Caribbean Property Investment Guide

A property purchase in the Caribbean has many advantages for foreign property buyers and is ideal for holiday-let property investments.  Important consideration when purchasing any tourist based property investment is whether or not the tourism will continue to grow and whether there is a long rental period. 

The Caribbean is ideal and fits all the major requirements, yet there are even more added benefits. Areas in the Caribbean include: Trinidad and Tobago; Dominican Republic; Haiti; St. Vincent; Barbados; Martinique; St. Lucia; Anguilla; Antigua and Barbuda; Aruba; Bahamas; Bermuda; British Virgin Islands; Cayman Islands; Colombia; Cuba; Dominica; Grenada; Dominican Republic; Honduras; Jamaica; Montserrat; Navassa Island; Netherlands Atilles; Nicaragua; Puerto Rico; St. Kitts and Nevas; St Vincenta and the Grenadines; Turks and Caicos; U.S Virgin Isles.

Average property values vary substantially from island to island however an estimate price per square metre overall is approximately €3200.  The British Virgin Islands is the most expensive and the Dominican the cheapest.  Rental yields also vary substantially across the different tourist locations but Jamaica and the Bahamas generally achieve the highest returns.  

In certain locations, for example in the Dominican Republic, purchasers can buy beach properties where there is no stamp duty to be paid, no capital gains taxes nor income tax for 10 year periods.  While this is an attractive proposition it is important to understand that the legal structure or means by which the property is purchased ( whether a natural person or a company) will indeed have an effect on when it comes to reselling.  When an investor purchases as a natural person the tax incentives will not be transferred to the next buyer, (within 10 years) whereas by purchasing by means of a company, the rights are transferable.  It is advisable to any property buyer considering purchasing in the Caribbean to seek legal and taxation advice on the matter before purchasing.

Property prices have been said to be increasing on an annual basis by approximately 15%.  This is a healthy increase prices, however, the most attractive aspect of purchasing in all-year round weather locations is the potential for high rental yields.  On some of the Islands occupancy levels in hotels are exceeding 80% and considering the fact that 2 bed properties in good quality tourist resorts can be rented out for almost $500 plus a night, it is easy to see what potential yields are achievable.  Developers of beach locations even offer potential buyers guaranteed rental income exceeding 7% gross of insurance fees. It is important to note rental yields in general are not this high, as income is un-evenly distributed and there is a lot of poverty.  The high rental returns will only be achieved through investing in the main tourist locations and resorts.

Financing in the Caribbean is available for overseas property buyers at a 70% LTV. While rental yields are high a mortgages for foreign property buyers are only on a 15-year term on interest and repayment only basis with interest rates of over 6%.  The financing is not ideal however a property can almost pay for itself over the course of the loan period.