Caribbean real estate market on the cusp of success

During the lockout over Covid-19, wealthy buyers swept up the tranquil islands in the Caribbean that get more than 300 days of sunshine a year. And even with the pandemic subsiding, the buying frenzy hasn't stopped. The Turks and Caicos Islands has quickly transformed from a relatively obscure destination to a global hub for luxury tourism, highlighted by a booming luxury real estate market.

The Caribbean's real estate market is booming after a buying frenzy sparked by the pandemic as people turned to its sunny beaches to escape the lockdown due to Covid-19. The islands see over 300 days of sunshine a year; pristine beaches and warm water, coupled with the tranquility of island life, have prompted many wealthy investors to buy property on the islands to live in, use as vacation homes or rent to tourists.

The Caribbean Hospitality Finance Survey for 2022 found that 56% of non-bank participants (80% of bank participants) believe the current real estate boom will last another 12 months, while another 44% of non-bank participants (20% of bank participants) believe it will last much longer. For many institutions, liquidity remains high and they are turning to real estate as the best place to invest. "All of our bank respondents expect it to be invested in real estate rather than in the stock markets or held in cash, and 75% of non-bank participants share this view," the study said. The market appears stable, with no respondents saying they believe it is a bubble that could burst.

Of the Caribbean nations, banks were divided in their investment preferences, showing equal interest in the 15 nations included in the study. However, for non-bank participants, Turks and Caicos is highlighted. In Turks and Caicos, sales rose to more than 324 transactions this year through August, representing more than $335 million in sales volume, according to real estate company The Agency. Real estate demand in Turks and Caicos remained above pre-pandemic levels, with a 71% increase in sales in the first to third quarters of 2022 compared to the same period in 2019. "There's never been a better time to buyreal estate in Turks and Caicos," says Walter Gardiner, a Turks and Caicos local and director and broker at Christie's International Real Estate.

Sales on the island literally exploded during Covid-19 as buyers, mostly from the U.S., flocked to the islands; 85 percent of island property owners are from North America, according to Sotheby's. Gardiner has been in the real estate sector in Turks and Caicos for 25 years. He has seen the islands rapidly transform from a little-known destination to a global luxury tourism hub, highlighted by a booming luxury real estate market - and the pace of growth is not about to slow down. In some places, infrastructure has not kept pace with the rapid development of the islands, and infrastructure development has now become a priority.

According to Sotheby's, in 2021, buyers focused on single-family villas until inventory ran out, and now, in 2022, buyers are focusing on condos. The pandemic boom has resulted in demand exceeding supply in some market segments, but new properties are being developed and sales of existing inventory remain stable. Preliminary design is now gaining momentum as well. "Condo sales continue to be strong, with a 42.54% increase in sales volume, driven by the completion of the Rock House project, the completion of sales at the Ritz Carlton and strong secondary condo sales," Sotheby's said in its Turks and Caicos real estate report. Apartments, whether to live in, use as a vacation home or rent out, have always been a mainstay of real estate in the country. The Agency says condo prices remain stable, with the average sales price exceeding $1.5 million, 50 percent higher than the national average sales price, supported by sales at the Palms, Grace Bay Club and Ritz Carlton.

The Turks and Caicos is the second most tourism-dependent economy in the world, but the real estate sector offers strong prospects for economic development. "I want more Turks and Caicos residents to take advantage of the opportunities," Gardiner says. "There are opportunities for local residents to benefit from launching a business that can serve the needs of real estate buyers." Even in the face of economic challenges and fears of rising costs, the islands are not stopping. "In terms of construction prices, I've encouraged buyers to go ahead and build now because prices are only going to go up everywhere," says Trevor Musgrove, managing partner of real estate firm The Agency T&C and president of the Turks and Caicos Hotel and Tourism Association. Emphasizing that now is a good time to buy, Gardiner says, "We've gone through various stages of stress testing, from political issues to hurricanes to Covid-19, we've faced all of these challenges and made the necessary adjustments." With increased infrastructure development, diversification and expansion of real estate options on the islands, the future of the industry in Turks and Caicos is bright - like the sun shining on their pristine beaches.