Real Estate In The Caribbean, Real Estate Market

What to Consider When Investing in Real Estate in the Caribbean

The turquoise waters, picturesque islands, tropical rainforests, white sandy beaches, and gorgeous coasts of the Caribbean attract millions of visitors each year. And thanks to growing tourism, the economies of Caribbean countries are growing fast, including their real estate markets. So, if you’re looking to invest in an exotic location, the Caribbean is a perfect option.

Investing in real estate in the Caribbean is also one of the ways to obtain a second citizenship via the Caribbean CBI program. Five Caribbean countries—Antigua and Barbuda, Dominica, St. Kitts and Nevis, Grenada, and St. Lucia—grant foreign investors citizenship in exchange for a minimum investment of $200,000 in government-approved real estate.

With a Caribbean passport, you’ll enjoy visa-free entrance to over 120 countries, including the UK, Singapore, Hong Kong, and the Schengen area. You’ll also acquire the full rights of a citizen, just like the locals. We’ll show you what to consider when investing in real estate in the Caribbean.

The Caribbean Real Estate Market

The Caribbean real estate market is different from most real estate markets worldwide. Unlike in the US, where proximity to social amenities, administrative seats, and business centers determines prices, tourism is the main factor influencing the Caribbean real estate market.

The most approved real estate investments for the Caribbean CBI program are beachfront hotels, tourist villas, and malls. Hence, prices are constantly increasing, guaranteeing a profitable investment.

However, even with the ever-increasing prices of real estate in the Caribbean, investing in luxury villas here is way cheaper than in European real estate markets. For example, a square meter costs about $5,000 in St. Kitts and Nevis, but the costs are about $15,400 in New York and $16,400 in London. Plus, the tax rates are lower in the Caribbean, and there are no taxes on capital gains.

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Things to Consider When Investing in Real Estate in the Caribbean

There are several factors to consider when investing in real estate in the Caribbean. Here are some of the main ones:

Real Estate Investment Options

The minimum real estate investment amount varies across the Caribbean countries, with Dominica’s being the cheapest at $200,000, excluding additional charges. In Antigua and Barbuda, you can invest at least $400,000 in a single-ownership property or $200,000 in an approved joint-ownership property.

St. Kitts and Nevis has the most expensive real estate investment options. The minimum investment is $400,000 for a condominium or $800,000 for a single-family dwelling with an Approved Private Home Status. Alternatively, you can buy at least $400,000 shares in a government-approved property, usually a resort or luxury hotel.

Property Prices

Property prices are similar across the region. However, even a little difference counts in determining your profits. Depending on the country and location, living spaces are sold for between $5,000 to $8,000 per square meter. Oceanfront apartments cost up to $1,000,000, while small one or two-room villas cost between $2,000,000 and $10,000,000.

Real Estate Investment
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Accompanying Expenses

Aside from the actual cost of purchasing a property, there are several accompanying expenses, and this includes due diligence fees, Alien Landholding License (ALHL), stamp duty, transfer taxes, and citizenship program fees. ALHL costs 10% of investment in Dominica, Grenada, and St. Kitts and Nevis, 5% in Antigua and Barbuda, and $2,400 to $4,300 in St. Lucia, depending on the area.

Citizenship program fee is $25,000 in Dominica, $30,000 in Antigua and Barbuda, $35,000 in St. Kitts and Nevis, and $50,000 in Grenada and St. Lucia.

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Annual Rental Yield

Many foreign investors do not intend to permanently reside in the Caribbean, so rental yield is often considered when investing in real estate. Fortunately, tourism thrives in the Caribbean throughout the year, though there are shoulder seasons. Plus, rental prices of properties registered under CBI programs are higher than regular ones, averaging $1,500 to $2,000 weekly.

The annual rental yield falls between 3% – 5% on average in the Caribbean, with St. Lucia having the lowest rental yield at 3.5% per annum. St. Kitts and Nevis offers the highest average rental yield at 5.11% annually.

Sales Requirement and Associated Costs

Investors can only sell real estate properties after the minimum holding period, which ranges from 3 to 7 years. And thanks to ever-increasing prices, you can make substantial income from the sales.

The average minimum holding time is five years, after which you can resell to a new investor. Although Dominica allows you to resell after three years, doing so will disqualify the property for further use in the CBI program. Also, in St. Lucia, a property can only be used once in the CBI program.

During resale, you’ll have to pay a stamp duty of 2.5% to 15%, depending on the country and property value, and a real estate agent service fee of 5% to 7%. There’s no capital gains tax in the Caribbean, so whatever you make as a capital gain (if any) is all yours to keep.

Start Investing in Caribbean Real Estate

Beyond being more affordable than in the world’s major cities, real estate investment in the Caribbean is a path to obtaining a second citizenship. Now that you know what to consider when investing in the Caribbean real estate market, you can start the process of owning Caribbean dual citizenship via real estate investment.

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