Turks and Caicos’ luxury property market is healthy
May 18, 2017
Condominium prices soared by almost 30% y-o-y in 2016 to an average of US$939,198. The thriving condo market was led by the development of five-star condominium resorts such as Grace Bay Club, The Palms, Seven Stars and Gansevoort, and a bevy of other five and four-star condo resorts.
Villa prices fell by 4.16% y-o-y in 2016 to about US$1.37 million. Some of the most exquisite standalone luxury villas in Turks and Caicos include Saving Grace, Coral House, and Hawksbill on Grace Bay, Turtle Tail Estate in Turtle Tail, Mandalay and Long Bay House in Long Bay. Other new managed villa projects in the islands that are gaining international attention include The Residences by Grace Bay Resorts, Beach Enclave North Shore, Beach Enclave Long Bay, Beach Enclave Grace Bay, Gansevoort Villas, The Dunes, Blue Cay Estate, Shore Club Villas and Rock House by Grace Bay Resorts.
On the other hand, land prices fell sharply by more than 51% to just an average of US$268,898 in 2016 from a year earlier. The sharp decline in land prices was mainly due to the fact that larger land parcels were sold in the past four years, according to Sotheby’s International Realty.
Property demand remains strong. During 2016, there were 311 real estate transactions, down 3.1% from a year earlier but up 157% from 2010.
- About 87 villas were sold in 2016, up from 65 villas sold in 2015 and just 19 villas sold in 2010.
- There were 92 condominium units sold in 2016, down by 101 condo sales a year ago but up from 34 condo sales in 2010.
- There were 127 land parcels sold in 2016, down from 143 lots a year earlier but up from 63 lots in 2010.
The value of property sales was US$242.13 million in 2016, down by 3.9% from a year earlier but up more than fourfold the sales recorded in 2010.
- The total value of villas sold rose by 28.3% y-o-y to US$119.11 million.
- The total value of condominiums sold rose by 18.4% y-o-y to US$86.41 million.
- The value of lots sold fell by 57% y-o-y to US$34.15 million.
“If you compare Turks and Caicos to other top comparable islands in the Caribbean, Turks and Caicos is still under-priced and offers tremendous value to foreign investors,” said Blair MacPherson of RE/MAX Real Estate Group Turks & Caicos Islands.
There are no restrictions on foreign ownership. Foreigners wishing to buy property in Turks and Caicos need not ask permission from the Government.
Turks and Caicos – prices have moved down, especially for larger condos
Prices in Turks and Caicos have tended to move down over the past year, especially at the higher end. Prices of US$4,400 are typical for condominiums in Providenciales, so that a 120 square metre condominium would fetch around US$530,000
Somewhat higher prices per square metre are typical for larger condominiums. However, it is in this sector that the downward pressure has been most pronounced, with prices of large condominiums moving down to an average of US$5,500, from around US$7,400 a year ago.
Turks & Caicos has absolutely no taxes
There are no income taxes, property taxes, capital gains taxes, or inheritance taxes in the Turks and Caicos Islands for residents and nonresidents alike.
Buying costs are high in Turks & Caicos
Roundtrip transaction costs are around 10% to 22% of the property value, inclusive of the real estate agent’s commission at 6% to 10%.
Turks & Caicos law is pro-landlord
Rent: Rents and rent increases can be freely negotiated.
Tenancy Contract: Rental agreements in Turks and Caicos are either short-term contracts (up to a month) or long-term contracts (more than a month). For long-term rental agreements, tenants usually pay a security deposit equivalent to one month’s rent before occupancy.
Tourism-based economyTourism is the bedrock of the economy. Almost half of Turks and Caicos’ gross domestic product (GDP) is generated by the hotel and restaurant sector.
Rapid economic growth blessed the Turks and Caicos Islands from the 1990s until 2006, with growing investment inflows, visitor numbers, employment, and revenues. Growth peaked at 13% in 1995, and averaged 8% after that.
However after the 2008 financial crisis the country’s economy went into decline. The islands were also hit by 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. Tourism developments ground to a halt. GDP fell by 18.49% in 2009 followed by a further decline of 2.33% in 2010, according to the Turks and Caicos Islands Development Strategy 2013-2017.
At the same time a commission of inquiry set by the Foreign and Commonwealth Office found widespread “political amorality.” The Foreign Office partially suspended Turks and Caicos’ constitution, dissolved the government and the House of Assembly, and imposed direct rule in August 2009.
Home rule was restored in November 2012 and a new parliament was elected.
The economy expanded by 4.6% in 2014, fuelled by strong growth in the tourism sector. For the first time, the number of tourist arrivals crossed the 1.3 million mark.The economy was estimated to have grown by 4.4% last year, after expanding by 5.9% in 2015.
The economy is expected to expand by a robust 4.3% this year and by another 5.3% in 2018. “This projected growth will be driven mainly by strong performance in the tourism sector and projected private sector investments worth more than $400 million” said SPPD Acting Director Shirlen Forbes. Tourism is the bedrock of the economy. Almost half of Turks and Caicos’ gross domestic product (GDP) is generated by the hotel and restaurant sector.
Stay-over visitors increased 17.5% to 453,612 people in 2016 from a year earlier, while cruise ship passengers dropped 8.9% to 846,963 people, according to the Turks and Caicos Strategic Policy and Planning Department. More than 80% of the stay-over visitors were from the United States.
Tourism growth is largely concentrated in the island of Providenciales, famous for the beautiful 12-mile Grace Bay Beach. It caters to a total of over 360,000 stay-over visitors each year while the Grand Turk Cruise Center, the country’s first cruise port, has hosted more than 700,000 tourists every year since its opening in 2007.
To grow tourism, the country has been reaching out to the South American travel market – particularly Brazil – while exploring opportunities to attract Asian luxury travelers. The country recently received "Approved Destination Status" from the Chinese government.
In July 2014, Turks and Caicos received its first-ever sovereign credit rating from Standard & Poor’s (S&P), receiving a rating of BBB+/Stable/A-2, which reflects its vibrant economy and net general government asset position. Turks and Caicos was able to maintain its favourable sovereign credit rating since.
“TCI continues to see strong economic growth in its tourist-based economy, largely due to the ongoing economic recovery in its largest visitor market, the US,” the S&P report said.