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Boom Time?

Over the past few years the real estate market on Anguilla has been a bit confusing—perhaps because the world at large is a bit confusing right now…from the USA economy to the Afghanistan situation, from the Iraq War to the North Korea issue, from Iran’s nuclear program to SARS. However, while the market in Anguilla has been quite slow, a number of other Caribbean islands have had substantial real estate appreciation over the last number of months—appreciation based on increased interest in investment as the desire for a primary or second home in a “safe haven” has driven high net worth individuals to the region. Sadly, to date, Anguilla hasn’t been the focus of those investors—as such, one must look at the unique local issues that may be the cause.

First and foremost among the unique reasons that Anguilla has lagged behind recently was the (now resolved) issue of approving alien land holding license applications only with the condition that the purchased or built home not be rented--with the concomitant condition that ExCo would not consider subsequent rental applications for those properties. Happily, licenses are now being issued with rental rights protected and Government is accepting applications from those who don’t have rental rights in their licenses to be so permitted.

Another reason international private real estate investment has been slow on island has to do with the lack of infrastructure development and the discussions surrounding such development—from the airport location to the runway extension, from the potholes on the roads to the new road works programs, from the closing of once viable hotels to the auctions regularly advertised in the local papers. Happily, once again, many of the projects addressing these issues under way (visibly under way, in some cases)—the golf course project is moving along with intriguing rumors that the Ritz Carlton will manage the resort component and the attendant villas, road works projects are under way with the Little Harbour to Blowing Point Road moving forward, and the implacable runway extension is apparently making steady progress at long last.

Therefore, if Anguilla is beginning to be seen to be addressing the unique problems that kept investors wary (as they went elsewhere) it would now seem that the tide should be changing and there should be renewed interest in our market—and, in truth, I believe there is such renewed interest. Homes that were on the market for years and years are now moving—however often at substantial discounts to list price (which is not, I don’t believe, an indication of a poor market continuing but an indication that home owners who have consistently priced their properties in an overly optimistic manner are now more realistic) and undeveloped land is once again being seriously considered (which might be impacted by concern over labor shortages once the hotel and villas associated with the golf course come on line).

At the moment there are a substantial number of inland homes available on Anguilla, a smattering of coastal homes, numerous parcels of inland property with some coastal land on the market. With regard to existing homes, the majority of inland homes are currently priced between US$350,000 and US$500,000 with a few seven figure inland homes on the market as well—this inland group is (in my experience) the hardest group to sell, as most international purchasers are ready to accept the headaches of increased corrosion for the protection of view lines that can only be assured with coastal locations. With regard to the smattering of coastal homes on the market, there are a few available in the US$450,000 to US$600,000 range, but then there is a substantial gap in availability until one considers million dollar properties. With regard to inland property, based on a half acre purchase, the prevailing rates vary between US$65,000 and US$80,000—with regard to coastal property, based on a one acre purchase, the prevailing rates vary between US$150,000 and US$250,000 (please note: I quoted inland at half an acre and coastal at one acre as those are the most common sizes for the two different locations).

With the foregoing in mind, the general absence of top quality homes on the market priced between US$650,000 and US$950,000 is intriguing—in fact, any investor with such a budget is forced to buy a lower priced existing home and add the required improvements…or to buy land and build. In fact, in most cases, maximum value is often derived from the building scenario (although construction does take time, effort and planning, the results are normally worth the endeavor). In fact, I believe that many (if not most) owners of existing homes on the market would be well advised to remember that investors do have the option of new home construction—for with such an option (and given the entrepreneurial attitudes of many of the high net worth individuals that can afford holiday homes) many do decide to build their own dream home instead of buying someone else’s vision. As such, owners of existing homes might be well advised to lower their prices or make improvements to freshen their homes to ensure they are part of the upcoming boom, and aren’t left behind.


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