The Turks and Caicos property downturn – where are the opportunities?

It has been a tough couple of years for Turks and Caicos. The global economic recession abruptly ended its high-end tourism and luxury property development boom. Revenues, tourism, and duties fell sharply, causing a public finance deficit  in 2008 and 2009.

Then came evidence of corruption in former Premier Michael Misick’s administration. A commission of inquiry set by the Foreign and Commonwealth Office in July 2008 found widespread “political amorality”.  After its May 2009 report, the Foreign Office partially suspended the Turks and Caicos’ constitution, and dissolved the ministerial government and the House of Assembly.   Since August 14, 2009, the Turks and Caicos have been under direct rule from the UK Government,  with Governor Gordon Wetherell holding all executive and ministerial power.

The next elections will be held in July this year. But although Governor Wetherell has brought in the smallest projected deficit in four years, at US$26.6 million in 2010/2011, and reduced stamp duty rates, most islanders are disappointed. Local residents feel that the government is more focused on the ongoing corruption investigations rather than the promotion of the Islands to attract foreign investors and developers.

Common complaints:

  • reduced household incomes (a 10% reduction in public sector wages),
  • rising unemployment and lack of jobs, particularly in the construction sector. 
  • the collapse of the Turks and Caicos Island Bank, one of the leading locally-owned banks in the country, led to thousands of depositors (mostly immigrant workers) losing their life savings.

House prices down, lots of properties available

The Turks and Caicos property market grew rapidly from 2001 to 2007, as tourism tripled. There was an unprecedented boom in luxury homes and resorts. Prices went up fast – a two-acre beachfront property on Long Bay which in 2001 would have sold for US$150,000, sold for US$1.5 million in 2007, according to previous report by Global Property Guide.

In 2010, house prices have fallen by 20% to 30% compared to 2009, according to ERA Coralie Real Estate.

“Long term rents are lower by as much as 50%,” says James Brown, sales associate at ERA Coralie. “We had many construction and management workers leave the Islands as our economy changed from ´building´ to ´operating´ the many resorts put in place here over the last four years.”

While market activity has slowed, particularly in the sister islands (outer islands), the island of Providenciales benefits from its popular resorts, the ongoing airport expansion and improved infrastructure.
“This is where one can find the best discounts and good selection. Currently mid- to high-end condos are selling the best. The price range of US$1 million to US$3 million would be the most active category,” says Brown.

There is also a growing interest in South Caicos, where a major new development, SailRock, is starting up.

  • Oceanview residences are priced from US$329,900 for studios and from US$429,900 for one-bedroom.
  • Beachfront villas start at US$999,900.
  • Oceanview home sites go from US$199,900 and oceanfront home sites from US$79,900.
  • Home sites overlooking the Bell Sound Nature Reserve are priced from US$28,900.

Where luxury homes defy recession

Two exclusive islands remain highly desirable and are doing excellently.   Parrot Cay island resort hosts the vacation homes of stars like Bruce Willis, Christie Brinkley and Keith Richards.  The resort is offering new homes for rent or purchase. Sale prices of the new single-floor, three-bedroom villas (each on 1.5 acre lots) start at US$10 million. Two-bedroom beach houses, set to open in 2011, will be for sale starting at US$5 million.

The private residential island of Ambergris Cay in southeastern Caicos is home to the Turks & Caicos Sporting Club. The club received two impressive awards in 2009 – the “Best Private Island of the Year” and the “Best Development of the Year” – both from Caribbean World Magazine. Prices of home sites range from US$650,000 to US$6.5 million.

Unemployment reaches record high

Unemployment in the Turks and Caicos has reached a record high of around 12%, caused largely by job losses in the construction sector, with many large-scale projects stalled due to financing problems, while others await construction permits or development agreements from the interim administration. According to the Economist Intelligence Unit (EIU), some investors were required to repeat due diligence activities already completed under the Misick administration.

Some major projects experiencing delays:

  • The Ritz-Carlton resort community on West Caicos, called the Molasses Reef. It was put on hold when the original financial source collapsed, although there are now new backers. When resumed, the project will consist of low-density oceanfront cottages, villas, and private home sites. Prices will start at US$2.7 million.
  • The Residences at the Mandarin Oriental (opened in 2010) on Dellis Cay. After some delays, construction is now in progress. The project consists of 17 stand-alone villas and 78 multi-roomed apartments.
  • Six Senses Resort and Spain the remote island of Salt Cay. Phase 1 has a budget of US$200 million. The hotel component consists of 40 stand-alone guest villas with an average of 1 acre per villa. The residential component consists of 13 private villas, each to be built on minimum 2 acre lots. The proposed opening date is in 2013.
  • The Shore Club, a new condominium project on Long Bay Beach. It will consist of 85 low-density units. Pre-construction prices are as follows:
  • The Colonial House: 3-bedroom units (3,101 sq. ft.) – US$2,095,000 - 2,295,000
  • The Royal Barbadian: 3-bedroom units (2,887 sq. ft.) – US$1,650,000 - US$1,795,000
  • The Plantation Loft: 3-bedroom units (2,506 sq. ft.) – US$1,995,000

Nikki Beach Club, which opened in April 2008, was closed in September 2009 and is in receivership. On the other hand, the Beaches Resort Villages & Spa had a US$125 million expansion in 2009, and now offers additional 162 two-bedroom family suites.

The Islands look to tourism for economic recovery

Most of the Turks and Caicos’ visitors come from the US (its major trading partner), and Canada, followed by Europe and other Caribbean countries.  Rapid expansion of tourism and the financial sector led to strong economic growth in the 1990s, peaking at 13% in 1995, and averaging 8% after that. Growth in tourism, however, was concentrated mainly in the island of Providenciales. Popularly called Provo, the island is famous for the beautiful 12-mile Grace Bay Beach. It is now the most populated of all the islands.

Tourism fell in 2008 and 2009 due to the global crisis. The islands were also hit by two hurricanes Hannah and Ike, which devastated the capital, Grand Turk, and smaller islands.

Many hotels and resorts slashed their room rates from 30% up to 50% to attract guests. The move paid off and tourism improved in 2010. Tourist arrivals rose 25% for the first half of the year, according to the Turks and Caicos Tourist Board – most notably from Canada (a 97% increase). Arrivals from the Caribbean rose 27%, while 21% and 5% increases were recorded for the US and Europe.

Interim government’s effort to boost revenue

Stamp duty on property sales was a major source of income for the Turks and Caicos   government. In the hope of attracting more real estate purchases by local residents (Belongers) and help first-time home buyers, new reduced stamp duty rates were introduced on May 7, 2010.


For Providenciales, Parrot Cay, Pine Cay, Ambergris Cay, Water Cay:
Less than $25,000 no duty
$25,001 - $500,000 4% (one discounted payment of 3.6% or four payments of 1.0%)
$500,000 - $1.5 million 6% (one discounted payment of 5.4% or four Payments of 1.5%)
$1.5 million - $3 million 8% (one discounted payment of 7.2% or four payments of 2%)
Over $3 million 10% (one discounted payment of 9% or four payments of 2.5%)

For Grand Turk, South Caicos, Middle Caicos, North Caicos, East Caicos, Salt Cay:
Less than $25,000 no duty
$25,001 - $500,000 2% (one discounted payment of 1.8% or four payments of 0.50%)
$500,000 - $1.5 million 3% (one discounted payment of 2.7% or four payments of 0.75%)
$1.5 million - $3 million 4% (one discounted payment of 3.6% or four payments of 1%)
Over $3 million % (one discounted payment of 4.5% or four payments of 1.25%