the future, but with a stubborn refusal to embellish either the record, the findings or the prognosis.
In other words, the type of journalism to which we should all aspire. Written by a real estate company.
Thanks, Terra.
