The Caribbean has always been among the best places in the world to live and vacation. Warm climates, beautiful beaches, lower costs 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 Programme (CIP), taking the hassle out of foreign property ownership.
The region is very diverse: buyers can select from flat islands with sandy beaches to tropical havens with rainforests, mountains, rivers, and waterfalls. Caribbean real estate markets range from mature to underdeveloped, and offer a wider range of price points and options, including single-family dwellings, condominiums, and branded luxury resorts. Resorts offer extra perks such as no maintenance fees, access to family programmes, spas, restaurants, water sports, tennis, and golf.
While the local real estate market suffered in 2020, the international sales segment showed positive signs, and experts project that this trend will be sustained throughout 2021 and 2022. Relatively low COVID-19 transmission rates in the region, along with large price reductions, have driven growth in this segment. Realtors have responded by digitising operations to improve efficiency and convenience for buyers here and abroad. They have integrated new technologies such as online multiple listing services, online networking, and selling channels, and conducted virtual home tours.
Based in Dubai, Lisa McShine — a partner at ROC Citizenship — specialises in government-approved residency and CIP solutions in the Caribbean. Responsible for CIP purchases in Antigua and Barbuda, Dominica, Grenada, St Lucia, and St Kitts and Nevis, McShine says that, post-COVID-19, she has received fifty per cent more enquiries and eighty per cent more conversions in the region. She works mainly with buyers from the MENA region (the Middle East and North Africa). McShine’s buyers are predominantly interested in the hospitality segment, such as hotels and luxury projects. Big international brands — which tend to have a higher rate of return, three per cent and more — are well received.
The deciding factor for most buyers is the number of countries their new passport gives them access to. McShine says she has seen significant interest from Iran, although its citizens are subject to international sanctions. Dominica remains an active market for these buyers. St Kitts and Nevis, having the oldest CIP in the world, tends to be the most popular destination — recently it has seen an influx of Chinese CIP investment. Antigua and Barbuda are second in line.
“In some territories,” McShine says, “foreign buyers have to pay an alien tax, which can be as high as twenty per cent. Buyers need to be aware of the legalities for each market — for example, in some you cannot purchase a property under auction without a local partner.” While non-nationals can obtain mortgages locally, this is not applicable to the CIP concept, as the buyer must hold the title in order to be granted citizenship.
Governments in the region benefit from CIP by obtaining much-needed revenue and foreign exchange, particularly US dollars. The programme also creates jobs, as developers must use local tradespeople, and a percentage of the materials must be purchased locally. In the longer term, there is also job creation with respect to maintenance and upkeep.
McShine predicts a bright future for the international real estate market in the Caribbean. “I project a sixty per cent increase over the next few quarters,” she says. “From December last year, we have seen a significant increase in interest. 2021 will be an amazing year in my industry, especially with the rollout of global and regional vaccination programmes.”
Donovan Reid, President of the Realtors Association of Jamaica (RAJ), paints a more cautionary picture. “Based on the figures from the Planning Institute of Jamaica, while the economy shrank by about 10.2 per cent, the real estate sector only reduced by 2.5 percent, and the construction sector shrank by 0.8 per cent,” he explains. “The association did not discern any significant change in the real estate market, nor did we observe an increase in the international real estate segment.”
Prior to COVID-19, the RAJ had noted an uptake in international real estate interest, but since the start of the pandemic the status quo has remained the same. Generational purchases from the diaspora account for a large part of international transactions in Jamaica. However, if a local address is used or local borrowing takes place, this may go undetected. Therefore, statistically, international real estate purchases appear low, as the numbers predominantly reflect third-party purchases such as second-home buyers and investors.
Dual currency, either US or Jamaican dollars, is used for land acquisition locally, which is a plus for foreign 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 allows for balloon payments, and up to ninety per cent financing is on the table. The recent reduction in the transaction costs of purchasing a home, now down to as low as two per cent, presents another cost saving for international buyers.
While Jamaica does not have specific entry programmes targeting international buyers, there is a six-month stay option available. A special consideration when buying in the Jamaican real estate market is to ensure that the property’s title is registered, versus having a common-law title.
The RAJ remains optimistic that as the local vaccination programme gets up and running, and the pandemic begins to trend downward in Jamaica, they will see an upward surge in the market.“This is an opportunity which the association is plotting the course for,” Reid says, “by mapping out the value proposition for foreign buyers to invest in Jamaica. Jamaica has a good future ahead of it — we are hopeful that in 2022 we will rebound. We expect that the rate of appreciation of property values will continue to trend upwards, the rental market will continue to remain fairly stable, and we think that with the stabilisation of the pandemic Airbnb’s short term rentals should also improve. Jamaica remains a secure place to live, do business, and raise families.” Purchasing a property in Jamaica can also bring a good investment return, especially in an economy where the US dollar is appreciating over time.
Buying your dream home in the Caribbean? Here are a few tips to get you started:
• Each island is different. Research the language, culture, lifestyle, reliability of infrastructure, and access to healthcare and services. Spend time in different locations to understand which community best suits you.
• Engage a licensed, reputable real estate agent, and conduct a background check on the agency.
• Visit the property in person, and hire an independent third party to value and survey the property.
• Caribbean islands have varying laws regarding the purchase of properties by foreigners. It is advisable to hire a local licensed attorney.
• Check out the financing options available to foreign buyers.
• Be aware of the associated costs of buying — different islands require different fees from non-nationals.
• Remember the Caribbean can experience extreme weather, so ensure your new home is prepared for all scenarios.
• Government processes and cultural differences can make the process lengthy. Be patient.
• Don’t forget to consider maintenance — hire a property manager for when you are out of the country.