Barbados Property News, July - September 2020

EE NE FR NLI O &

Luxe - Page 7

Eastern - Page 9

Ron Karp - Page 32

The Estates at St George - Page 2

BARBADOS PROPERTY

NEWS www.barbadospropertynews.com • July - September 2020 • Issue 129

Endorsed by the Barbados Estate Agents and Valuers Association Inc.

Editor’s Comments At the time of writing, we currently have no cases of COVID-19 in Barbados!

This is largely due to leadership and the excellent handling of our Prime Minister Mia Amor Mottley, and her government. Congratulations to all. Throughout the past few months our PM has communicated to everyone, and when needed she did not hesitate to make the difficult decisions. Many female leaders in the world excelled during the Covid-19 crisis, and we are proud that our leader is amongst them.

This has been an unprecedented journey since our last edition of BPN. I assume most of us have never used the terms- ‘lockdown’, ‘protocol’ and ‘self-distancing.’ Now we use them in everyday conversation. The world has dramatically changed in the past few months, and many people believe it will never be the same again. We have been blessed with a Government that rose to the challenge in the face of adversity, but the recovery will just be as difficult. We are facing a tough time to restore tourism, the cornerstone of our Pamela Hiles, Editor economy.

Normality is slowly returning, and we must step up to the the table that awaits us.

Planes are coming back after the borders have been opened, visitors will return to hotels and restaurants. This is a fabulous place to live, and we should never forget it.

The Paradise island has not changed- the sand, sea and sunshine have always been there and so much more.

Unfortunately, the Hurricane season has now started. We can’t ignore it. Our Insurers are available to advise and don’t be the one who left it too late. Now is the time to prepare. Clean up around your property, trim the trees, get in supplies. All the basics of being prepared! Read the excellent article by James Slattery of BCQS and make sure your insurance is current.

Barbados is alive, and despite Covid-19 tarnishing our economy the better times will follow. Be positive. Crop Over will return next year, tourists will flock to the Caribbean, On the Cover: Terra and who knows, maybe the West Indies cricket team will rise once again!

Enjoy our Barbados Property News Summer Special, and remember BPN is on line at www.barbadospropertynews.com <http://www.barbadosporpertynews.com

Publisher – Hiltop Publications Ltd, 11 Cottage Ridge, St George, Barbados, BB19071 Tel (246) 228-9122, Fax (246) 228-0243 Email: sportingb@caribsurf.com www.sportingbarbados.com www.barbadospropertynews.com www.caribbeanpropertymag.com www.caribbeanmortgageservices.com Editor/Advertising – Pamela L Hiles Design and Art Direction – 809 Distribution – Hiltop Publications Ltd, Brian’s Print Brokerage Printing – Coles Printery The Material and editorial contained in this publication have been deemed accurate at the time of going to print. The views expressed as editorial are those of the Editor unless stated otherwise. No part of this publication may be reproduced without the consent of the permission of Hiltop Publications Ltd.

If you would like to advertise in Barbados Property News call Pam at 228-9122 or 232-0692

Property Insurance Cost Assessments: Be Prepared – BCQS can help!

by James Slattery, FRICS Director - BCQS International An Insurance Valuation or Reinstatement Cost Assessment is an appraisal of a property for insurance value purposes. Through this assessment, a BCQS Surveyor will calculate the construction cost to rebuild a property based on a total loss, inclusive of any demolition costs as well as professional and statutory fees necessary to reconstruct the property “new for old”.

Property owners need to protect themselves and make sure that the full reinstatement cost of their property is reflected in their insurance policy.

The failure to cover the full amount is known as “underinsurance”. Underinsurance is when a building is insured for a lesser amount than the current rebuilding cost.

This means that the insurance premium paid is not representative of the actual risk. This may save a building

Hurricane aftermath in the Bahamas - Photo: Randy Knowles

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owner money in the short-term in terms of a lesser premium, but will be a false economy should a claim become necessary.

Underinsured properties are subject to the insurance industry’s Condition of Average Clause which in essence, reduces the claim according to the percentage of under-insurance, relative to rebuilding costs. For example, if a building is insured for 50% of the rebuilding cost, the maximum of any claim made will be 50% of the insured amount, meaning that the owner will be unable to fully finance the rebuilding of their home or business premises from their insurance claim. This would be further exacerbated by any deductible being taken from the insurance payout the owner receives.

As is often the case, owners do not necessarily know that they are underinsured until they make a claim. This is usually because they are relying upon out of date information or are not getting the right advice regarding the value of their property.

