Introduction
Several Caribbean Community (CARICOM) Member States, including Barbados, Grenada, Jamaica, St. Vincent and the Grenadines and Trinidad and Tobago, are under a storm (hurricane) watch. We at Demerara Associates are acutely aware of the devastation and immense suffering that hurricanes bring. They are in our thoughts and prayers.
Climate change is expected to make natural disasters more severe (WWF, 2024). Due to the rising frequency and intensity of natural catastrophes, the effect of natural disaster risk on property prices has received a lot of attention lately.Given the storm watch in some parts of the CARICOM region, the recent tremor just over a week ago, and the propensity of Small Island and Development States (SIDS) for extreme weather events which can cause significant damage to infrastructure, housing, and agriculture (ITC, 2024), it is instructive to examine impact of natural disasters on real estate. By examining the effects of natural disasters on real estate value, this blog offers readers insightful advice on how to safeguard themselves against possible losses.
Some Possible Impacts of Natural Disasters on Real Estate
The potential impact of natural disasters on property values is a significant worry for real estate developers and owners (Bishop, 2023). This is especially crucial for people who live in high-risk places where there is a continual danger of natural disasters (Bishop, 2023). The loss of property value is one of the biggest effects of natural catastrophes on real estate values. A property’s value may decrease if it is determined that it is uninhabitable in certain circumstances. Further, decreasing property values could result from the belief that the area is now more vulnerable to natural disasters, which could cause less people to want to buy real estate in the impacted area.
Szakos (2023) argues that costs associated with rebuilding and repairs are another way that natural catastrophes affect real estate values. Szakos contends that if a property is destroyed or damaged, reconstructing it could come at a significant expense. Homeowners without insurance or with inadequate coverage may find this to be particularly challenging (Szakos, 2023).Natural disaster-affected properties have difficulties with reselling (Real Estate, 2023). Damaged homes may be on the market for longer, which could affect their resale value (Real Estate, 2023). To attract buyers, sellers may need to do repairs or renovations, which could have an impact on the properties’ marketability and value (Real Estate, 2023).
Recommendations for Protecting Your Investment
Although you cannot totally shield yourself from how natural disasters affect real estate values, there are things you can do to reduce your risk. Demerara Associates recommends, as suggested by Szakos (2023), the following:
- Invest in insurance: Purchasing insurance coverage is one of the most crucial things you can do to shield yourself from the effects of natural catastrophes. If you reside in a region where flooding is a common occurrence, be sure your property is adequately insured, especially with flood insurance.
- Maintain your property well: Keeping your property in good condition will help lower the likelihood that it will sustain damage from natural catastrophes.
- Try buying a house in a less likely-to-be-affected by disaster area: If you are worried about how natural catastrophes will affect the value of your property, you might want to think considering buying a house in a less likely place. Long-term, this might assist safeguard your investment even if it might need you to spend more initially for your property.
Conclusion
Property owners are becoming increasingly concerned about natural disasters. Property values can be significantly impacted by the possibility of earthquakes, storms, and floods. Property owners should be aware of the possible dangers and take precautions to reduce them as natural disasters become more often and severe. Proprietors and investors can safeguard their assets by making well-informed judgments by evaluating and understanding the possible effects of natural disasters on property values.
If you are interested in learning more about real estateinvestments contact us on 592 668 3665 or at demeraraassociates@demeraraassociates.com
