Global Real Estate Trends in 2024: The Bahamas, Cayman Islands, and Aruba

Dated: March 3 2024

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High inflation and borrowing costs are impacting real estate all over the world, but the never-ending desire for homeownership continues to drive home sales despite weakening economics and other factors, like supply chain interruptions, labor shortages, and lack of available inventory.

The tourism industry was severely wounded by the pandemic, and the Caribbean islands were no different. These islands are located in the Caribbean Sea, south and east of the U.S. and Mexico and north of Latin America. They are widely considered to be among the most beautiful places in the world and a major tourist destination, and their proximity to the United States, Canada, Mexico, and South America make the islands extremely popular with cruise ships, honeymooners, and other tourists. Tourism’s economic importance is measured in “arrivals,” i.e., people visiting a location by boat or plane.

Since the 1990s, tourism in much of the Caribbean has declined, due to the global financial crisis in 2008-2009, weak gross domestic product and high unemployment. Frequent tropical storms and hurricanes also contribute. Tourism is notoriously vulnerable to economic shocks from wealthier and more advanced economies, so when world economies decline, so does tourism, which in turn impacts economic growth in other sectors of the local economy, such as “agriculture, trade, transportation, communications, construction, and entertainment.”

Another factor impacting Caribbean tourism is Cuba. The Cuban Revolution in 1959 caused the United States to close tourism to the country in 1963. Until then, Cuba was the destination of approximately half of U.S. Caribbean tourists. By 1968, tourist arrivals to The Bahamas grew from 150,000 in 1954 to more than a million. Mexico also developed Cancun as a tourism destination. Eventually, Cuba was left with only 3% of the tourism market in the Caribbean.

In 2014, the U.S. relaxed travel restrictions to Cuba in 12 categories, short of allowing tourism to resume, but it was enough to give Cuba a boost in arrivals to 21.8% of the market, including a 6.6% rise in U.S. arrivals. Canadian tourists account for 40% of Cuba’s 3 million visitors. In Aruba, The Bahamas, Cancun, Jamaica, and St. Kitts and Nevis, U.S. tourists constitute 60% of total arrivals. European tourists have fallen by 25% since 2008, but Canadians are making up the shortfall.

The Caribbean tourist market doesn’t come without risk. An average one-week holiday on a Caribbean beach is higher in cost than other beach destinations, with the exceptions of Cuba and the Dominican Republic, which could explain the decline of European and other visitors. Should the U.S. lift all travel restrictions to Cuba, tourism numbers in the Caribbean could change rapidly, making other countries and their islands even more dependent on the U.S. and Canada. One estimate is that U.S. tourism to Cuba could increase from 3 million to 5.6 million annually. While new tourists could account for some of these numbers, it’s safe to say that Cuba would have increased arrivals while other islands in the Caribbean could lose many tourists.

Another major risk to the Caribbean is its vulnerability to natural disasters. Fifteen out of the top 25 countries worldwide with the most tropical cyclones per square kilometer are in the Caribbean islands. Hurricanes can destroy their economies, with tourist arrivals slashed by 25% to 50% the month after and as much as 90% in the year following a severe disaster. Hurricane “season” is typically between June 1 and November 30 each year.

Why is tourism so important to Caribbean real estate? Beachfront is limited and becoming more so. Since the 1990s, cruise lines have purchased seven islands in the Caribbean to give their tourists a private, safe beach experience. On some islands, protests have begun against the building of luxury resorts that favor foreign investment over local citizens, and impacts marine life, water usage and beach access. One source called luxury resorts the tourism of the future, as they bring in more revenue than hotels. Tourism is also important to housing sales, as visitors may love an island so much that they buy a home there.

Statista.com reports that real estate in the Caribbean is under significant development and growth and it’s also attracting homebuyers. The region has more than 7,000 islands, reefs and cays, and it’s vast enough that the island countries have different weather, economies, legal systems, cultures and politics. With 30 different countries and territories, they also have different homebuying processes for foreigners. English-speaking countries Antigua, Barbados, and St. Lucia follow English law. French-speaking countries St. Barts, St. Martin and Martinique follow French law. Antigua/Barbuda, the Dominican Republic, Granada, St. Kitts/Nevis, and St. Lucia offer citizenship by investment to expats—a second citizenship in exchange for a financial contribution or an investment in real estate.

Because of the relative ease of becoming a property owner in the Caribbean, expats, second-home buyers, and investors are taking aim at the Caribbean, with its gorgeous stretch of clear waters, white sand beaches, balmy weather, and small islands ideal for retirement or second homes.

According to KnightFrank.comthe Bahamas is an ideal place to buy a luxury home. It’s a diving paradise only an hour’s flight from Miami, and there are no restrictions on foreign homebuyers. Property owners apply for an annually renewed Home Owners Resident Card, with those buying property valued at $500,000 and above given priority in permanent residence applications. While tourism is the number one economic driver, a fifth of the Bahamas GDP is in financial services. The Bahamas also has the third-largest shipping registry in the world.

The Cayman Islands is composed of three islands and is internationally known for having some of the most beautiful beaches and island scenery. It’s a politically and economically stable autonomous British Overseas Territory made famous as a tax haven for wealthy investors and businesses. The Cayman Islands has no inheritance tax, income tax, property tax, or capital gains tax.

Aruba is known for its incredible trade winds, making windsurfing and kite surfing among many activities for tourists and residents. Its Dutch heritage gives the island a unique charm with notable architecture. Aruba offers housing at all price levels, from modest apartments to luxury villas, with no restrictions to international homebuyers.

For those interested in investing in a Caribbean home, there are many opportunities, both affordable and expensive. All it takes is a visit and some research. And about those hurricanes? New technologies are making it possible for homeowners to live more safely with impact-resistant windows, roof reinforcements, new materials, water diversion, and much more. 

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