A BCQS reinstatement cost calculation will take into account the property’s size, construction specification, and associated external works, services and utilities. After a detailed inspection of your property, a BCQS reinstatement cost report provides insurance companies with a precise and reliable cost for rebuilding.

FEATURE

Hurricane damage in the Bahamas - Photo: Randy Knowles

Effects of Hurricane Ivan in the Cayman Islands

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Property Insurance Cost Assessments: Be Prepared â&#x20AC;&#x201C; BCQS can help!

Additionally, when an insurance claim is necessary, a BCQS surveyor can help by assessing the damage and work in conjunction with a Loss Adjuster to help settle these claims as quickly as possible and facilitate the property owner receiving the money required to make the repairs to their property.

The only way to guard against underinsurance is to ensure that your insurance policy accurately reflects the replacement cost of your property. To be clear, this is not the market value of the home, but the amount it would cost to rebuild in the event of a total loss.

Such assessments should be carried out every few years to ensure escalating construction costs are captured. If there are any substantial changes made to the property, including enhancements and renovations, then a re-assessment should be carried out to ensure there is adequate insurance cover.

BCQS will help you ensure your property is covered for the correct amount, and in the event of a claim, that your interests are protected.

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Devastation left behind by Hurricane Irma in the British Virgin Islands

Donâ&#x20AC;&#x2122;t Wait Until A Storm Is Here To Prepare

KOOYMAN.BB KOOYMAN.BARBADOS

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Restock your emergency kit and store in a safe place

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Pay attention to weather updates during the storm season

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Reinforce your roof and secure your home as early as possible

Economic uncertainty during the COVID-19 outbreak and the unprecedented impact on real estate valuations

By Lesley Goodfellow MRICS Registered Valuer - PCS - Property Consultancy Services Valuers still require to provide valuation reports to financial institutions, private investors and potential purchasers amid the volatility of the current market.

It is more challenging than before to provide an opinion of value in such uncertain market conditions. Valuers must be driven by comparable transactions and it is their role to interpret market data; not to set the market and make a judgement in the absence of supporting transactional data.

So how on earth do you value in these times?

The Royal Institution of Chartered Surveyors has published guidance for Valuers. One of the key elements is to include a ‘Material Uncertainty’ clause. This is to draw to the readers attention that the value provided is done so with the best data available to the Valuer, however, given the market doubt created by Covid-19, the value may prove to be inaccurate at the date of valuation given the Valuer cannot reasonably predict its impact in the coming months and even years.

That said the Valuer can exercise an element of judgement and it is likely that many Valuers would be cautious and conclude a value which is likely less optimistic than pre-Covid times.

It is incumbent on the Valuer to enhance disclosures that detail how the valuation was carried out, the thought process behind the decision, the reasons for the selection of methodology and detailed analysis of the relevant factors involved. Now more than ever before, transparency is required. It is essential that comparable data is included and that a proper analysis of that data is demonstrated within the report. The Valuer must seek to cover all bases and provide the most thorough report possible. It is likely stake holders, particularly, the bank, will demand greater clarity from Valuers in their decision making.

Valuers play a very important role in the banks’ lending decisions, with precarious conditions at play, and the banks exercising more caution than ever before, Valuers reports must meet the banks stipulations and ensure that the expected content is covered. A good report will avoid the banks having to come back to the Valuer to have points qualified.

Commercial Property – What can we expect Properties held as investments and subject to lease arrangements with tenants are under fire. Tenants have in many cases defaulted on their rent

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and in others vacated the property entirely. No lease clauses could have predicted an event such as Covid-19. Therefore, there is little guidance and case law to assist landlords and tenants in managing their lease relationship going forward. Shrewd landlords are working closely with tenants to keep them in-situ. This could be by means of rent relief, rent holidays or rent reductions. These are better results for a landlord than a tenant vacating since it would be challenging to re-let most commercial spaces quickly.

So, what does that mean for the property value?

Unfortunately, landlords with significant debt in place are likely to face cashflow challenges and potentially default on their debt as current rents remain unpaid. So how does the Valuer provide an accurate picture?

Valuation models can reflect reductions in rent which naturally reduces the Market Value. However, as well as a drop in rental income and forecast income, the Valuer has to consider what capitalization rate to apply to the property's net operating income to arrive at the Market Value. This ratio of income to capital value is expressed as a percentage and is an estimation for an investor's potential return on a real estate investment. Again, it is challenging for the Valuer, however, the percentage (known as the yield) must reflect the certainty of the income projected.

It is a brave Valuer who wears an optimistic hat in these times, however, something to consider is that an overzealous Valuer can create problems for banks and clients particularly where loan security is concerned.

