Aruba property market – a puzzle
December 02, 2010
Aruba is a puzzle. Apparently an attractive investment with an expanding tourism industry, with both affordable and luxurious properties, the growth of Aruba’s real estate market has been sluggish.
There are no official data such as average house prices per sq. m. and rental prices in Aruba, so it is difficult to analyze the market. However, three-bedroom family homes can be found in Oranjestad, the island’s capital, and in surrounding areas at prices typically ranging from US$350,000 to US$450,000 (AFL 630,000 to AFL 810,000), according to Coldwell Banker Aruba Realty. In prime locations like Malmok, an exclusive community, luxury villas go from US$800,000 to US$1.2 M (AFL 1.4 million to AFL 2.2 million), depending on size.
Some newly constructed properties are:
- The Divi Aruba Residences – prices range from US$350,000 to US$1.2 M (AFL 630,000 to AFL 2.16 million) up to 1,862 sq. ft.
- Oceania Residences – prices start at US$445,000 (AFL 801,000) for one-bedroom units, US$525,000 (AFL 945,000) for two-bedroom units, and US$770,000 (AFL 1.3 million) for three-bedroom units
- Oasis Luxury Condominiums – prices start at US$460,000 (AFL 828,000) for two-bedroom units
- Jardines del Mar town homes – prices range from US$350,000 for two-bedroom units to US$450,000 for three-bedroom units
A rapid housing expansion took place with the oil refinery. Foreign labourers poured in, as did and other investments. The population increased, contributing to housing demand.
A construction boom in hotels and condominiums took place in 2006, but construction then declined in succeeding years, particularly in 2009, as a consequence of the global recession. Figures for Q1 2010 show no improvement. The Centrale Bank Van Aruba recorded a 56.8% decline in the total value of permits granted, despite a 29.2% increase in the number of granted permits.
Tourism picks up, but economy still down
Tourist arrivals rose 6.2% in the year to Q1 2010, dominated by US tourists. Arrivals from Latin America are also growing, with a significant increase in tourism from Brazil, according to Centrale Bank Van Aruba.
2009 was a record year for cruise tourism. New cruise lines included Aruba in their programme, and there were larger ships. There was a 9.1% increase in cruise passenger arrivals in 2009 compared to 2008, offseting the 1.7% decline in stay-over visitors.
Despite strong tourism, Aruba’s economy is still below pre-crisis levels. The Valero oil refinery shut in July 2009, as world demand fell, and many contract workers were laid off. Construction also declined. Consumer demand and capital spending fell, leading to a sharp contraction in GDP. Inflation (12-month average) was -2.1%.
The Centrale Bank expects a 2.5% contraction in GDP in 2010, unless the refinery restarts operation.
“Aruba: 90,000 Friends You Haven’t Met Yet”
Tourism is Aruba’s leading industry. The majority of repeat visitors are timeshare unit owners. The timeshare market is a significant backbone of the tourism industry. Occupancy rates at timeshare properties averaged 77.3% in 2009, based on reports by the Centrale Bank.
Efforts to attract new and repeat visitors have the government to rejuvenate tourism facilities particularly in Oranjestad, the island’s capital. The programme emphasizes a commitment to avoidijng overdevelopment. As a result of the rejuvenation , there was a 60% increase in the repeat visitor rates in 2009.
An ad campaign by Aruba Tourism Authority called “Aruba: 90,000 Friends You Haven’t Met Yet” was also developed, marketing the island’s beaches and the friendliness of the people.
Aruba awaits new developments
Concerned that there are only a few public beach areas left, newly elected Prime Minister Mike Eman is working to achieve sustainable development in the tourism industry.
Nonetheless, Aruba is anticipating the completion of the Ritz-Carlton Hotel in Palm Beach, where Aruba’s finest beaches are located. The 320-room oceanfront luxury resort, set to open in 2012, is expected to spur other investments, and attract more visitors to the island.
Construction activities in the residential market are ongoing as well:
- Acqua Condominiums Aruba, Palm Beach - occupies 30,278 sq. m. of land on and consists of three towers – North, East, and South. The property will be completed in 2012.
- Tuscany Residence Aruba, Oranjestad - a low-density gated community featuring free-standing homes, condos and townhouses. Construction of model homes started in November 2010. Completion of the project is set in the summer of 2011.
- Anabui Private Residence Club, Malmok - the first deeded fractional resort in Aruba and the new offering of Tierra del Sol Resort, Spa & Country Club. It offers 36 three-bedroom residences. Pre-construction prices start at US$149,000. Tierra del Sol Resort is planning to construct 200 more homes.
- Gold Coast, Malmok - the newest residential community in Aruba. When completed, it will boast over 260 residences including two- and three-bedroom townhouses, three-bedroom condos, and and three- to four- bedroom villas. More than 85 residences will be delivered by December 2010.
- Aruba property market – a puzzle - December 02, 2010