Active and healthy real estate market in Q1 of 2023

BY DELANA ISLES

Turks and Caicos Islands has maintained a healthy and active real estate market in the first quarter of 2023, even as condo and vacant land sales decreased.

Sean O’Neill, Managing Director of The Agency Turks and Caicos in his company’s quarterly report said that while the TCI did not see the same highs as the North American market during the COVID real estate boom, it has not seen the same drop, which the US especially is now experiencing.

“We are a long-term real estate market where, partly because all a buyer’s property tax is paid on closing, rather than annually, therefore we do not attract many people merely seeking to flip properties. As a result, the viewpoint of a buyer in the Turks and Caicos is different to those who may have sought a shorterterm profit in other markets.”

He said there remains significant interest in the $1M market and above $3.5M, however, the gap in the middle is reflective of those most likely to have benefitted from lower interest rates in 2020-2022 as well as built equity in primary homes which could be utilised for borrowing.

He noted that only three properties listed between $1.5M and $3.5M sold in the first quarter of 2023, excluding previously agreed pre-construction sales at Beach Enclave, SouthBank and the Ritz Carlton.

This, he continued, compares to 19 sales in the same price range in 2022 and 14 in 2021.

According to O’Neil, this does not mean there are no buyers at this price point, rather it is indicative of a reset in certain parts of the market.

The market is not quiet, O’Neil stressed, it is more a case of well-priced and well-marketed properties moving swiftly.

“When inventory is tight, agents and brokers have to work harder. That is why it feels that these three months have flown by. Our team has been out there hustling and working hard for our clients, buyers and sellers.”

He noted that limited inventory has meant that the number of sales has reduced but an increase in the average sales price of more than 35% shows that the demand remains there.

“Strong tourist numbers highlight the continued demand for visitors to visit our shores and with every flight comes more and more potential purchasers. These visitors, and the rental revenue that they produce, are a major driver for our reduced inventory.

“Many of our purchasers are seeking income-generating properties and our superb airlift is allowing those revenues to surpass expectations.”

However, one area that is doing well is single-family homes.

O’Neil said the statistics appear to show that single-family homes (SFH) bucked the trend of the other sectors in the first quarter of 2023, exceeding the recorded numbers for the same period in 2022.

“The reality is that a number of these sales are pre-construction villas that have had agreed terms at earlier dates and have been recorded now. With almost four times as many single-family homes listed in the Turks and Caicos as there are condos there is more choice in the SFH sector and significantly greater variety.”

He said he expects to see this sector continue to flourish, especially where buyers gravitate toward the AirBnB/VRBO rental model that has seen so much success over the last few years.

Condo sales, meanwhile, continue to drop.

“When you see new listings reduced by 45% on the previous year that is always going to have a knock-on effect on sales and that can clearly be seen in the condo sector in Q1.”

He said as of the morning of April 3, there are only three constructed condos that are actively listed in the TCI, an astonishingly small number of properties for a country that has 22 condo hotels on Grace Bay Beach alone.

“The majority of our guests come and stay in resorts, therefore their initial emotional connection to the Islands is in these communities. That tells us why well-priced properties are not lasting long on the market.

“Revenues are up, and owners are happy, so buyers need to ensure that when the right property comes along, they are primed and ready to move.”

As for land sales, North Caicos is still primed for development, but challenges of accessibility of labour remain.

Some statistics, when viewed on their own, can be downright shocking, especially an 84% decrease in undeveloped land sales from the first quarter of 2022 to the same period in 2023, O’Neil observed.

However, he said on closer inspection, the sale of a four-acre hotel site on Grace Bay Beach for $20M in 2022 is going to deeply skew numbers, as that is not a ‘normal’ sale.

“Even absent that example the sale of vacant land in Q1 reduced significantly year on year. There were significantly fewer sales and only one that topped $1M, and just barely at that.”

He said what they have seen is more locals purchasing homesites, which is an important step in ensuring that the rise in the real estate market provides opportunities not just to investors but those who live in TCI.

“With 30% of the vacant land sales being on Islands other than Providenciales, we continue to see a push towards long-term investment in the outer islands.

“We keep saying it but, North Caicos remains on the crest of a wave of activity, the only thing currently absent being the workforce to allow vacant landowners to construct on their properties without the cost of bringing crews over by boat from Provo every day.”