Transparency and independence in the context of valuation should lead to credible valuations. In today’s markets this remains a must as we are still recovering from the most severe financial crisis ever experienced.

In order to promote investor confidence, Valuers need to follow standards and regulations set out by the International Valuation Standards (IVS) and the Royal Institution of Chartered Surveyors (RICS).

Valuers play a vital role which impacts the economy. A Valuer should never under estimate the importance of the role they play and should never be persuaded to overstate values just to keep a client happy. This is negligent. The consequences of doing so are far reaching and what the market demands more than ever is competent, honest and transparent Valuers who follow the regulated guidance.

Having a regulated valuation body in Barbados would play a pivotal role in stabilizing the economy and resuming investor confidence.

Niven Distribution Ltd adds Niven Retail

FEATURE

Niven Distribution was started many years ago in Barbados by your father Andrew, now it’s really grown - can you tell us a bit about all the different ‘branches’ to Niven Distribution?

Firstly, thank you for having me!

Yes, the company has really grown since Andrew started the company back in 2008 from his garage, doing deliveries out of the back of a hire car! The last few years in particular we’ve had some really exciting growth and expanded into new businesses and different sectors. Niven Distribution Ltd is our main company which is our import/export division and handles all of our distribution across the island. This has around two hundred core product lines, which supplies mostly the hospitality sector from water, cooking oil, french fries, and so on. We then have Niven Eco Oil Inc, which is a waste management company that I started a few years ago. This collects used cooking oil for free island-wide, it's then shipped off to the States and recycled into BioFuels that are sold across the world. Niven Eco Oil also has a grease trap, sewage, and drainage cleaning department that looks after accounts such as Sandals. Our latest addition has been Niven Retail, a fully functioning online supermarket that was created as a result of COVID-19 and us having to seriously think on our feet.

How does Niven Eco Oil work? Who are your main customers and how does it help the environment?

Niven Eco Oil came about because we were selling huge quantities of cooking oils to hotels/restaurants and we were being continuously asked if we could collect it and dispose of it. After realizing we had a responsibility to make sure this waste oil was being disposed of in an environmentally friendly way and not ending up in landfill or worse, being dumped into the sewage system and causing issues as we saw on the south coast. We partnered with an American company that had the infrastructure and means to be able to process it and turn it into Bio Fuels. It’s a completely free collection service that’s offered to everyone both residential and commercial, and you don’t have to purchase the ‘fresh’ oil from us. This is very much for the island and environment, and for everyone to make use of. I’d say that we collect the vast majority of commercial waste oil on the island now and have a great team who work closely with our clients so that they can be on

collection routes to suit their needs. Whether that’s weekly, fortnightly, or monthly. This is great, as it means they rarely have oil sat around causing pests and they also know what days to change fryers etc. Obviously, they have the reassurance that it’s being disposed of responsibly and upcycled into a product that’s helping the environment. It’s a really great company and I’m very passionate about it.

You mentioned you’ve recently added a new retail online supermarket with exciting products from the Co-op in the UK! How can customers shop with you? What is available? Do you deliver?

Niven Retail was born out of the dreaded COVID-19 situation we’ve all had to endure over the last few months because our turnover essentially disappeared overnight, like many others! And we were determined to keep all of our staff employed and to keep moving forward. This lead us to find a supermarket that had an affordable, extensive range of products that we could offer to the local market. However, as we don’t have a physical shopfront, and because of social distancing, it all had to be online. Which was no easy task, creating a functioning website with over seven hundred new product lines in a matter of weeks. What we didn’t anticipate was just how successful it would become (pretty much overnight) and the massive demand for the CO-OP products in Barbados. The support we’ve had from the island has been truly overwhelming and very humbling and we’re now playing catchup with our internal infrastructure having to add new managers, staff, and more trucks to our ever-expanding fleet and team. All of the products can be seen and purchased at www.nivendistribution.com and delivered island-wide.

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The Red Book 2020 is now available

FEATURE

The Red Book offers detailed data analyses, market insights and property listings. The statistics covered in this year’s edition show that 2019 was a recovery year for luxury real estate in Barbados. 2019 also saw two of the largest projects in Barbados get new owners and more certain futures. The Four Seasons project/site also changed hands while the Government of Barbados unveiled its ambitious vision for Carlisle Bay. Though it is not yet clear what the full impact COVID-19 will have on Barbados in 2020 and beyond, we hope that you enjoy the insights from our team who have written on various real estate related subjects. www.terracaribbean.com/The-Red-Book/

“Our mission is to simply provide you with the best information we can in a comfortable environment to assist you in making a decision.”

– Andrew W Mallalieu, CPA FRICS Chief Executive