Caribbean Homebuyers Get Citizenship

St. Kitts and Nevis have done well to avoid fallout from the global financial crisis and local realtors say it has much to do with a new citizenship …

4 0
4 0

St. Kitts and Nevis have done well to avoid fallout from the global financial crisis and local realtors say it has much to do with a new citizenship program that allows foreign homebuyers to gain residency through the purchase of high-value property. One analysts estimates that 60% of recent sales have been driven by the program, which has brought in $60 million in processing fees from buyers predominately located in the Middle East, Russia and Asia. Buyers must purchase a home valued at no less than $400,000 in addition to $50,000 fees for the head of household and $25,000 for each dependent. For more on this continue reading the following article from Global Property Guide.

The global real estate crisis did not hit St Kitts and Nevis until early 2010, when was an average 20% decline in the price of homes worth between $600,000 and $1.2 million, according to Nevis Style Realty’s proprietor Wayne Tyson.  The year before the crisis, St. Kitts and Nevis had enjoyed an increase of 5% to 10% in home values.  Nowadays vacation home prices tend to range from XC$ 1.5 million (US$ 550,000) to US$ 850,000, placing St. Kitts and Nevis in the middle rank of Caribbean countries.

What helped the housing market remain buoyant was the Citizenship-by-Investment Programme, which allows foreigners to acquire citizenship, the right to live and work in the Federation, visa-free access to Schengen countries, and a large range of other benefits, through house purchase under these conditions:

  • The foreigner should purchase a property unit worth not less than XC$ 1,078,744 (US$ 400,000) in an approved real estate development in St. Kitts and Nevis (increased from US$350,000 in January 2012).
  • Additional cash payments of XC$ 134,843 (US$ 50,000) for the head of the household, and payments of US$ 25,000 for adult dependents aged 18 to 25, for the spouse, and for each child below 18 years.

“I would estimate that at least 60 percent of real estate sales are linked to the Citizenship-by-Investment Program,” Mr. Tyson said.

St. Kitts and Nevis had, by May 2012, received an estimated 300 applicants for the Citizenship-by-Investment Program, and collected almost XC$ 60 million in processing fees, with up to 1,500 people estimated to have obtained passports through the program. Most of these homebuyers are from the Middle East, Asia and Russia.

In Nevis, though there are some ongoing projects, condominium development has been slow, according to Sugar Mill Real Estate broker and owner, Suzanne Gordon.  The minimum price of most condominiums in Nevis eligible for the Citizenship-by-Investment Program is XC$ 1,078,744 (US$ 400,000), with some costing as much as US$ 1.5 million.

In St Kitts, the pace of real estate developments has increased rapidly – with some slowdown more recently – spurred by the arrival of the Marriott Hotel in Frigate Bay, and an increased number of air flights into the islands. St. Kitts was ranked 4th on the British Airways’ top 10 holiday destinations for 2011.

“Since the Marriott opened, property sales and prices have increased dramatically,” says local real estate agent Brian Kassab.

The local housing market is expected to stay healthy in 2013, as the economy recovers after a two-year recession.

In Calypso Bay Resort, St. Kitts, resale prices of residential properties have quadrupled since the resort’s launch in 2001, says Ricky Pereira of St. Kitts Realty.

House price variations

Saint Kitts

Residential properties in the Marriot Residences St Kitts have been on sale from January 26, 2012 at XC$ 1.1 million (US$ 400,000) for studio apartments, to around XC$ 5.6 million (US$ 2.09 million) for four-bedroom penthouses.

In Ocean’s Edge, an exclusive residential development located in Frigate Bay, St. Kitts, properties start at XC$ 1.1 million (US$ 405,500). The starting price was up by 14.2% from its previous price in February 2011.

  • Poolside studio apartments sell for around XC$ 1.13 million (US$ 420,000).
  • Hillside apartments are priced from XC$ 1.3 million (US$ 480,000) to XC$ 2.4 million (US$ 875,000), depending on the number of bedrooms.
  • Luxury villas sell for about XC$ 5.1 million (US$ 1.9 million) to XC$ 7 million (US$ 2.6 million).

Silver Reef, a ‘green’ resort in St. Kitts, offers one and two bedroom apartments with freehold prices starting from XC$ 1.1 million (US$ 400,000). In August 2012, prices of residential properties offered in Silver Reef ranged from XC$ 1.13 million (US$ 420,000) for a one bedroom apartment to XC$ 1.4 million (US$ 530,000) for a two-bedroom apartment.

