Caribbean real estate: prices, income and expenses

Analytical reports, like the Canadian Imperial Bank of Commerce, show a steady increase in tourist flow. Simultaneously, the tourist’s "wallet" is growing; the amount spent by one guest during the rest. Nevertheless, the economy of the Caribbean countries suffered two big blows.

The hurricanes of 2017 caused great damage. Antigua and Barbuda and Dominica suffered the most out of all of these islands. The destruction led to a reduction in the tourist flow, but quickly recovered. Falling property prices began to rise after a few months.

In the spring of 2019, the fall in the British pound led to negative dynamics in property prices. They fell by an average of 5‑10%. However, since the summer of 2019, the Caribbean real estate market has shown increased positive dynamics. Demand from American, British and Canadian investors for rental villas by the sea grew.

By early 2020, prices had recovered by about 90%, said Bradley Esty, executive director of Stanley Real Estate in Antigua.

The pandemic has reduced the flow of tourists. During quarantine, demand for rent fell but will recover quickly when the borders open. Experience has shown that prices in the Caribbean real estate market are rapidly returning to pre-crisis levels.

The range of objects is expansive; from apartments to luxury villas. For example, in Antigua, prices range from $250,000 for a two-bedroom townhouse in Jolly Harbor on the west coast and up to $10‑25 million for a seaside home in nearby Pierce Point.

We provide approximate prices for furnished and fully equipped real estate. Estimates are from major agencies and are adjusted based on the experience of Immigrant Invest:

• 60‑120 square metres costs 0.4 to 1 million dollars.

• Small villas with one to two bedrooms are estimated at $1 to 2 million.

• For a large oceanfront villa with its own dock, you will have to pay 2 to 10 million dollars.

The peculiarity of such projects is that they are approved by the government to participate in the citizenship by investment program. As a bonus, investors get the opportunity to relax at the hotel for 7‑14 days free of charge.

Keep in mind that some apartments and villas which are purchased as part of investment programs must be leased to guests of the country. If the investor does not plan to rent out the property, it is necessary to select an appropriate real estate in advance.

Investors usually buy properties in the Caribbean for renting and less often for holidays. Few people move to the Caribbean for permanent residence. Therefore, it is important to estimate the rental yield in advance.

The Caribbean has high and low seasons but the difference in rental prices is small; less than 1.5 times smaller. There is a tourist flow all year round.

Source: Global Property Guide

The cost of renting apartments or villas in hotel complexes approved for citizenship programs is much higher — from $1,500 to $2,500 per week. For an investor, the yield is 3‑5% per year.

Source: Numbeo

Objects with two to three bedrooms are often purchased for rent. This is a family-friendly property very close to the beach. Not only can you buy a specific apartment or villa, but a share in the project, as previously mentioned. Equity participation is cheaper than buying the whole object. It is possible to purchase a building plot or a yacht dock.

Guide on Caribbean real estate market

Approved projects are considered a reliable and more profitable investment option. Let us explain in detail why:

• The license to participate in the program confirms the reliability of the project. This is guaranteed protection against fraud.

• These are five star hotels. Therefore, the rooms are never empty and are booked in advance.

• For such projects, sites are better allocated — near beautiful beaches and local attractions. Their availability also drives demand.

• In 80% of cases, shopping centers and highways are located next to these hotels. Convenience dictates demand.

• Private investors are being attracted even at the construction stage. The earlier investments are made, the more loyal the conditions for entering the project.

• Only large international companies are involved in the construction of such projects. This is a factor of reliability: the project will be built and put into operation.

• It is convenient not only for hotel guests, but also for investors. The management company is responsible for the care and expenses of maintaining the property and renting it out. Yes, these expenses are deducted from rental income but the investor does not have to puzzle over everyday problems.

• The management company is a representative of the developer, an international hotel holding. This means certain standards for the management and maintenance of the hotel.

• A private investor as a co-owner of the project can spend 1‑2 weeks a year in a hotel apartment or a villa for free.

The most common transaction for an approved project is an initial sale during the construction phase. Antigua and Barbuda, Dominica, Saint Kitts and Nevis programs allow the purchase of resale real estate. These are shares in the same licensed projects.

That is, the investor who made the first purchase can sell his share to the next investor after five years. The second investor will also be able to obtain citizenship. The third investor will not be able to participate in the program.

At the stage of selection, it is important to check the property clean title. It is better to entrust this to a professional lawyer. Services will cost 1‑3% of the cost of the object. Immigrant Invest cooperates with developers and provides detailed and verified information about each property.

If there is no time to fly to the Caribbean, you can select an object remotely. If we are talking about a large developer, then you can ask to organize a video broadcast of the inspection.

