2016 Market Report - Century 21 Grenada Grenadines Real Estate

Transcription

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GRENADA REAL ESTATE MARKET REPORT - JANUARY, 2016
Pg.
From Paula’s Desk3
Market Overview4
Power of Sale9
International Buyers Index11
Commercial Property Update13
SGU Rental Market Assessment15
Developments - Resorts, Residential Resorts, CBI
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It is important to recognize that Grenada’s real estate market is very small. In fact, the total monthly real estate transactions – for the entire
country - averaged only US$3 million per/month in 2015. The small datasets are easily skewed by a single outlier. This will sometimes be
noted in the body of the report, and must always be considered.
There are very limited sources to obtain data, and the task is a purely manual one. Research clerks have spent days and days capturing
the data in this report from the various Government of Grenada sources. The result is accurate, but less than perfect. Once gathered, data
is input into our in-house database for use in compiling market reports, for providing valuation services, and in supporting our professional
guidance for a range of real estate services.
The report is focused on southern Grenada. This is a result of the fact that nearly all of the volume and value of real estate transactions occur in
the parishes of St. George and St. David. While Century21 remains active throughout the island (and in Carriacou), many of the observations
below pertain more to the southern parishes.
Note of Thanks: This report could not have been completed without the support of a dynamic network of individuals and organizations. A
special thanks to: Opixels for the design and layout; the Government of Grenada Registry Office; the Physical Planning Department for the
statistics on building permit applications; El Sylvester and his team for their hours of data collection; The Grenada Citizenship by Investment
Committee (CBIC), and the entire Century21 Team (in particular the Valuations Division) for helping to compile the report.
Copyright 2016 @ All Rights Reserved. No part of this report may be reproduced, published, distributed, displayed, copied or stored for public
or private use in any information retrieval system, or transmitted in any form by any mechanical, photographic or electronic process, including
electronically or digitally on the Internet or World Wide Web, or over any network, or local area network, without written permission of the author.
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FROM
PAULA’S DESK
Warmest wishes to you and your family in this New
Year!
I like to begin each year with a review of the one that
has past, and by laying out plans for the new one.
Maybe that is why I am so excited about our Annual
Real Estate Report. You will find a detailed analysis of
all aspects of Grenada’s real estate market in 2015, as
well as our projections for 2016.
The past year has been a good one for Grenada. After nearly seven years of
contraction and stagnation caused by the global economic collapse we are fi-
nally seeing trends of stabilization and signs of growth in the real estate market.
Grenada enters 2016 with a solid pipeline of real estate development projects;
economic growth in the UK, US, and Canada (home to a large portion of our
Diaspora); and growing international recognition as a luxury destination. While
there are some strong remaining drags on real estate values (oversupply, fore-
closures, and taxes on foreign buyers), the market looks well positioned for 2016.
This year we have reinvented our annual report by adding an International Buyers
Index, Power of Sale (Foreclosures) Data, and an SGU Housing Assessment. The
result is a comprehensive insight into Grenada’s real estate market. I am thrilled
by what we have put together, and truly hope that you enjoy it.
I continue to be grateful for the opportunity to provide our real estate services.
We look forward to 2016 and to providing you with your best real estate experience ever.
Paula LaTouche-Keller
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MARKET
OVERVIEW
Century21 Grenada Grenadians Real Estate is pleased to provide its Real Estate Market Report, and a
projection of what is ahead for 2016.
Both monthly and annual real estate totals have improved significantly over the last three years, with 2015
total real estate transactions of US$40.8 million. Total sales transactions values in 2015 were more than
71% higher than 2014. This is a remarkable increase and a strong indication of improvement. The trends
are positive and are on course to continue in 2016.
FIGURE 1 GRENADA’S TOTAL ANNUAL REAL ESTATE TRANSACTIONS
Total sales transaction values in 2015 were
more than 71% higher than 2014
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FIGURE 2 ISLAND-WIDE REAL ESTATE SALES
...in 2015
there were
about 40 real
estate sales
every month
in Grenada
On average, in 2015 there were about 40 real estate sales every
month in Grenada. This number has remained relatively stable over
the past three years, while the average transaction value has increased. The average transaction value in 2015 was US$84,772. The
average transaction value is 64% higher than 2014. This is a result
of an increase in the number of homes being sold relative to vacant
land. It is also a result of several luxury villas transactions. It is important to keep in mind that a single sale of a luxury villa can significantly skew the averages and trends (as is the case in July ’15 and
Dec ’13 in which the average monthly transaction values are skewed
due to the sales of single villas in each of those months). It must be
clearly noted, the increase in transactions values is not due to an
increase in the values of the individual properties.