An ambitious development that is fast becoming a destination for property investors, Christophe Harbour, is a 2,500-acre project located in the southeastern coast of St Kitts. The starting price for villas was at XC$ 1.2 million (US$ 450,000) and can go up to XC$ 18.2 million (US$ 6.8 million). Christopher Harbour also includes a Tom Fazio golf course, a superyacht marina and a Mandarin Oriental hotel.

Nevis

In the Sunset Ridge, situated near Mount Nevis, selling prices were unchanged from two years ago. The price of a Columbus model villa is XC$1.9 million (US$715,000), while a Nelson model is priced at XC$2.15 million (USD$795,000). The Phase 1 is expected to be completed by November 2011.

In Nelson Springs Beach Villas & Spas, located in Charlestown:

  • Prices for property units range from XC$ 1.1 million (US$ 400,000) to XC$ 4.6 million (US$ 1.7 million).
  • The beach resort’s condominiums sell for about XC$ 1.4 million (US$ 530,000) to XC$ 1.8 million (US$ 650,000).

Prices of luxury villas and estate homes in Fern Hill Estates range from around XC$ 1.7 million (US$ 615,000) to XC$ 3.1 million (US$ 1.2 million).

Solving housing problems

Till recently, many of the local population weren’t very well-housed. Prime Minister Denzil Douglas began to address the housing problems in St. Kitts and Nevis as soon as he took office in 1995.

About 2,500 affordable and middle-income homes have been built during the past 13 years via National Housing Corporation (NHC) programmes. In Nevis, the Nevis Housing and Land Development Corporation (NHLDC) has embarked on a comprehensive home construction program to make affordable housing available.

Aside from affordable housing, the government is committed to raise housing standards.

“85% of the housing stock was damaged by Hurricane George in1998,” says Housing Minister Cedric Liburd. “In response, the government joined with USAID and the OAS…to create a plan of action for repair and upgrading of existing housing, so that these structures might be better suited to withstand future storms. The Parliament also upgraded the building codes in 2000.”

A recent study by the Caribbean Development Bank showed that poor quality housing in St. Kitts has been cut by 23% over the past 8 years. The percentage of population living in poor quality housing fell to 7.5% in 2008, as compared to 30.5% in 2000.

In an attempt to further promote homeownership among its citizens, as well as to stimulate the economy, the government implemented the Building Materials Investment Programme (BMIP) in 2012, a tax incentive programme encouraging private home construction. Under the BMIP, all duties and customs service charges will be removed for the first XC$ 400,000 (US$ 150,000) of building materials throughout 2012.

Citizenship-by-investment program

Since 1984, St. Kitts and Nevis has implemented the Economic Citizenship Program, which mainly aims to attract wealthy foreigners. Through purchasing real estate in approved developments, the prospective expatriate (and his dependents) can acquire citizenship instantly.

The program has two qualifying options: (a) investment in real estate; (b) cash donation to the Sugar Industry Diversification Foundation (SIDF).

Starting January 2012, new regulations for the Economic Citizenship by Investment Programme came into effect:

  • As part of St. Kitts and Nevis’ economic sanctions on Iran, the granting of economic citizenship to Iranians living in Iran at the point of their application for investment in the programme is suspended.
  • Under the real estate option, the minimum investment requirement in an approved real estate development in St. Kitts and Nevis is now XC$ 1,078,744 (US$ 400,000).
  • The buyer can sell the property after five years. The property, however, will not qualify the new owner for citizenship by investment, if the citizenship by investment application of the first owner was approved before 2012.
  • Payment of a cash sum of XC$ 134,843 (US$ 50,000) for the head of the household, XC$ 67,421 (US$ 25,000) for the spouse as well as for each child below 18 years, and XC$ 134,843 (US$ 50,000) for every unmarried dependent child of the applicant between the ages of 18 to 25.