Examples of properties in Dominica

Dominica, Portsmouth

$220,000 — $320,000

Share in a five-star resort managed by Autograph Collections (premium branded by Marriott)

1—2

Dominica, Portsmouth

$270,000+

Share in a five-star hotel managed by Intercontinental

Dominica, Roseau

$216,000 — $3,800,000

Share and villas in a six-star resort

1—2

1

Getting a license. If the investor is not a citizen of the country, he or she needs to purchase an Alien Landholding License (ALHL, land ownership license).

An agreement on the property reservation is concluded. The buyer transfers the developer 10‑15% of the total transaction amount. The property is withdrawn from sale.

A sale and purchase agreement is drawn up, the investor transfers the funds to the developer’s account. On average, it takes a week to complete a purchase. All contracts can be signed in person in the presence of a notary or remotely through a lawyer by power of attorney from the investor.

If the buyer participates in the citizenship program, the sales contract is signed and paid after the approval of the application.

The processing time for an application is from 2 to 6 months, depending on the program. The investor receives the passport by a delivery service to a convenient address.

Once purchased, the property is registered with the local land department.

A foreign investor acquires an ALHL license for 5‑10% of the transaction amount. It is important to take into account the license processing time. For example, in Antigua and Barbuda, this can take up to six months. In fact, during this time, you can get a passport of the country.

The buyer will have to pay taxes and agency fees. If real estate is purchased for citizenship, some programs require you to pay special government fees.

The commission to the selling agent is negotiable and amounts to 3‑6% of the transaction sum. It is more profitable to buy projects directly from the developer, there is a choice. If real estate is purchased under the citizenship program, this expense item is absent.

Taxes. Property tax ranges from 0.002 to 5%, the minimum rate is in St. Kitts. Land tax is calculated on a progressive scale, but the amount is small for residential development. Owners of real estate in Dominica pay council tax of only 1,25% of the cadastral value of the property.

Utility bills including water, electricity, telephone and internet are the lowest in Grenada, from $83. The highest costs are in Saint Kitts and Nevis from $200 to $260 and in Antigua and Barbuda — $150‑250. The figures are given for apartments with an area of ​​60‑80 sq. m.

Real estate insurance costs about 0,2% of the value of the property.

The service cost of the management company depends on the type of property. For villas and apartments costing from $200,000, they can be 1‑2%.

Buyers of shares in resort complexes, participants of citizenship programs do not bear direct costs for the maintenance of real estate. The management company deducts them from the lease payments.

Individual cost calculation for Caribbean citizenship

Get the cost calculation

Real estate acquired by investors through citizenship by investment programs is rented out immediately after the facility is put into operation. The process is managed by a management company.

There are different tax regimes on rental income for tax residents and others.

To pay taxes, a non-resident gets a tax ID, an analogue of TIN. Having a Caribbean State ID can help investors in business.

The possibility of exiting the investment project is planned before the investment. The same is with real estate: the liquidity of an object (the ability to quickly sell at a market price) means no less profitability. From this point of view, tourist property in the Caribbean is a profitable asset.

Mandatory ownership period. Citizenship program participants can sell real estate after 3‑7 years of ownership. Considering the dynamics of price increases, the sale can generate income. The investor sells the property or goes through a management company.

Taxes and fees on sale. The real estate seller pays stamp duty, which is a certain percentage off the value of the property. The rate of stamp duty differs from country to country. In Grenada and Saint Lucia, the tax rate for foreigners is much higher than for residents.

If the property is sold for an amount greater than the acquisition cost, capital gains occur. Many countries are obliged to pay the corresponding tax. But there is no capital gains tax in the Caribbean.

The seller pays for the services of a real estate agent which is 5‑7%.

In addition to income and expenses, other factors also influence the choice of an object. The density of the tourist infrastructure, natural and historical attractions, the quality of the beaches, the wealth of the underwater world. Below, each country is evaluated.

Antigua and Barbuda. The state of Antigua and Barbuda consists of three islands: Antigua, Barbuda and Redonda. Sparsely populated Barbuda is famous for its wildlife and Redonda is a favorite destination for yachtsmen, a rocky uninhabited island that has preserved the flora and fauna of the tropics in their original form.

All about Antigua and Barbuda

Antigua is the main tourist center of the country. Most of the hotels, restaurants, bars, casinos, clubs and shops are located here. Antigua is home to private villas worth from hundreds of thousands to millions of US dollars. Two thirds of the population work in the service sector and are very hospitable to tourists. The island has an atmosphere of serene relaxation.

Antigua is popular with water sports enthusiasts. Fans of windsurfing, scuba diving and deep-searnfishing fly to the island from all over the world. The island’s largest harbor, the English Bay, is a renowned international yacht port. Every year at the end of April, a week of sailing competitions is held here.

