The Caribbean has always been one of the best places in the world to live and vacation. Warm climates, beautiful beaches, lower cost of living, affordable real estate, direct flights and tax breaks make this an ideal destination for buyers looking for a change of scenery. Another plus: Many islands offer a Citizenship by Investment Program (CIP), which eases the hassle of foreign property.
The region is very diverse: buyers can choose from flat islands with sandy beaches to tropical oases with rainforests, mountains, rivers and waterfalls. The Caribbean real estate markets range from mature to underdeveloped and offer a wider range of price points and options, including single-family homes, condominiums, and branded luxury resorts. Resorts offer additional perks like no maintenance fees, access to family programs, spas, restaurants, water sports, tennis, and golf.
While the local real estate market suffered in 2020, the international sales segment showed positive signals and experts believe this trend will continue in 2021 and 2022. Relatively low COVID-19 transmission rates in the region, together with sharp price cuts, are growth drivers in this segment. Real estate agents have responded by digitizing operations to improve efficiency and convenience for home and international buyers. They have integrated new technologies such as online multi-list services, online networking and sales channels, and performed virtual home tours.
Lisa McShine – a partner at ROC Citizenship – is based in Dubai and specializes in government-approved residency and CIP solutions in the Caribbean. McShine, who is responsible for CIP purchases in Antigua and Barbuda, Dominica, Grenada, St. Lucia, and St. Kitts and Nevis, says it has received 50 percent more inquiries and 80 percent more conversions in the area following COVID-19 . She works mainly with buyers from the MENA region (the Middle East and North Africa). McShine’s buyers are primarily interested in the hospitality segment, such as hotels and luxury projects. Big international brands – which tend to have higher returns of three percent and more – are well received.
The deciding factor for most buyers is the number of countries their new passport will have access to. McShine says she has seen great interest from Iran despite its citizens being subject to international sanctions. Dominica remains an active market for these buyers. St Kitts and Nevis, with the oldest CIP in the world, is usually the most popular travel destination – there has been an influx of Chinese CIP investment recently. In second place are Antigua and Barbuda.
“In some areas,” says McShine, “overseas buyers must pay a foreigner tax, which can be as high as 20 percent. Buyers need to be aware of the laws of each market – for example, in some markets you cannot buy property without a local partner. ”While foreigners can take out mortgages locally, this does not apply to the CIP concept as the buyer owns the title must in order to obtain citizenship.
Governments in the region benefit from CIP by providing them with much-needed revenue and foreign exchange, especially US dollars. The program also creates jobs as developers have to employ local craftsmen and some of the materials have to be purchased locally. In the long term, jobs will also be created in the area of maintenance and repair.
McShine predicts a bright future for the international real estate market in the Caribbean. “I forecast an increase of 60 percent for the next few quarters,” she says. “Since December last year we have noticed a significant increase in interest. 2021 will be an amazing year in my industry, especially with the launch of global and regional vaccination programs. “
Donovan Reid, president of the Jamaica Real Estate Agents Association (RAJ) paints a more cautious picture. “According to the figures from the Planning Institute of Jamaica, the economy contracted by about 10.2 percent, the real estate sector only contracted 2.5 percent and the construction sector contracted by 0.8 percent,” he explains. “The association could not detect any significant change in the real estate market, nor an increase in the international real estate segment.”
Prior to COVID-19, the RAJ had seen an increase in international property interest, but the status quo has remained the same since the pandemic began. Generational purchases from the diaspora make up a large part of international transactions in Jamaica. However, if a local address is used or a local borrowing occurs, it may go undetected. Therefore, from a statistical point of view, international real estate purchases appear to be low, as the numbers mainly reflect third-party purchases such as second home buyers and investors.
A dual currency, either US or Jamaican dollars, is used for local land purchases, which is beneficial for overseas buyers. Jamaica has a robust, competitive financial market with a large number of institutions offering mortgage services. There are several unique financing products available, including “Design your own mortgage,” which enables balloon payments, and financing of up to ninety percent is on the table. The recent reduction in transaction costs when buying a home to just two percent means further cost savings for international buyers.
While Jamaica does not have specific immigration programs for international buyers, a six month residency option is available. One particular consideration when buying in the Jamaican real estate market is to ensure that the title of ownership is registered as opposed to a common law title.
The RAJ remains optimistic that with the start of the local vaccination program and the downward trend of the pandemic in Jamaica, the market will see an upward trend. “This is an opportunity the association is setting the course for.” Reid says, “by developing the value proposition for overseas buyers to invest in Jamaica. Jamaica has a bright future ahead of it – we are confident that we can bounce back in 2022. We assume that the property appreciation rate will continue to trend higher, the rental market will remain relatively stable and we think that as the pandemic stabilizes, Airbnb’s short-term rentals should also improve. Jamaica remains a safe place to live, do business and raise families. ”Buying a property in Jamaica can also bring a good return on investment, especially in an economy where the US dollar appreciates over time.
Are you buying your dream home in the Caribbean? Here are a few tips to get you started:
• Every island is different. Explore the language, culture, lifestyle, infrastructure reliability and access to health care and services. Spend time in different places to find out which community is best for you.
• Hire a licensed, reputable real estate agent and do a background check of the agency.
• Visit the property personally and hire an independent third party to appraise and appraise the property.
• Caribbean islands have different laws regarding the acquisition of real estate by foreigners. It is advisable to hire a licensed local lawyer.
• Find out about financing options for overseas buyers.
• Be aware of the associated purchase costs – different islands charge different fees to foreigners.
• Remember that extreme weather conditions can occur in the Caribbean, so make sure your new home is prepared for all scenarios.
• Government processes and cultural differences can drag the process out. Be patient.
• Don’t forget to consider maintenance – hire a property manager when you are out of the country.