 

APPROVED DEVELOPMENTS FOR ECONOMIC CITIZENSHIP

SAINT KITTS NEVIS
Calypso Bay Resort Botanical Gardens
Christophe Harbour Bush Hill
Golf View Carino Hamilton Estate
Half Moon Bay Villas Cliffdwellers
Heritage Plantation Fern Hill Villa Development
Horizons Villas Fort Ashby Beach Club
Kittitian Hill Four Seasons Resort Estates
Leeward Cove Jones Estates and Red Hawk Ridge
Marriot Vacation Club Sunset Ridge (Live Nevis)
Ocean’s Edge Mount Nevis Hotel
Pirate’s Nest Nelson’s Springs Beach Villas and Spas
Royal St. Kitts Hotel and Casino Oualie Beach Resort
Sea Lofts Paradise Garden Estate
Silver Reef Resort Rawlins Plantation
St. Christopher Club Royal Getaway Estate
Sundance Ridge The Hermitage Plantation Inn Villas and Estates
Sunrise Hill Resort  

 

The Economic Citizenship Program provides the following benefits:

  • Full citizenship, for the applicant and all eligible family members
  • Dual citizenship is permitted, without the requirement to notify the applicant’s home country, and without any need to reside in St. Kitts and Nevis
  • Passports will be issued, and may be easily renewed
  • Visa-free travel to more than 60 countries worldwide, including the Schengen Zone countries
  • Full residency status and the right to work in St. Kitts and Nevis
  • Tax free status on foreign income, capital gains, gift, wealth and inheritance tax
  • As a Commonwealth citizen, the applicant receives preferential treatment in the UK (e.g. applicant’s children may enter the UK to study without the need to apply for student visas. After studying, they may work in the UK for 2 years without needing a work permit.)

Growing mortgage market

St. Kitts and Nevis’ mortgage market has grown sharply from an average of 20% of GDP from 2000 to 2008, to around 15% in 2012, according to the Eastern Caribbean Central Bank.

Foreign buyers still mostly pay cash, though local banks do offer home financing to non-residents. The maximum loan-to-value ratio is usually 60%, with loan terms of 15 years. Mortgage interest rates are typically tied to the US prime rate or LIBOR.

The Eastern Caribbean dollar, the official currency of St. Kitts and Nevis, is pegged to the US dollar, at XC$2.7 to US$1.

Improving yields, strong rental demand

Gross rental yields in St. Kitts and Nevis have improved in 2012. From an average rental yield of 4.07% in 2011, the yield for two-bedroom condos and houses rose to 4.9%, while three-bedroom units yield 5.31%, according to the January 2012 research by the Global Property Guide.

The (small) long-term rental market in St. Kitts and Nevis remains stable due to strong demand from non-resident workers and foreign students. St Kitts is home to two American universities. The Citizenship Investor Programme has also helped propel rental demand from foreigners.

Occupancy rates are difficult to determine and vary enormously, due to the influx of short-term vacationers during “season” from December to mid-April. During the high seasons, short-term rent for a three-bedroom house ranges from US$ 2,500 to US$ 3,000 per week, while low season rentals range from US$ 1,200 to US$ 1,500 per week. Long-term rentals, which usually last for three months onwards, have rents starting from US$ 1,000.

Economic recovery in 2013

Sugar used to be the backbone of St Kitts & Nevis’ economy. However, decreasing world sugar prices prompted the government to close the sugarcane industry in 2005. A period of excessive social spending followed.  The government has since aggressively promoted light manufacturing and international financial activities, to fill the gap left by the sugarcane industry.

In June 2011, IMF named St. Kitts and Nevis as the country with the second highest gross national debt in the world at XC$ 3 billion or at around 200% of its GDP, only below Japan. The IMF and the government agreed to a SDR 52.3 million (about US$84 million) Stand-By Arrangement (SBA) over 36 months in July 2011, conditional on a comprehensive debt restructuring.

An IMF delegation reported in October 2012 that despite the continued sluggish global economic activity, St. Kitts and Nevis had met all the performance criteria set by the IMF, and would register a budget surplus of around 1.7% of GDP in 2013.

In 2013, the IMF expects the economy to recover to around 1.8% due to Foreign Direct Investments in the pipeline.   Before experiencing a recession in 2009 (-4.2%), St. Kitts and Nevis’ economic growth rate averaged 4.2% during the period 1993 to 2008. However, the islands occasionally hit trouble. In 1998, hurricanes damaged about 85% of housing stock. In 2001, the 9-11 terrorist attacks in the US sapped economic growth.  There was sluggish growth in 2010 (0.05%), a GDP decline of 1.9% in 2011, and a 0.9% GDP decline in 2012.

This article was republished with permission from Global Property Guide.

Share This:

In this article

Join the Conversation