However, Jonathan Simpson, listing agent of Realtors Limited, believes that the crisis just corrected overvalued prices of properties in Barbados.
"It's a very stable place - economically and politically - it has a familiarity to it for British buyers with low crime, good roads, hospitals and schools and excellent communication from US and Europe. It has a depth of culture which means buyers can winter there without going crazy," says Savills’ Caribbean director James Burdess.
The resiliency of Barbados’ real estate market attracts buyers - especially compared to the [rice fluctuations in other parts of the Caribbean, according to Chesterton Barbados chairman Kieran Kelly. He also notes that although there were 10% to 15% price drops in some parts of Barbados since 2008, beachfront homes fell by just an average of 5%, while some didn’t have a price decline due to their prime locations.
Beachfront homes can cost approximately from US$ 600 to US$ 2,500 per sq. ft., or US$ 6,420 to US$ 26,750 per sq. m., estimated by Kelly. Inland homes are priced at US$250 to US$ 1,000 per sq. ft.
Barbados has the most expensive luxury properties in the Caribbean, with prices ranging from US$4 million to US$40 million. For the extremely wealthy, there are houses that come with US$75 million price tags.
Most foreign buyers in Barbados are British, followed by Americans. Due to its strong currency, the number of buyers from Canada is growing. In 2012, Germany and other European countries, as well as Trinidad & Tobago, had an increase in tourist arrivals as compared to the decline on other major markets.
Since 2009, when GDP contracted 4.1%, Barbados has had low growth. In 2012, the country’s real GDP remained static, exhibiting no growth. During the first quarter of 2013, Barbados economy contracted by 0.4% and is expected to remain flat, according to the Central Bank of Barbados.
Analysis of Barbados Residential Property Market »
Rental income earned by nonresidents is subject to 25% withholding tax, which is credited against the taxpayer’s final income tax liability.
Capital Gains: There are no capital gains taxes in Barbados.
Inheritance: Inheritance is not taxed in Barbados but transfers of property in Barbados are subject to property transfer tax.
Residents: Residents are taxed on their worldwide income at progressive rates, from 20% to 35%.
Buyer and seller pay for their own lawyer (legal fees are at 1% - 2%, plus 15% VAT).
Tenant Eviction: The landlord cannot evict a tenant without a court order under any circumstances, even when the tenant has not paid the rent for six months. It takes an average of 92 days to evict a tenant.
In 2012, the country’s real GDP was static, and is expected to remain flat in 2013. Barbados has had an average growth rate of 0.4% from 2010 to 2011, after GDP contracted by 4.1% in 2009. Unemployment rose to 11.7% at end of 2012.
By the end of March 2013, inflation had slowed to 3.3%. The IMF expects inflation to slightly increase to 4.9% in 2013.
In 2012, tourism slumped, with a sharp decline of stop over visitors by 6.2%, according to Central Bank of Barbados. The central bank pointed out that the closure of the Almond Resorts, as well as the UK’s Air Passenger Duty and the reduction of the number of flights out of US and UK by two major contributed to the decline. Meanwhile, the shift to other destinations by some cruise ships caused a large decrease in cruise passenger arrivals by 16.4% in 2012.
There was a 16% decline in foreign investments in real estate projects in 2012. This has affected the construction sector, which declined by 3% last year.
Tourism is one of the main economic drivers of Barbados, accounting for 11.8% of the country’s GDP in 2012, according to the World Travel and Tourism Council. During the same year, the tourism sector has directly employed 15,000 people and has a 12.1% of the total employment.
In order to regain the lost cruise ship market, Barbados will be sending a delegation, headed by Tourism Minister Richard Sealy, to the United States for talks with major cruise lines as part of Barbados’ promotion. Th government's main promotion agency, the Barbados Tourism Authority (BTA) will be split into two institutions, one focusing on marketing, and the other in charge of product development.