The average transaction value in 2015 was US$84,772
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FIGURE 3 AVERAGE SALES VALUE
There continues to be downward pressure on
real estate values, but this has eased considerably over the past three years. The easing is
due to improvements in the US and UK real estate markets and economies. These markets are
home to much of the Grenadian Diaspora, which
makes up a significant proportion of real estate
purchasers in Grenada’s market. The noted improvements in the US and UK economies also
improves the position of international buyers,
which make up a small portion of the number of
monthly transactions (approximately 7%), but a
significant portion of the value of transactions (a
single villa sale can occasionally value more than
the combined total of all other transactions for
that month). We are also beginning to see the results of more than five years of intense downward
price pressure and reductions in asking prices. In
other words, the asking prices are now attractive
to potential buyers.
Sales values are
trending at about
15% below asking
prices.
Diaspora ... makes up a significant
proportion of real estate purchases
in Grenada’s market
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FIGURE 4 BREAKDOWN OF TOTAL REAL ESTATE SALES
Some important data that is not included in these
real estate numbers are the transactions of shares
and fractional ownership of properties sold through
Grenada’s Citizenship by Investment Program (see
box on pg.18). This program was launched in 2013,
and is gaining significant traction in the global market. Several luxury developments have been able to
raise the needed capital through sales of shares in
a development company or fractional ownership of
individual units. These projects are slated to break
ground in the first quarter of 2016. The citizenship
program will bring a considerable number of new
real estate-based projects to Grenada. Much of it
will be operated as hotel room-stock and will have
only a limited impact on the standard real estate market.
It will, however, have a strong positive impact on the
Grenadian economy and create other positive spinoffs.
The citizenship program will bring a considerable number of new real
estate-based projects to
Grenada
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The data for 2015 indicates stabilization and increased improvement in the real estate market.
There remain a considerable number of properties
to be sold under power of sale, while challenges in
the overall Grenadian economy continue to thwart
domestic demand (or more accurately, domestic purchasing power). Grenada remains a buyer’s
market, with some significant opportunities, and a
notable increase in market interest and activity.
volumes in 2016. Look for increased acquisitions of
large development tracks (for the development of
projects through the Grenada Citizenship by Investment Program), and an increase in interest in luxury
villas (due to increased liquidity of international buyers and greater interest in Grenada as a luxury destination). We expect property values to remain flat,
as there is simply too much inventory, relative to demand, to support upward movement in values.
Looking forward, the level of enquiries and strong
tourism visitor numbers for 2016 bode well for the
New Year. While only time will tell, we are projecting continued year-over-year increases of sales
...we are projecting continued year-over-year
increases of sales volumes in 2016
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POWER OF
SALE
Power of Sale (equivalent to the term foreclosure) continues to play a role in the real estate market. The table
below indicates that power of sale transactions in 2015 were valued at US$4,728,385 and made up 12% of
total real estate market.
FIGURE 5 POWER OF SALE VS MARKET TRANSACTION
The value of power of sale transactions moved from US$2.5 million in 2014 to US$4.7 million on 2015,
an increase of 85%. This increase is mostly in keeping with overall market increases, but does indicate
an uptick of around 1% relative to 2013 and 2014.
Lenders continue to carry a significant amount of nonperforming real estate loans. While the volume of
power of sale transactions dipped in 2014, the average value of those transactions has been climbing,
with an increase of 14% in 2015. This is consistent with the general market trends.
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FIGURE 6 POWER OF SALE TRANSACTION VALUE
The vast majority of power of sale
transactions occurred in the parishes
of St. Georges and St. David’s, with
some limited transactions in St. An-
drews. The likely challenge for lenders with
nonperforming loans will be finding buyers
for the numerous properties in St. Marks,
St. Johns, and St. Patrick’s, as the northern parishes account for only a negligible
amount of sales in the standard real estate
market. The added challenge of selling a
property under power of sale will further
discourage buyers. It should be added that
lenders are not in a position to sell assets at
a discount to market value (as is common
in the US). There is a clearly prescribed process in place that favors the borrower and
ties prices to market values.
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INTERNATIONAL
BUYERS INDEX
Despite the high transaction costs incurred by non-Grenadian purchasers, there remains a pool of international buyers of Grenadian real estate. They come from literally all over the world, with British making up
about half of the number of buyers. It is critical to note that like all of the data in this report, buyers through
Grenada’s Citizenship by Investment Program are not included, as the data are simply not yet available.