The business center of the country is the capital of St. John’s. Most of the sights are also located here. The city’s trademark is a unique eclectic style of architecture, which is expressed in a combination of multi-colored sturdy stone buildings and dilapidated huts.

This island state can be called the focus of tourism, water sports and culture. Real estate here is well bought and rented by those who prefer an active lifestyle and proximity to infrastructure.

Grenada. The island was discovered by Columbus in the 15th century and has largely retained its original appearance to this day. The sand on the beaches is white. The sea is very calm as Grenada is surrounded by coral reefs that protect the island from the winds.

The main type of recreation on the island is diving. Diving enthusiasts come to Grenada for a variety of fish, rare sea turtles, various species of dolphins and sharks, as well as for excursions to sunken ships.

The most interesting dive sites are the south coast of Grand Anse Beach, Dragon Bay, Tyrrel and Grand Mal Point, and Bose Reef. Jenny’s small island is popular among divers: it is considered one of the places with the cleanest water in the world.

The main city of the country is the capital of St. George’s, the cruise port and tourist center of Grenada. Here you will find shops, restaurants and attractions. For example, Concord Falls, Grand Etang Forest Reserve with a mountain trail to Seven Sisters Falls, Crater Lake, a botanical garden with Annandale Waterfall.

Real estate in Grenada primarily attracts lovers of nature and the underwater world.

Dominica is called "The Nature Island", wishing to highlight the pristine beauty of this country. The island’s volcanic activity is manifested in the form of black sand, geysers, hot springs and lakes with boiling water. Dominica is home to the world’s second largest Boiling Lake.

Dominica is a green and ecologically clean country: electricity is produced using hydropower, solar and geothermal energy. Attractions include one of the largest waterfalls in the Caribbean, hydrogen sulphide springs, a botanical garden and the Waitukubuli National Trail, an 184 km long hiking trail.

The capital of Dominica is the cruise port Roseau, the oldest city on the island and the cultural center of the country. There are many architectural monuments in the city, for example, the Catholic cathedral of the 18th century. It is also home to the largest motorway that connects Roseau to another large city, Portsmouth.

Dominica real estate is interesting for lovers of outdoor activities and pristine nature.

Saint Kitts and Nevis. The state consists of two islands. Saint Kitts is almost twice the size of Nevis, and it is here that tourists prefer to rest. There are many leisure options: sports complexes, golf courses, tennis courts, horse riding, yachting, surfing, diving, excursions and spa treatments in hotels.

The island has many salt lakes and coves with sandy beaches, some of which are dark, almost black in color. Saint Kitts attracts diving enthusiasts: about four hundred sunken ships rest near the island.

The island is home to a UNESCO World Heritage Site — Brimstone Hill National Park and Fortress at the top of an ancient volcano, also known as the Gibraltar of the West Indies.

Nevis lies three kilometers away from Saint Kitts. Excursion routes around the island which almost entirely consists of volcanic rocks from ancient eruptions are very popular with tourists.

The largest city in the country is the capital Basseterre, which is located on the island of Saint Kitts. It is one of the oldest cities in the West Indies, founded in 1627. Basseterre is home to the bulk of the country’s population.

Many St. Kitts hotels cater to high-income visitors. Property on the island is bought and rented by wealthy guests.

Saint Lucia is one of the most beautiful and greenest islands in the Caribbean: there are no such forests like Saint Lucia’s anywhere else.

The visiting card of the country is two cone-shaped mountains, which are called Pythons and are located 45 km from the capital. It is worth visiting the picturesque Marigot Bay, Sulfur Springs Park with hydrogen sulfide springs, Toraille Botanical Gardens and Diamond Gardens, a black sand beach and the local cathedral.

The main economic and tourist center of the country is the capital of Kastri, which is home to a third of the total population of the island. The city is a major cruise port and is famous for its Central Cathedral and quirky flearnmarkets.

Tourist property in Saint Lucia is in demand primarily among lovers of tropical wildlife.

When choosing real estate, it should be kept in mind that the largest number of respectable apartments and villas are concentrated in five-star hotel complexes in Antigua and Barbuda, Saint Kitts and Nevis. Accordingly, the rental income will be higher, and the rental yield is likely to approach 5%. The yield on renting more modest objects in cheap Caribbean real estate will be closer to 3% per annum.

On the other hand, all Caribbean states live off tourism. Therefore, on many islands there is an active construction of large resort complexes. And at the development stage, prices are lower than after commissioning, that is, for the same amount, you can purchase an object with a higher potential profitability.

If you plan to come on vacation, you should consider investment options in hotel complexes.