St. Maarten Real Estate Market is collapsing
July 21, 2008
The Real Estate picture for St. Maarten is turning grayer by the day. The enormous Indigo Project in Cay Hill, The grandiose Barbaron Development and the prestigious The Cove in Cupecoy are the latest three “victims” of sluggish interest in “Vacation homes in Paradise”.
All three developments came to a screeching halt almost simultaneously due to lack of purchase interest. The Cove at Copecoy returned the few deposits it received and halted all activities.
Zebrabot reported on more that 6 occasions prior to to these announcements that these inevitable collapses would occur and now the St. Maarten government will face the effects of granting unbridled licenses without guarantees of completion.
We cannot blame the government for the global real estate market collapse, but we should hold the government accountable for bad management since an additional 3,000 apartments, condos and hotel rooms on top of some 2,000 store locations, Malls and Shopping plaza’s would have, if completed, spelled disaster to the infrastructure without adequate solutions on short and mid term demands for water production and electricity as well as road infrastructure and other highly necessary utilities.
The St. Maarten landscape is scarred by “clearing for construction”, “cut down trees”, and “defaced mountain sides” that will take 10 or more years to return to natural beauty or concrete landscape. The Mullet Bay disaster is “only” 12 years old, but the scars are as visible today as they where 12 year ago after Hurricane Luis.
This saga and the further demise of the Real Estate market has not bottomed out and still will have a rocky 3-5 years to go. We can only hope that “construction” of a country of St. Maarten will not be “defaced” the same way the political figures allowed the landscape to be mangled without recourse.
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Here in the States it is becoming clear that just catching up on real estate inventory is going to take 4-6 years, which means that the second home (leisure) market is probably going to be 8-10 years. However what scares me even more for Dutch St.Maarten is the Antillean Guilder being fixed to the dollar. The Federal Reserve has now pledged to support Fanny Mae and Freddy Mac, no matter what, which means that they are going to print dollar bills as if it were “mannah”. The current inflation rate is estimated at 12% for this year. Reality will probably be somewhere like 17% for the year. With the Feds underwriting Fanny Mae and Freddy Mac’s 1.6 trillion dollars in weak mortgage write offs, the dollar will have about 35% lower purchasing power by the end of the year and consequently push the oil price to about $200 per barrel. Believe me, it’s time for St.Maarten to seriously reconsider its fixed dollar standard, as the US dollar’s demise more than anything else, will define the island’s political future.