US Virgin Islands' property market improving
March 16, 2015
Home owners are feeling better in the U.S. Virgin Islands.
In that haven of luxury residential properties St. John, the average home sales price fell slightly in 2014 - but only by 1.5%, to approximately US$1.04 million, according to Islandia Real Estate. This is a drop - but it is a sharp improvement from the price decline of 10.9% in 2013, and the decline of no less than 31.3% in 2012.
In St. Thomas, where the USVI’s capital Charlotte Amalie is located, the average home sales price rose by 16.1% to US$772,334 during the year to end-August 2014.
In St. Croix, the largest of the U.S. Virgin Islands, the average home sales price rose by 4.2% to US$332,950 in 2014 from a year earlier, after y-o-y drops of 18.8% in 2013, 10.1% in 2012 and 2.9% in 2011, based on figures released by Re/Max Team San Martin.
In 2013, the average home sales price in the U.S. Virgin Islands rose by 22.1% to US$538,369, according to the USVI Bureau of Economic Research. The recovery was led by St. John/St. Thomas, with home prices soaring by 49.6% in 2013 - clearly, most of this house-price recovery took place in St. Thomas, given the declines in St. John and St Croix noted above.
The condominium market was mixed, but on average less strong in 2014:
- In St. John, the average sales price of condominium units rose 16.5% to US$714,924 in 2014.
- St. Thomas average condo sales prices dropped 1.8% to US$219,512 during the first eight months of 2014, compared to the same period the previous year.
- In St. Croix condominium sales prices dropped 7.1% y-o-y in 2014, to an average of US$149,730.
Condo sales prices in the whole U.S. Virgin Islands fell 15.9% y-o-y in 2013, to an average of US$208,205. In St. John/St. Thomas, condo prices fell by 3.8% y-o-y in 2013 while in St. Croix, condo prices dropped 4.6% over the same period.
The USVI’s property market is expected to continue to recover this year, as more visitors come. However the USVI remains vulnerable to the overall state of the global economy.
House price boom and bust
The U.S. Virgin Islands saw a housing boom from 2000 to 2007, with nationwide home sales prices surging by 90.1%, according to the USVI Bureau of Economic Research. The condominium market experienced even bigger price rises, of an average of 133.8% over the same period.
However in 2008, home prices dropped 11.8% while condominium prices fell by 2%. Home prices in St. John/St. Thomas saw the biggest decline of 28.5%.
|PROPERTY PRICE CHANGE (2000-2013)|
|HOME PRICE CHANGE (%)||CONDO PRICE CHANGE (%)|
|St. John/St. Thomas||146.8||-39.1||49.6||161.8-7||-11.9||-3.8|
|US Virgin Islands||90.1||-16.0||22.1||133.8||-11.4||-15.9|
|Source: USVI Bureau of Economic Research|
Demand is now rising in St. Croix
In St. John the number of homes sold fell 18.8% in 2014 from a year earlier, according to Islandia Real Estate. On the other hand, condominium sales increased 12.5% over the same period.
Residential property sales in St. Croix are now increasing sharply. In 2014, the total number of home sales in the city soared by 28.8% y-o-y while condo sales climbed by 78% over the same period, according to Re/Max Team San Martin.
From 2008 to 2013, the average number of homes sold in the whole territory was 296 units per year, down from an average of 508 units from 2003 to 2007, based on figures from the USVI Bureau of Economic Research. Over the same period, the average number of condo units sold also declined to 238 from 513 units every year.
Long-term rental market is small
Most landlords cater only to short-term vacationers and holiday makers. Long-term rental residences in USVI are usually not advertised, except to locals. Most landlords only put a “for rent” signage in front of these rental apartments, which are often part of a larger house, with the landlord living next door.
St. John has the most expensive rental houses and villas. Monthly rents for one-bedroom apartments range from US$950 to US$1,800. Three to four-bedroom beach houses can cost from US$2,000 to US$7,000 per month. Recently, more condominiums have been built near hotels and resorts in St Thomas and St Croix.
Land prices are rising
Land prices in all the territory’s major islands are now rising.
- In St. John, land prices were up by 2.8% y-o-y in 2014, according to Islandia Real Estate.
- In St. Croix, land prices also surged by 48.5% y-o-y in 2014, according to Re/Max Team San Martin.
- In St. Thomas, land prices were also up by 16.4% in August 2014 from the same period last year.
Residential construction activity remains down
In 2014, the total value of private residential permits in the U.S. Virgin Islands fell 19.5% y-o-y to US$90.29 million, based on figures from the USVI Bureau of Economic Research. However this conceals large differences - building permits are surging in St. Croix.
- In St. Thomas/St. John, private residential permits value fell 43.4% to US$46.9 million.
- In St. Croix, the value of private residential permits rose 48.4% y-o-y in 2014, to US$43.4 million
After rising in 2008 by 16.9%, the value of private residential construction permits dropped sharply in 2009 (-35.6%). The decline continued in 2010 (-7%), 2011 (-14.5%) and 2012 (-5.6%). The value of private residential construction permits finally increased 10% in 2013.
