Caribbean attractive second-home

Tax incentives and a sun-kissed lifestyle are making buying in the Caribbean an increasingly attractive second-home proposition. Stevie King visits three tropical escapes stepping up their game

St Lucia

On an island historically dominated by all-inclusive brands, St Lucia’s move into the premium echelons of residential tourism with a coterie of new five-star resorts shows just how far the island has come in recent years in its bid to become the Caribbean’s new hot spot for HNW second-homers.

Big on tropical greenery and marina life, the island doesn’t boast the same beach inventory as some of the other Caribbean havens. Yet it’s this unadulterated topography: the primeval Piton peaks, rising out of the sea like daggers, and the cosy, drop-anchor harbours that sets it apart.

Tourism, while a dominant force in the economy (currently accounting for 45% of GDP) hasn’t always been so prevalent. Until the early 1990’s, banana production was the island’s primary source of income, but with globalisation and subsidy cutbacks in the European market, revenue from the ‘green gold’ industry has dwindled away, with the St. Lucian government stepping in to fill the gap with a raft of investment sweeteners aimed at attracting new sector interest, with residential tourism leading the way.

Buyers in the market for a beachfront pad will find two distinct investment locations vying for attention – the more developed northerly coastal reaches around Rodney Bay Marina and vintage capital Castries and the quieter south around Soufriere. To date, property values in the north have had the edge over their southern counterparts with more demand for re-sales. Existing properties on resort developments in Marigot Bay south of Castries, for example, have doubled in value the last six years, with new developments tipped to rise by 8-10% a year. Personal tax incentives are attractive too with no VAT, no capital gains tax, no inheritance tax and no estate tax to consider.

Investment projects stealing the limelight include the exclusive Mount du Cap Estate where bespoke build three-bed villas are selling for US$2.5m and Sugar Beach Resort with turnkey residences with views of the Pitons from US$2.75m.

Turks and Caicos

One of the fastest-growing markets in the Caribbean, this British Overseas Territory 500 miles southeast of Miami consists of 40 islands and cays, yet is home to just 30,000 year-round residents. Comprising two archipelagos: Providenciales, one of the Caicos, boasts the islands’ largest airport and is the only real tourist ‘hub’. A diminutive 38 square miles, island infrastructure is continually being upgraded including the expansion of the international airport; the magnificent coast sporting a growing but still limited number of handsome resorts and villas concentrated on the north shore, overlooking the beautiful and aptly named Grace Bay.

“The Islands have seen an impressive recovery since 2009,” explains Robert Greenwood, the president of the Turks and Caicos Real Estate Association. “In conjunction with residential growth, development opportunities have returned with new luxury projects in the planning stages and pre-construction sales again in our inventory.” Scarcity in certain areas of the market also appears to be driving up values, particularly among well-designed, quality beachfront property. Turnkey condos with excellent rental potential can be picked up for $US650,000 through to luxury beachfront villas from $US2.5m.

A rigorous legal framework for property investment also ensures clean title when buying. “We have no property or income taxes,” adds Greenwood. “There is, however, a one-time stamp duty that is paid at the time of purchase, depending on the price. As a British protectorate, we are under British common law which means when your name is on the deed, this guarantees ownership of property.”

Cayman Islands

A late to the party destination when it comes to residential tourism – the Cayman Islands only featured on the investor map in the late 70s but has wasted little time since, building up its glam getaway reputation; Grand Cayman now the largest and liveliest of the three-island archipelago and home to lively Seven-Mile Beach, the honey-pot for expatriate second-home buyers where prices average round US$1,000 per square foot.

A community that enjoys the highest income per capita in the Caribbean and arguably the highest standard of living, one of the destination’s key investment draws is the streamlined process for foreign ownership. “We have a small population of around 60,000, and about half of those are foreigners on work permits or retirees from all over the world,” explains Donnie Smith of Cayman Fidelity Real Estate.

“The Islands’ rules for international transactions are therefore tailored to attract high foreign business spend to the country. There’s no income tax, property tax, or capital gain tax and no onerous landlord legislations. Property title can also go into your own personal name or company name.”

Property demand of late is surging. Real estate transactions surged by 45% in the first half of 2014 from a year earlier, based on figures released by CIREBA, the largest property portal in Cayman Islands. New product is helping to fuel investors’ interest, among them the uber-trendy Watercolours development on Seven Mile Beach with units priced from US$3.9 million. Situated in the sought after residential community of Crystal Harbour on the water’s edge at Mitchell’s Creek on Grand Cayman; luxury marina development Cypress Pointe North has 38 apartments and villas priced from $395,000 to $1.8 million.