Despite challenges presented by natural disasters, rising construction costs, and general economic uncertainty, the Caribbean real estate market continues to strengthen. Tourism remains the primary economic driver for many Caribbean nations, and its recovery to pre-pandemic levels has directly influenced the regional real estate market. Rising demand for second homes overseas, Citizenship by Investment programmes, and recent interest rate cuts in some countries have also boosted the market.

Premium Properties Setting New Records

According to the 2023-24 BCQS Market Trend Report, real estate in St. Barthelemy remains the most expensive in the Caribbean, with premium properties ranging from around US$1,500 to over US$2,500 per sq. ft. The Cayman Islands and Turks and Caicos follow closely, with many properties exceeding US$2,000 per sq. ft. In October 2023, Turks and Caicos set a record with the sale of a 36.25-acre beachfront site in Grace Bay for US$88.75m, along with the sale of ‘Sole E Mare – Tranquility Lane’ for US$33.5m, marking the highest price for a residence in Providenciales. Several other sales in 2023 surpassed US$15m, with some homes fetching up to US$2,900 per sq. ft.

The Cayman Islands continues to experience strong sales, particularly along Seven Mile Beach, with over 25 condos selling for in excess of US$5m since early 2023. This figure excludes pre-construction sales from new developments like The Watermark and Lacovia, where list prices reach US$19.25m. According to the Cayman Islands Real Estate Brokers Association (CIREBA), sales volume for the first quarter of 2024 surpassed US$250m.

Other notable regional sales include a $19.5m villa in Oil Nut Bay, British Virgin Islands, a Nassau residence listed at $39.49m and a villa in St. Peter, Barbados, for over US$30m.

Branded Residences on the Rise

The growth of branded residences in the region has boosted property prices and spurred demand from overseas buyers. According to Savills’ 2022/23 report, branded residences in the Caribbean are expected to double within five years, with brands like The Ritz-Carlton, Kimpton, Mandarin Oriental, Four Seasons, and Six Senses leading the charge. Some of these developments offer Citizenship by Investment (CBI) opportunities, which governments use to bolster local economies and real estate markets. Countries like Saint Kitts and Nevis, Grenada, Dominica, Antigua and Barbuda, and Saint Lucia offer citizenship in exchange for financial contributions, with most requiring a minimum real estate investment of US$200,000.

The Challenges Ahead

Despite its resilience, the Caribbean real estate market faces growing challenges. BCQS research found that across 15 jurisdictions, construction costs rose by an average of 7.25% last year, with Guyana seeing a 22% surge. Real estate insurance is also becoming more difficult to secure. According to Gallagher’s ‘Summer 2024 Real Estate and Hospitality Market Update,’ insurance rates in the northern Caribbean, including the Cayman Islands, Turks and Caicos, Jamaica, and the Bahamas, rose 10-20% in 2024, driven by more frequent hurricanes. Rising costs in both construction and insurance could pose significant risks to the region’s real estate market moving forward.