ORIGIN OF INTERNATIONAL BUYERS OF REAL ESTATE IN GRENADA
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In all, 36 foreign buyers purchased real estate in Grenada in 2015*. International buyers accounted for 7% of
the number of real estate transactions in 2015. With purchases totaling US$ 10,381,834 they made up 25%
of the value of all real estate sales. It is, however, important to distinguish between the purchase of real estate in a resort setting and of standard residential property. The reason being that resort developments have
concessions; most importantly the foreign buyer does not pay the Alien Landholders Tax on the purchase
and sale of the property.
$10,381,834
$4,887,000
$5,497,834
Avg Transaction Value in Resort Development
Avg Transaction Value Outside of Resort Development
$1,629,000
$166,510
100%
47%
53%
US DOLLARS
Total Real Estate Purchased by Foreign Buyers
Foreign Purchases in Resort Developments
Foreign Purchases Outside of Resort Developments
Most remarkable is that the five highest value transactions make up 60% of the total real estate purchased
in Grenada by international buyers. In fact, the largest transaction accounts for 38% of the total. British purchasers made up the vast majority of international buyers in Grenada.
*There were 8 records from 2015 involving purchases by non-Grenadian buyers that were not available at the Recorders Office.
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COMMERCIAL
PROPERTY UPDATE
There has been considerable movement in the commercial real estate sector throughout 2015. This is evident in the increase in applications and approvals for new construction of commercial units (see table
below), increased occupancy in many commercial complexes, and significant renovation of commercial
property in St. Georges.
Government data on real estate transactions does not clearly distinguish commercial from residential. This
makes tracking the island-wide market extremely challenging. Insights into the commercial market depend
on a combination of sales data (Government and internal), anecdote and observation, and other data sources.
There was a notable increased in application and reapplication for commercial building permits to the Physical Planning Dept. in 2015. In addition, there was notable activity in the renovation of commercial properties
in St. Georges and Grand Anse.
All indications are that strong activity in the commercial real estate sector will continue in 2016. Look to
see some limited additional commercial real estate in True Blue (coupled with student housing), possible
development along the Carenage (spurred on by the temporary courthouse, the new Pizza Hut, and larger
development plans), and ongoing renovation of existing commercial properties in St. Georges and Grenville.
+46.5%
INCREASE
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What True Blue Needs (Hint: A Commercial Complex)
For years, prime commercial lands in True Blue have been built out almost entirely as SGU off-campus student
housing. While there is some justification for student housing, there is a much stronger case to be made for a commercial center in True Blue.
•
Pent up demand – There is a long list of diverse businesses actively seeking a location in True Blue, as
•
The average ft2 of Commercial space rents for 60% more than a ft2 of residential.
•
demand far exceeds supply.
More stable occupancy – Students come and go, with great frequency, meaning it is common to lose
1-2 months of occupancy each year. Even long-term student tenants tend to demand discounted or free
rent over the summer months, when the unit is vacant. Commercial tenants will often agree to 5-10 year
•
leases.
Cost of fit-out – Student accommodations are almost always rented as furnished units (with the cost
borne by the owner) commercial units are almost always leased as unfinished shells (with the cost of all
improvements borne by the tenant).
There are several lots currently available in True Blue capable of supporting a commercial center. Contact Century21
for further information.
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SGU RENTAL MARKET
ASSESSMENT
Century21 maintains a database of SGU-focused rental properties totaling more than 1,300 bedrooms. The
data provides rich insight into the market.
The data shows that studios and 1-bdrm units earn the highest rate; each additional bedroom normally is
rented at a discount. This trend is clear in True Blue, Lance aux Epines, and Calliste; but not in Frequente,
Grand Anse, and Point Salines. This is due only to the limited size of the data sets for those three areas.
The most surprising information from the table is that Lance aux Epines draws higher rental rates than True
Blue. This requires some explanation, as it does not compare apples to apples. The room stock in True
Blue tends to be high-density, apartment-style units, with mid-level finishes. The room-stock in Lance aux
Epines includes several luxury apartment, waterfront cottages, and more residential settings.
In addition to the distinct properties in True Blue and Lance aux Epines is the divergence within the student
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body (see sidebar below). There is a progression from first term students (which must live
on-campus), moving out into True Blue in the
second and third terms, and often venturing into
Lance aux Epines in the final terms for a more
comfortable setting in more luxurious accommodations.
It should be noted that all of these trends are
ripe for disruption. As noted in the sidebar “All
Students Are Not the Same”, the student market is diverse. When properties deliver on an underserved need in the market, they are able to
charge significant premiums. Despite the fairly
established room rates in True Blue, a recently completed project has been able to achieve
full occupancy within a matter of weeks, while
charging more than twice the prevailing rate.
