The islands that are already worst affected include Bahamas, Bermuda and Jamaica where tourism is the main economic driver. Caribbean property construction within the islands can account for up to 90% of GDP.
In the last few years there has been a significant decline in tourist numbers which is causing a problem for the construction of luxury hotels and resort property.
Caribbean Property Construction Problems Create Tourism Problem
Along with declining tourist numbers, Caribbean construction projects for hotels are being delayed or stopping altogether. Property developers have been relying on mixed use projects which are no longer commercially viable. Of the 105 hotel projects underway in the Caribbean, around half are still under construction, and the remainder are likely to be mothballed for some years until the economic situation improves.
Investment mainly come from the USA, China and EU which of course are experiencing their own financial meltdown. Tourism is one of the sectors which tends to shrink in a recession, and with the Caribbean so heavily reliant on it, dark times may be ahead. Even cruise ships visiting the islands have declined by around 200,000 people per year. Buy To Let speculation which prompted a boom for the Caribbean property construction market has all but collapsed.
More evidence that Caribbean property construction is in decline comes from Barbados, where resort construction and manufacturing makes up nearly 60% of GDP. This equates to Barbados employing half of the local labour force in tourism related jobs, which have been steadily reducing since 2006. Even Bermuda, which has the highest per capita income in the world, is struggling with a slowdown.
Tax Causing A Problem
Various tax increase changes within the islands has not made it any easier for off plan builders and residents, as local governments try to get a grip on the crisis. In some cases it’s added to the problems already being experienced. Caribbean islands are vulnerable to tropical storms, which can often wipe out whole villages and cause massive damage, for which there is very little money to aide repairs. Economic experts feel the worst may still be to come for Caribbean property construction and tourism.
*extracts from Caribbean Construction