Economy: five very tough years
Tourism is the US Virgin Islands’ main industry. It generates 2 million visitors every year, and accounts for 80% of GDP. From January to November 2014, the total number of stay-over tourist arrivals in the territory rose by 3.9% y-o-y to 655,477 people, according to One Caribbean, and cruise passenger visits increased 4.3% to 2,083,890 people in 2014.
The last few years have been very tough for the USVI´s economy, despite tourism.
USVI’s GDP dipped 5.5% in 2009, based on figures from the U.S. Bureau of Economic Analysis. After a short-lived recovery in 2010 (real GDP growth of 1.3%), GDP plunged again by 7.5% in 2011. Real GDP then fell by a huge 13.8% in 2012, and by another 5.4% in 2013, mainly because of the closure of the HOVENSA refinery in 2012, which caused the layoff of around 1,200 employees.
No figures are yet available for 2014, but things look better. During the year to end-November 2014, the overall unemployment rate in the U.S. Virgin Islands dropped to 13% from 13.4% in the previous year, according to the USVI Bureau of Economic Research. In St. Croix, the jobless rate fell to 14% from 15.2% over the same period. In contrast, in St. Thomas/St. John, the jobless rate rose to 12.2% from 11.8%.
What attracts people to USVI?
A brief glimpse of the charms of these marvelous islands:
St. John, the “Love City”
St. John is known for its well-preserved natural beauty and picturesque hills dotted with lavish villas. Unlike the overdeveloped St. Thomas, real estate developments in St. John are restricted. The island is the wealthiest and most expensive of the US Virgin Islands.
St John is home to the territory’s National Park, which protects more than half of St John’s land area. The National Park includes some of the best beaches and coral reefs in the world.
- Sunset Ridge: located in Cruz Bay, Time-share and condo units are available as well as some units under construction. From $575,000. Weekly time shares from $8,000 and up.
- Pastory Estates: located on the hillside just five minutes from Cruz Bay, it has four buildings with thirteen one and two bedroom condos. One-bedroom units are priced at least $350,000.
- Pond Bay Club: located in Chocolate Hole just three miles from Cruz Bay, it is an exclusive 15-acre fractional time-share development consisting of 50 furnished three-bedroom cottages and villas and other recreational facilities.
St. Thomas, the “Rock City”
Mountainous St. Thomas is an ocean lover’s paradise. Hillside houses usually have magnificent views of the ocean. Snorkeling, scuba diving and windsurfing are popular tourist activities. St Thomas is home to USVI’s capital and largest city, Charlotte Amalie.
Recent residential developments in St. Thomas include:
- The Residences at Cabes Point: a luxury gated community along Lindqvist Beach on Smith Bay, on the east end of St. Thomas. It has a full-time in-house manager as well as a tennis court and pavilion, and a private beach club. It has slots for only 17 residents.
- Dolphin Cove: a luxury community situated on St. Thomas´ "Gold Coast"; with around 20 acres of oceanfront property, Dolphin Cove plans to build at least 4 oceanfront bungalows, 64 villas, and 36 luxury flats offering views of Nazareth Bay and St Croix and the channel between St. Thomas and St. John.
- The Preserve at Botany Bay: 360 acres of land designed to be a high end, exclusive community which consists of plans for 150 homes/lots. Lot prices start at US$950,000.
- Cabrita Point Estate: the creation of a new luxury development comprising of 35 home sites ready for construction was announced by the Ritz-Carlton Development Club in cooperation with John Foster Real Estate on July 2010. The site offers oceanfront and water views.
St. Croix, the “Twin City”
St. Croix is the largest island in the US Virgin Islands, but is more laid back than the other two islands. Unlike St. Thomas and St. John’s mountainous landscape, one of St. Croix’s charms lies in its varied topography, which goes from uncrowded white-sand beaches to rolling hills to rain forests.
St Croix is nicknamed the Twin City because of its two main towns: Christiansted and Frederiksted. Out of the two, Christiansted is more developed featuring shops and superb restaurants with a modern setting. This town is also known for architectural and historic richness, present in its 18th-century Danish-style buildings constructed by African slaves. Meanwhile, Frederiksted, with its historic landmark Fort Frederik, has been the main port for cruise ships in St. Croix.
Some notable attractions in St. Croix include the Buck Island Reef National Monument, the renowned Cane Bay Wall, St. George Village Botanical Gardens and the Cruzan Rum Distillery. St. Croix is also the only island in the US Virgin Islands that has a casino, the Divi Carina Bay Casino.
The Virgin Islands Housing Authority is responsible for planning, financing, constructing, maintaining and managing public housing developments, mostly on St. Thomas and St. Croix, and it manages around 15% of USVI’s total housing stock. VIHA provides rental assistance to low-income families, elderly and disabled persons, with rentals based on the highest of three methods:
- Income-based: 30% of the monthly-adjusted income Total Tenant Payment (TTP)
- Welfare rent, if applicable
- Minimum rent of US$25
Currently, VIHA runs 3,345 public housing units. Approximately, 1,605 units are in St. Thomas and St. John, while the other 1,740 units are in St. Croix.
- US Virgin Islands' property market improving - March 16, 2015
- US Virgin Islands' property market on road to recovery - January 02, 2013