Barbados: Investing in Property Is there room for more Capital Growth?

Introduction:

If you are looking at an Investment property, what better country to look at than Barbados. I look after clients in the UK, Europe and in the States and the general sense of opinion is that Barbados is a safe bet for the less risque property investor, and I would have to agree. However just because it seems a safer investment doesn't necessarily mean lower returns on rentals or capital appreciation, on the contrary, Barbados is undergoing a massive urbanisation program which in turn will increase tourism and better the existing facilities and infrastructure.

Why Invest in Barbados?

In My view there are four compelling reasons to invest in Barbados, even before the exceptional benefits of Merricks Resort and Spa are considered;

Reason 1: Established and Growing Tourism Industry

Barbados has seen a huge increase in visitors to the island, from 17,829 in 1956 to 507,086 in 2001.

The island has also benefited from the development of the international cruise industry with an
increase in cruise passengers from 12,391 in 1956 to 527,597 in 2001. Visitor expenditure in 2001 was estimated at $1.4 billion, which represents 14 percent of Gross Domestic Product. Travel and tourism is expected to grow by 4.6% per annum, in real terms, between 2002 and 2012. The travel and tourism economic contribution should rise from 37.4% to 43.8% during that same period. All this means that for an investor in the tourism sector you will be putting your money into a destination that is well established and still growing. This offers security in the knowledge that Barbados is viewed by many people as the ‘safest-bet’ in the Caribbean in terms of capital growth.

To My knowledge, Barbados has never suffered from a property recession and property prices have increased steadily for the past 50 years. An impressive record that continued demand and limited supply will ensure is continued for many years ahead.

Reason 2: Urban Renewal and Development

One key aspect of successful property investment is to buy in the early stage of regeneration
initiative. This usually leads to increased prices, demand and easier resales. Despite Barbados being one of the premier locations in the Caribbean it is only just receiving Significant regeneration investment and as an investor you stand to benefit.

The broad policy objective of the Barbados Tourism Sector Plan is ‘To pursue sustainable tourism Development through improvement and optimal use of human resources and services, and through the Conservation and managed use of the cultural, built and natural heritage, in order to ensure a product Of the highest quality whilst improving the life and economic development of the people of Barbados’. Barbados Tourism Investment Inc. (BTI) has been designated by the Government as the Agency that will manage the execution of the infrastructural renewal programme in the tourism Centers of Bridgetown, Speightstown, Oistins and St. Lawrence Gap. This renewal programme is An integral part of the country’s drive to encourage increased investment in the tourism Sector.

This infrastructural programme known as the Urban Rehabilitation Programme is now
in the execution stage. The programme will be executed over a five year period, from 2005 -
2010. This means that you are investing at the start of this programme and should therefore
experience significant benefits. Capital growth on the island is currently around 15% pa, with
regeneration money it may even be more than that in the years to come.

Reason 3: Climate

Sun, sea, sand….The climate is tropical with temperatures ranging from 21 to 31 degrees Celsius and a rainy season from June to October. Throughout the year the weather is warm and sunny with an average daytime high of 75 - 85 F. The nights are slightly cooler. The weather is one of the major lures of Barbados and rightly so. The consistent weather and extended tourist season mean that Barbados remains an attractive holiday destination when others islands are colder or wet. Long seasons mean more income, which means greater yield and profit for the investor. Tropical rainstorms sometimes occur in June to October. However, the rainfall is usually brief and quickly drains off into the underground lakes or the sea. There has not been a hurricane in Barbados since 1952.

Reason 4: Travel

The island has one airport, Grantley Adams International which is thirty minutes drive from the
capital, Bridgetown and 15 minutes drive from Merricks. There are a number of international airlines which operate from Grantley including Air Canada, American Airlines, British Airways, Air Jamaica, BWIA International and Virgin Atlantic. Barbados is just over three hours by plane from Miami, four hours from New York and eight hours from London. The runway is long enough for a 747 and the airport is modern, mostly open-air, and safe. We are told anecdotally that British Airways allocate more Premium Economy seats on flights to and from Barbados than any other destination. We think this says a lot about the type of visitor to Barbados – wealthy and looking for life’s luxuries – such as the 5* resort at Merricks. Flights from the UK to Barbados are priced just over £500 return. We are informed by the developer that Virgin
intends to increase the number of flights to Barbados once Merricks is completed. In recent times they have reduced the number of flights because there was insufficient high quality accommodation available to fulfill the demand.