This was done by providing a well-designed,
well built, building with a combination of services and amenities not otherwise available in
True Blue, and appealing to a specific sub-segment within the SGU-student market.
“All students are not the same” The key to maximizing return on investment in SGU-student housing.
There is a tendency to think of the SGU rental market as homogenous in make-up. That is far from the
case. There is a world of difference between a 22year old, second-term, single, vet student; and a 31
year old, fifth-term, medical student with his wife and
child. While this is immediately clear from the preceding description, what may not be so clear is the
importance of understanding the SGU-rental market
to maximize return on investment (ROI) in the development (or redevelopment) of your SGU off-campus
housing.
Some key features that can be properly configured to
increase rental rates, raise occupancy, and maximize
ROI include:
•
Larger Floor-plans
•
High-end Finishes & Furnishing
•
Security
•
Including Utilities (or the ability to pay on-sight)
•
High-speed Internet
•
Pet-friendly Units
•
Washer & Dryer
•
Proximity to SGU bus route
•
Amenities (gym, pool, Jacuzzi, rooftop lounge)
•
Free Storage
•
Concierge Service (Airport pick-up, move- service, etc.)
Century 21 has guided several developers in maximizing ROI by better understanding the opportunities
within the SGU rental market. Contact us to discuss
your property or development plan.
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Developments
Resorts,
Residential
Resorts, CBI
There was considerable movement in the development of medium to large projects in 2015. This
was driven by Grenada’s Citizenship by Investment Program, which has allowed developers to
raise the capital needed for buildout.
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Citizenship by Investment Program (CBI)
Citizenship by Investment Program (CBI) In 2013 Grenada launched its CBI program. In doing so, it joins a competitive global market that includes countries such as Canada, the USA, England, Portugal, and several regional islands.
Despite the global competition, Grenada has created a competitive product that attracts applicants seeking a second citizenship. The options are:
1. A US$200,000 donation to the Government of Grenada, National Transformation Fund or,
2. A US$350,000 investment into an approved real estate development.
There are strong indications that the program is gaining recognition in the global market, not only for the CBI program, but for Grenada and its luxury tourism product as a whole.
Century21 has several development properties that would be ideal candidates for the CBI program. In addition, we
market the real estate component of several CBI-approved resorts.
Some of the most exciting projects that launched in 2015 or will break ground in 2016 include:
La Luna Villas
Joyau des Caraibes (Silver
Sands)
The Pointe at Petite
Calivigny
Though not an approved CBI project, La
Luna was able to build out seven of the
highest luxury villas in Grenada in 2015.
Will be an Ultra-luxury 5 star resort and
residences bult on 10.5 acres of Grand
Anse Beachfront. Construction has
commenced. The resort will include 59
rooms, 12 suites and 9 villas.
The residential resort and marina will
break ground in March of 2016. It will
contain (4) luxury 2 BdRm villas and (12)
condominiums.
The villas range from US$3.5 to $5 million.
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The increased recognition of Grenada’s
CBI program and its ability to attract
development funds and buyers has
significantly raised the interest in large
development tracts in prime locations
and/or with beach frontage.
One of the greatest challenges to the growth of the program will certainly be the limited
number of suitable development sites. Look for it to spur CBI projects in St. David, and
Carriacou, as well as redevelopment of existing resorts in the parish of St. George.
The likely impact of the CBI program and the associated real estate will be mixed. The
initial sales through the CBI program, which is a parallel real estate market (i.e., they
attract a buyer that otherwise would not be interested in local real estate, to purchase
a real estate product within a resort setting, and include concessions not available on a
standard residential purchase.). However, after 3-years the initial CBI investor can, and
likely will, sell their real estate holding (or share/fraction). It remains to be seen how this
will affect the local market, and what opportunities it will create. At the same time, the
CBI-funded projects are causing a great deal of excitement and interest in Grenada as
a destination. In addition, the related construction will have a significant positive impact
on the local economy.
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Sales
Rentals
Valuations
Property Management
CENTURY 21 - GRENADA GRENADINES REAL ESTATE
We are a part of the largest and most progressive real estate organization in the world with 7,700 offices across 68 countries and 117,000
professionals working for you. This gives us the strength and security of a worldwide network, access to the most up-to-date technology
and the resources to successfully market properties to local and international purchasers greatly enhancing the quality of service we can
deliver to our clients.
www.c21grenada.com

2016 Market Report - Century 21 Grenada Grenadines Real Estate

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