Geographically the Caribbean is quite close to the doldrums. Metaphorically its second-homes market is bang in the middle of it.
Overseas second-home buyers stayed away from the region during the winter, traditionally the busiest time of year for this housing market.
They are slowly coming back into the market now, tempted by a round of cuts in asking prices.
"The buying season has started late this year," Georgina Richards, associate at estate agency Knight Frank, said. "It usually starts mid-January, but this year it started in March, because people were sitting on the fence. Prices were not coming down as fast as buyers were expecting, but they are coming down now. Vendors are offering 10 to 15 per cent reductions."
According to home finder Quintessentially Estates, vendors are slashing up to US$500,000 off prices.
Examples of big price cuts include Colina del Mar, a Barbados beachfront villa, which has had its price reduced from US$3.5 million to US$3 million.
The story is similar on the western side of the Caribbean. The asking price for luxury Casa Sul Mare on the Cayman Islands has been cut from US$1.9 million to US$1.53 million. Both properties are marketed by Knight Frank.
Ms Richards said Barbados and other islands that were easily accessible by air and had good infrastructure and security would survive the downturn best in the Caribbean.
"A couple of years ago people were looking for islands that were up and coming and where they could get more for their money, such as St Lucia and Antigua. But in the past few months they have focused on the more mature markets, such as Barbados and British Virgin Islands," she said.
Foreign buyers tend to buy beach-front homes in areas with low levels of development.
To cash in on this trend, international branded resort operators are unveiling beach-side developments offering on-site leisure facilities such as spas and championship golf courses.
Ms Richards was confident about long term prospects for the Caribbean second-homes market because favourable tax regimes on many islands and plenty of sunshine on all of them would ensure it remained popular with overseas buyers.
Growing numbers of Caribbean nations, heavily dependent on tourism, were opening their doors to overseas holiday homebuyers because construction of resort communities was a valuable source of new income for them, she said.
Even Cuba is allowing private developers to build residential communities for wealthy overseas buyers. The first of these will probably be the Carbonera Club where British-based Esencia Hotels and Resorts plans to build 720 villas and apartments, spa, hotel and golf course. The developer is offering homes to non-Cubans in pre-launch sales. Prices for villas start at US$1.3 million.
New projects are appearing in established Caribbean second home markets too.
Developer Cinnamon 88 is building 35 villas and a Four Seasons Hotel at its 13-hectare Clearwater Bay project in Barbados. Ten villas remain unsold at prices starting from US$11.5 million. Music impresarios Lord Lloyd-Webber, Simon Cowell and Formula One team owner Eddie Jordan were early buyers.
However, Lord Lloyd-Webber and other would-be residents were reported to be impatient about the slow pace of construction. The developer said building work would be delayed by a year following the Barbados government's decision to ban 1,000 Chinese labourers from working on the project as part of its "no foreign labour" policy aimed at protecting local jobs. The developer insisted it would keep to its scheduled 2011 completion date despite the hold-up.
Assuming all goes to plan, the estate's villas will be constructed in the same fashion as Alang Alang, the Balinese-influenced Barbados home of Cinnamon 88 partner Mike Pemberton. Homes at the developer's Grenada scheme, the Mount Hartman Estate, will be built in the same style, also with aged teak doors from Indonesia, Brazilian wood floors and French chandeliers. Residents will have access to the Four Seasons Hotel facilities at the Grenada and Barbados developments.
On the former British colony of St Lucia, Lord Glenconner, the developer who helped transform Mustique into a hideaway for the world's glitterati, is building seven multimillionaire homes on the island's southwest coast. The developer said the Glenconner Beach villas were the only homes in St Lucia with direct access to the beach. Prices start at US$7 million for a 1,239 square metre property. Construction is scheduled to start this month.
The Turks and Caicos Islands are rated by Conde Naste Traveller to be the Caribbean's best holiday destination. This British colony may have its constitution suspended by London while irregularities are sorted out. However, once the constitutional overhaul is completed, these islands will be much better place in which to invest estate agents say.
Homes on the Turks and Caicos Islands and other Caribbean destinations can be found at http://www.caribbeanhomefinder.net/
CARIBBEAN HOME BUYER'S GUIDE
Taxes, laws, languages and openness to foreign property buyers vary widely across the Caribbean.
Among the most tax friendly and welcoming to overseas buyers is the British colony of the Turks and Caicos Islands.
Foreigners can buy homes anywhere in the archipelago and there are no taxes on inheritance, capital gains, income or property. Stamp duty has been temporarily cut from 9.75 per cent to 6 per cent until the end of June to stimulate sales.
The Global Property Guide considers the Turks and Caicos rental market pro-landlord. However, home transaction costs are high, averaging 19 per cent of the value of a property when buying and selling fees and charges are combined. They include legal fees, estate agents fees and notary fees.
The situation is nearly identical in British colony the Cayman Islands. The cost of buying and selling a property can touch 20.5 per cent but there are no taxes.
Foreigners are free to buy property in Barbados. They need permission from the Barbados Central Bank, but this is a formality. There are no capital gains or inheritance taxes, but homeowners can pay 20 per cent income tax on rental income if they let their properties out.
Grenada is distinguished with having the Caribbean's highest combined buying and selling costs - equivalent to 43 per cent of a property's value the Global Property Guide reveals. But taxes are low.
The former British colony of St Lucia is more suitable for holiday homebuyers with money to spend than investors looking to make money because property purchase and sales costs are high - when buying and selling costs are added together they amount to 22 per cent of the value of the property.
Tax on rental income ranges from 10 per cent to 30 per cent. Foreigners need a Land Holding Licence to buy a home in St Lucia.
The legal systems in St Lucia, Grenada, Barbados, Cayman Islands and Turks and Caicos are based on English common law. English is widely spoken on these islands.
There are 10 projects in Cuba aimed at overseas buyers at various stages of planning and development. The only foreigners who cannot buy into these schemes are Americans because of their country's embargo. Little English or Chinese is spoken in Cuba, where the language is Spanish.
Caribbean rental returns are usually in single figures. Research from estate agency Cluttons Resorts shows gross yields on Barbados range from 6 per cent to 10 per cent. They vary from 4 per cent to 6 per cent on St Lucia, and 4 per cent to 5 per cent on Grenada.
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