Article / St Lucia’s thriving property market Posted: 2011-12-12 13:52:19| Article > Buying & Selling > Home Buying

St. Lucia is increasingly seen as one of the world’s most interesting property markets. The island is in many ways comparable to neighboring Barbados, but St. Lucia’s property prices are about 40% to 60% lower.

St. Lucia is increasingly seen as one of the world’s most interesting property markets. The island is in many ways comparable to neighboring Barbados, but St. Lucia’s property prices are about 40% to 60% lower.

A note of caution.  St. Lucia offers great tax breaks, and is stunningly beautiful.  But yields on condos are some of the lowest in the world, at 2.3% gross. So if you are looking for income from your property, you need to be selective. Houses in St. Lucia, on the other hand, can earn reasonable rental returns.

Reasons for the rising buzz about St Lucia:

Property prices in St. Lucia fell by about 15% in 2010, according to some local property analysts.  Others claim that house prices remained steady or even increased modestly. In the absence of house price statistics, these claims are hard to verify.

In the Cotton Bay Resort, prices for one- to two-bedroom villas are up 35% from two years ago.

In The Landings, prices are around 10% up from its first opening in December 2007.

In residential developments like The Seaside, Allamanda, Marquis Estate, and The Tides Sugar Beach, apartments and villa prices were almost unchanged from two years ago, based on current advertisements.

St. Lucia’s currency is pegged to the US dollar at EC$2.7 to US$1.

House prices

Property values rose by about 10% to 15% annually from early-2000s to 2008, local analysts estimate. The northern coast, with most residential developments, saw the highest house price rises.

Now prices in St Lucia range from US$1,207 to US$2,649 per square metre (sq. m) for houses from 150 sq. m to 700 sq. m.

Typical prices in March 2011:

The average condominium price was US$2,994 per sq. m.

There have been numerous residential developments in the past decade. A notable feature is the attractive tax incentives

Most new developments are in the island’s north, including Castries, the capital city, and Rodney Bay. South Coast development is limited by strict planning laws, and by the area’s dense rainforest.

          1-bedroom apartments: from US$550,000 to US$610,000.
          2-bedroom apartments: from US$750,000 US$1.3 million.
          3-bedroom apartments: from US$1.15 million to US$2.15 million.

          2-bedroom apartments start from US$755,000.
          3-bedroom townhouses sell for US$875,000
          Villas sell for US$1.85 million.

          1-bedroom villas: from US$395,000.
          2-bedroom villas: from US$495,000.
          3-bedroom villas: from US$595,000 to US$1.1 million.
          Luxurious four-bedroom villas: from US$1.4 million.

Sluggish mortgage market

Property in St. Lucia is usually bought for cash, in foreign currency (US dollars). The mortgage market hardly grew the past decade.  It was 19% of GDP in 2010, up from 18% of GDP in 1997, according the Eastern Caribbean Central Bank (ECCB).

Nevertheless St. Lucia’s banks do offer mortgages to non-residents. Interest rates are about 3% above US LIBOR, with maximum loan to value (LTV) ratios from 60% and 70%, and terms up to 25 years. Non-residents can borrow up to US$1.5 million. Bank lending rates ranged from 9.5% to 13% in 2010, according to the ECCB.

Total property loans totaled US$229.5 million in 2010, up by 2.9% from the previous year.

In 2010, about 46% of the outstanding property loans were used for house and land purchases, while the remaining 54% were used for home construction and renovation.

Rental yields rising, but still low

In Q3 2011, the average rent for two to three-bedroom apartments ranged from US$1,100 to US$1,300 per month. Prices fell the previous year, so gross rental yields have risen a litte.

The supply of long-term private rental properties in St Lucia is limited, as most landlords prefer to rent to short-term vacationers. Rental properties are concentrated on the northwestern coast, especially in Castries.

Economic growth was modest in 2011

GDP growth is expected to be 2% in 2011, according to the IMF.

St. Lucia’s economy expanded by a healthy 4.4% in 2010 after a 1.3% decline in 2009 and 5.8% growth in 2008, mainly due to an increased activity in construction and tourism, supported by a bouyant property market.

Inflation was 3.3% in 2010, up from -0.2% in 2009. From 2003 to 2007, St Lucia had average inflation of 2.6% per year.

St. Lucia’s unemployment was 20.6% in 2010, up from 18.1% in the previous year, according to the ECCB.

According to the latest IMF report, “In the face of increasing headwinds from subdued growth in the U.S. and Europe and an uncertain global financial environment, we expect growth at about 2% in 2011, shored up by post-hurricane reconstruction. High world commodity prices are expected to put temporary pressures on inflation and the balance of payments in 2011, but these will subside over the medium-term”.

Twin pillars of St. Lucia’s economy: construction & tourism

Economic growth in St. Lucia is driven by tourism and construction. Private sector construction recovered steeply in 2010, as a number of small-scale projects were undertaken during the year.

From January to August 2011, tourist stay-over arrivals were 6.2% down on the same period last year, according One Caribbean.  This was disappointing after a good year in 2010, with stay-over arrivals up by 9.9%, and The hotel industry expanding by 8.2%.

Helen of the West Indies

St Lucia is often called “The Helen of the West Indies” for its captivating beauty. With a total land area of about 620 square miles, St Lucia is one of the most beautiful islands in the world.

The island has excellent beaches, scenic waterfalls, mountains, rainforests, orchids and exotic plants. The twin mountain peaks of Les Piton drop dramatically to the water´s edge on the west coast. In the south, visitors get close to bubbling pools of lava and steaming sulfurous spouts at Sulphur Springs Volcano, or splash in the sulfur-infused waters of the Diamond Waterfall and Mineral Baths.

The UK and France spent almost two centuries fighting to control the island. French influence is deeply felt today, in the names of its cities, towns and bays, in the architecture and in the French-inflected patois spoken by the islanders. However, English is spoken at all major hotels, major tourist attractions and restaurants.

St Lucia’s world-class annual events add to its appeal to tourists and holiday makers. Popular events include the Atlantic Rally for Cruisers (ARC), the Rose Festival and the Jazz Festival.

Author Details

Terry Hawkins

United Kingdom

Telephone:+44 20784662788

Languages: French, English

Markets: Barbados, Saint Lucia

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