2021 BVI Real Estate Market OverviewArticle by Smiths Gore, Published 14 May 2021
Considering the disruptions to the real estate market experienced in 2017 with Hurricane Irma and again in 2020 with the pandemic, the BVI real estate market has so far shown itself to be remarkably resilient. After the 2008 recession, the BVI property market struggled to gain momentum for a number of years with limited external investment resulting in typically twenty villa sales a year over $500,000 in value. Most of the villa sales were under $1.0M and few villas sold in excess of $3.0M. As the number of external investors reduced, the market started to see a higher percentage of Belongers acquiring villas as vendors became more willing to negotiate at lower prices. All that changed at the end of 2017 when Hurricane Irma destroyed or severely damaged much of the housing stock in the BVI. Far from reducing property sales, the damage caused by Irma created opportunities for mainly locally based investors, who were able to acquire damaged property from vendors motivated to exit. This led to an increase in the number of home sales, albeit at generally lower values reflecting the damaged nature of the properties being sold.
At the same time, the market for land continued to grow as local investors bought into newly created sub-divisions mainly situated on Tortola. While there were positive signs that overseas investment in the BVI property market was picking up towards the end of 2019 and the early part of 2020, the closure of the BVI borders in March to tourists, prevented overseas purchasers from visiting the British Virgin Islands to view property. Despite that, the isolated nature of the Caribbean Islands has appealed to the sense of security that many investors are seeking, and international enquiries for property in the BVI has remained strong. C BVI real estate market overview Reviewing the property market between 2018 and 2020 (to September), the patterns of investment that emerge, demonstrate both the activity within the local (Belonger) market and the importance of overseas investment to the real estate market as a whole and including the significant stamp duty that it generates for the Government.
The decision by Government to suspend stamp duty payments for Belongers purchasing property until May 2021 and the National Bank offering 100% financing to Belongers acquiring land has also added impetus to property transactions within the local market.
The above chart compiles the data for all residential property transactions in the BVI between 2018 and September 2020, divided between land and houses. In total, there was $168M of residential property sold with houses accounting for $98M (58%) and land for $70M (42%). Land sales have been evenly spread in total value between 2018 and 2020 ranging between $26.5M total value in 2018 to $20.75M in 2019. There have been $22.46M in land sales through September 2020. The total value of house sales has increased by 26% between 2018 ($29.79M) and 2020 ($37.42M to September). House sales in 2019 totaled $30.95M.
The above chart summarises home sales since 2018 with a total of sixty homes being sold up to September 2020. The average sale value of homes generally fell through 2018, reflecting the sale of damaged homes at lower values. Although the average price spiked in Q1 2019 due to a single home sale at $7.125M, the trend from Q3 2019 to Q3 2020 has shown a rising average house price as the residential home market moved away from the sale of damaged homes and back to more normal trading conditions of undamaged or repaired homes. In terms of total sales volume ($M), there has been a steady increase in the volume of transactions over the period with total sales of $18.81M in 2018 through 19 sales, $20.69M in 2019 (including a single home sold for $7.125M at Oil Nut Bay) through 19 sales and $26.54M to September 2020 through 22 sales. Again, this upwards trend in total sales volume reflects the changing market as the sale of damaged homes was replaced by the sale of mainly undamaged homes by late 2019 and 2020.
The above chart shows the breakdown of the sixty home sales by price band by year. This graph illustrates the same trend, with the market in 2018 dominated by home sales between $500,000 and $1.0M, only five home sales in the price band between $1.0M and $2.0M and one sale above $3.0M. A similar pattern was evident in 2019, and again there was a single sale of a home in the $3.0M+ price range. However, by 2020, there has been a spread of home sales between the price bands, with 7 home sales between $1.0M and $2.0M and one each between $2M to $3M and over $3M.
The above map shows the geographic spread of the sixty home sales over $500,000 between 2018 and September 2020 divided between sales to Belongers and Non-Belongers. The majority of the sales have occurred on Tortola followed by Virgin Gorda.
There have also been villa sales on Great Camanoe, Scrub Island and Jost Van Dyke. 2020 for most people has been a turbulent year, dominated by a pandemic virus which has caught politicians and scientists by surprise, leaving governments treading a fine line between re-opening the economy and trying to bring the second wave of infection back under control. There remains much uncertainty for the short term, vaccines are now just being administered. The main diversion to the pandemic was the US presidential election which was conducted alongside a resurgence of the Black Lives Matters movement and protests in the States between left and right wing ideologies. Just as with other countries, the BVI is having to grapple with the same issue of opening the Territory to tourism and the measures needed to be in place to protect the population.
The politicians, having announced their protocols to the local population and visitors alike, have had to simplify those protocols for persons wishing to visit, in light of many cancelled bookings since the protocols were first announced. Time is not on the Government’s side with what has been a very limited booking through the Terrance B. Lettsome Airport and the opening of the more travelled seaports pushed back yet again, now to 15 April 2021.
With the winter season now almost behind us, uncertainty remains for many tourist related businesses. While the real estate market has proven to be remarkably resilient post Hurricane Irma, a healthy economy is an essential part of the success of the real estate market. The next six months will be critical to the future of the BVI.
For a full version of the Smiths Gore Market Outlook for 2021, go to: https://smithsgore.com/2021-real-estate-outlook/
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