Caribbean dreams

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If you want to make that island fantasy a reality, look farther a field, beyond the normal tourist hotspots, says Gamma Elwin Harris
If you’ve always hankered after a home in the Caribbean, take heart. White-sand bays and palms can be yours for less than an apartment in the Med, if you know where to look. Adventurous investors might take a punt on emerging markets like Dominican Republic, Aruba and Jamaica for some of the best value for money in this region. But if a little slice of luxury is more your style, glamorous tax havens such as the Bahamas and the Turks and Ciaos Islands are now open to negotiations.
“The recession has taken all the easy money off the table,” says George Dominos, President of Dominos Sotheby’s International Realty in the Bahamas. “Like everywhere else, prices were ahead of value. Now sellers have become more realistic and buyers, though cautious, are taking advantage.”
If you can bag a deal, the Bahamas is an attractive option with good infrastructure, a stable government and banking system, and a currency pegged at parity to the US dollar. Florida is just a 50-mile hop, so there’s potential for high rental yields, and if you fancy permanent residency, buyers that spend over $500,000 on a home can fast-track their application.
Typically, prices remain high in developed tourist spots like New Providence and Grand Bahamas, but there are deals to be found elsewhere. If your budget is around the £150,000 mark, explore the calmer ‘Out Islands’, also known as the Family Isles. Among the largest are Exuma, Eleuthera and Abaca.
For value, Dominos recommends: “Try Eleuthera, with its miles of beautiful deserted beaches, small towns and friendly people, and a tiny island to the north called Spanish Wells. Also the Abaco Cays, such as Hope Town and Guana Cay: islands with small communities. These are old Loyalist settlements only accessible by ferry.”
If the cays sound too remote, check out plans for the mixed harbor development on Great Abaca called Schooner Bay, currently offering lots from $105,000. Said to set the benchmark for future development of the island, Schooner Bay promises a more environmentally sensitive approach than has generally been seen in the Bahamas, with emphasis on pedestrian and bicycle access, community living and local produce.
William Wong, President of the Bahamas Real Estate Association, adds Cat Island and Long Island to the value-for-money list in the Family Isles. “If you’re lucky enough to find a one-bedroom apartment close to the sea, it would cost you between $250,000 and $400,000,” he says. “Away from the beach a two-bed, two-bath new build can be bought for around $250,000. And the return on investment is around 8%.”

Les Calvert, Director of UK-based portal Property-Abroad.com suggests buyers take the initiative. “We are still listing original prices because the Bahamas has always been lifestyle-buyer fuelled, and sellers are hoping to get the price they want. But anyone looking for a bargain is welcome to call us, find out which have been on the longest and make an offer.” Properties include a two-bed condo in Pineapple Point Resort, Treasure Cay, and Abaca at £329,921 and a one-bed villa in Pagoda Beach complex, Great Exams at £148,122.

In the Turks and Ciaos Islands to the south east of the Bahamas, global recession struck at the height of a boom. Prices had been soaring since 2001, in tandem with the area’s cachet as an unspoilt hideaway and diver’s paradise. Residents – including Bruce Willis, Donna Karen and Keith Richards – benefit from no income tax, capital gains tax or inheritance tax – as in the Bahamas. In addition, there’s no property tax.

Karen Mesick, Sales Manager at Prestigious Properties on Providential says: “While most of the world was seeing drastic changes in 2008, we didn’t feel it until 2009. A large group of developments opened that year, so closings on off-plan purchases may have affected things.”

Sales have slowed to a crawl – down 75% on two years ago – and prices have generally plateau, dipping in some areas. The upshot? Buyers now have time to shop around, and more power to negotiate. “In the past sellers were looking to double their investment but now they’re willing to sell for about 10% to 20% profit,” says Mesick.

If you’re looking to buy your dream holiday home in ‘T&C’ you need liquid funds in US dollars, the adopted currency. “Lending interest rates here are low, around 5%,” says Mesick. “But the average residence is over US$300,000 then there’s 9.75% stamp duty [on properties over US$75,000]. So you need to inject around US$150,000 on average if you plan on getting financing.”

In Providential, home to 62% of the country’s population, studio apartments go for around US$250K+. However, developers are offering bargains in the slow-down. The upscale beachfront Alexandra Resort on golden Grace Bay Beach, for example, is offering studio condos from US$197,000. Outside the resort developments on ‘Provo’, as it’s known, prices begin around US$350,000 for a two-bed family home.

Naturally the better deals lie on less developed islands, and some areas offer more favorable stamp duty. “Look in Middle, North or South Ciaos, Grand Turk or Salt Cay where stamp duty is 6%,” says Mesick. “Or there are developments in Providential, such as Highland Estates or Flamingo Park, where the developer rolls stamp duty into the costs with their all inclusive financing from Scotia bank.”

While amenities on Provo and Grand Turk make these the best bets for buy to let, don’t be gulled by promises of high returns. Mesick warns: “Short-term lets only make enough income to cover the expenses of owning a second home… utilities, strata fees, maintenance. Don’t assume the income will help with your mortgage or other large expenses.”
Schemes exist to make short-term lets easier. Kathryn Brown, President of the Turks and Ciaos Real Estate Association, suggests: “If you invest in a condominium or hotel, management encourage you to put the unit in a short-term rental pool. That way you can recover expenses for the unit and still book any time you want.” Fractional ownership schemes are also in the pipeline, says Brown.

In contrast to the Bahamas, Turks and Ciaos is in the very early stages of development. The total population is around 36,000, and only eight of the 40 islands and cays are inhabited. A runway extension planned for Providential Airport will soon allow super-sized jets to land for the first time. Brown says: “One can invest now while prices are stabilized [in cases] at 20% down, and certainly make money in a few years if you sell.”
Good investment potential, weather around 90ºF all year, turquoise waters. It’s a tempting prospect. Before you buy, though, be sure to factor in all costs. The Global Property Guide online estimates you can rack up an average 19.15% of your property price just buying and selling in Turks and Ciaos – in fees alone (agents, legal etc). The Bahamas averages higher at 21.26%. Also check the cost of living on any island you’re considering, and research flight prices and regularity for the times of year you’d want to travel.

Finally, don’t overstretch yourself in pursuit of a dream. “The advice I often give first-time buyers here is to buy within their means,” says Brown. “Get started, grow at your comfort level, hold for a time, then sell and buy upwards.”

Article Source: http://depositarticles.com/

Bill Mackay works and writes for the leading offline and online magazine Living Abroad Magazine. The magazine is your monthly guide to living and buying abroad , with a wealth of information, stories, and guides.

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