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The Trifecta Revisited

In a recent article I wrote for Anguilla Life Magazine I discussed the Trifecta I envisioned on the real estate horizon, whereby a Trifecta (for those who don’t gamble on horses) relates to picking the first, second and third place winners in a race—not an easy trick. At the time the trio of events I focused upon included the reopening of the recreational component of the Temenos project at Rendezvous Bay, the recommencement of construction of the residential component of that project, and the opening of the Viceroy Resort on Barnes Bay--all by the end of 2009.

Interestingly enough two of my three predictions were borne out: Cap Juluca has (albeit temporarily) taken on responsibility for managing and operating the recreational component of the Temenos project at Rendezvous Bay so that the golf course is now open and tee times are being purchased with golf bags being carried and shipped into and out of the island; the Viceroy Resort has opened (albeit with a surfeit of rain) so that guests are now enjoying its sleekly urbane atmosphere which features a diversity of restaurants, eclectic furnishings, and impressive views.

However, a Trifecta isn’t won with two out of three—the ticket can’t be redeemed for two thirds of the winning value…it’s an all or nothing proposition. As such, rather than admit and gracefully accept defeat, allow me to change the length of the race ever so slightly in an effort to let my third prediction (the recommencement of construction of the residential component of the Temenos project at Rendezvous Bay) come to pass, as follows:

With elections due to be constitutionally held no later than early March 2010 and with most prognosticators predicting they will be held by the middle February, I expect that there will be an announcement prior to those elections that will pave the way for the recommencement of construction—whereby that announcement will either confirm a voluntary sale and purchase of the assets (to a purchaser such as the Salamander Group, who have been the most visible suitors thus far) or a compulsory acquisition of those assets (by the Government currently in office).

Anguilla is facing a very interesting election cycle in that Obama’s victory has (I believe) emboldened both voters and candidates with regard to ignoring the traditional power of incumbency (with more candidates expected to pay their deposits on nomination day than ever before) and with three of the current members of the legislature resigning from office (with all three being members part of the ruling coalition). As such there is a guarantee that there will be at least three new representatives in the legislative assembly in 2010, whereby prior to this year only three new legislators have been elected in the twenty five years since 1984—and in each case when an incumbent has not run. Given the combustible mixture of a loss of incumbency inevitability and fewer incumbents running, the possibly for political change is increased—although with just seven elected representatives, there has been a surprising degree of meaningful political change since 1984 as the few times seats have changed hands those changes have often led to changes in the ruling coalition.

As the current construction dormancy of the Temenos project is a fundamental political liability for today’s Government, and as today’s Government would like to be tomorrow’s Government, and as elections put increased focus and pressure on making tough political and economic decisions, it will be interesting to see if the third component of my Trifecta is realized prior to the upcoming elections and if hitting the Trifecta is the current Government’s winning ticket in its electoral efforts—whereby a resolution to the ongoing indecision surrounding the Temenos project will have a very positive impact on the real estate market throughout the island…which has already begun to show signs of substantial rejuvenation.

With purchasers reentering the market and with sellers adopting a more realistic view of post 2008 values, transactions are beginning to close once again—however there is in fact a substantial inventory of unsold homes on Anguilla even though the Government has taken the proactive step of discounting the stamp duty payable on Alien Land Holding Licenses to 5% (for villas valued over US$5,000,000) or 6.25% (for villas valued under US$5,000,000) making the total stamp duty payable on a villa transfer either 10% or 11.25% respectively (instead of the previous amount of 17.5%). It will be intriguing to see the impact on villa inventory that a resolution to the Temenos project might have, as both Cap Juluca and Viceroy have done their part in making my predictions come true and have concomitantly done their part in helping move the real estate market forward, which in turn helps us all.

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