High-end property buyers rush in to Saint Kitts and Nevis

The high-end property market is serving Saint Kitts and Nevis well. Thanks to its citizenship-by-investment programme, the federation is attracting an increasing number of wealthy foreign investors. St Kitts even opened a new private jet terminal at its international airport recently, to cater to this elite market. And with the increased profits from this boom, the government has also managed to substantially improve housing conditions for its own poor.

“After the closure of the sugar industry in 2006, we made a strategic decision to shift our visitor demographic towards the higher end of the market,” says Minister of Tourism Richard Skerritt.

In St Kitts, the pace of real estate developments has increased rapidly, spurred by the arrival of the Marriott Hotel in Frigate Bay, and an increased number of air flights into the islands.  “Since the Marriott opened, property sales and prices have increased dramatically,” says local real estate agent Brian Kassab.

The newest development in St. Kitts is the five-star Park Hyatt hotel, which is partly financed by the government’s citizenship-by-investment programme.

Property investors need to pay XC$1.16 million (US$430,000) upfront and, in exchange, they acquire a limited partnership share. A foreign investor gets permanent St Kitts & Nevis citizenship for himself and his dependents.  There is no residency requirement.

“Park Hyatt will raise our visibility as a tourist destination throughout the world,” says Skerritt. “The Citizenship by Investment has been in place for years, and generally worked well, but this is taking the concept to a new level.”

In Nevis the Four Seasons Resort is offering 73 villas set in 350 acres, with land for the most recent phases of development on sale from XC$1.89 million (US$700,000) to XC$6.75 million (US$2.5 million). Second-hand villas are among the most expensive on the island, at from XC$2.7 million (US$1 million) to XC$13.5 million (US$5 million) for two- to six-bedroom properties.

“The arrival of the Four Seasons Resort in 1991, and the creation of their first branded residences [in 1995], put Nevis on the map,” says Suzanne Gordon, owner of Sugar Mill Real Estate. “That heralded the beginning of the boom in luxury developments.”

Now the much-anticipated Aman Resort in Nevis, now under construction, offers 40 palatial villas, off-plan, from XC$6.75 million (US$2.5 million) to XC$32.4 million (US$12 million).

“Nevis has always been known as the more exclusive island,” says Aman Resort developer Simon Lowe.

“Nevis is essentially a villa island,” adds Gordon, “attracting artists, celebrities, and people in the know, since the 1970s.”

Saint Kitts and Nevis tourists

The minimum price of most condominiums in Nevis eligible for the Citizenship-by-Investment Program is XC$1.08 million (US$ 400,000), with some costing as much as XC$4.05 million (US$1.5 million). Prices in Nevis tend to be higher than in St Kitts, reflecting its greater exclusivity.

With these new developments, the property market is expected to thrive in the coming years, according to local real estate experts.

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. This offers long-term financial security. There is no capital gains tax or tax on personal income.

Citizenship-by-investment program

The Economic Citizenship Program began in 1984, giving St Kitts and Nevis citizenship instantly to an expatriate who acquired property (and his dependents).

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

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 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.)

Increasing citizenship approvals

As of December 2015, there were already 10,777 primary passports issued under the citizenship-by-investment programme, according to Prime Minister Timothy Harris.

  • In 2005, 6 primary passports were issued under the citizenship-by-investment programme;
  • In 2006, 19 primary passports were issued;
  • In 2007, 75 passports were issued;
  • In 2008, 202 passports were issued;
  • In 2009, 292 passports were issued;
  • In 2010, 664 passports were issued;
  • In 2011, 1,092 passports were issued;
  • In 2012, 1,758 passports were issued;
  • In 2013, there were 2,044 passports issued;
  • In 2014, there were 2,329 passports issued, and;
  • In 2015, there were 2,296 passports issued under the programme.

An increased transparency on the implementation of the programme has been evident under Prime Minister Harris, who took office in February 2015, and is expected to attract more foreign investors. In addition, the new administration has introduced several reforms including:

  • Improving the management of the Citizenship-by-Investment-Unit by adding professional and expert staff;
  • Implementing organizational changes to allow for a more client-focused team;
  • Introducing a new citizen case management system to make the processing of applications faster, and;
  • Commissioning a Technical Committee that institutes a more formal and documented process over the denial of applications.

Saint Kitts and Nevis passports issued

According to Henley & Partners, St Kitts and Nevis passport was ranked 4th among the Caribbean’s Top Ten Most Powerful Passports based on a a visa restriction index. Moreover, St Kitts and Nevis passport ranked 32nd globally and gives visa-free entry to 132 countries.

A resilient housing market

The global real estate crisis did not hit St Kitts and Nevis until early 2010, when home prices declined by an average 20%, 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.  Yet due to the Citizenship-by-Investment Programme the market remained buoyant,

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

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).

  • 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).

Saint Kitts and Nevis prime lending rate

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). 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. Residential property prices in the Christophe Harbour were almost unchanged for several years now. 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, 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).

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).

In fractional ownership developments in Nevis, such as Seaside at Cliffdwellers,  a one-eighth ownership of a four-bedroom home by the sea costs around US$1.08 million (US$400,000). It also comes with a shared 85ft pool.

Solving housing problems

Till recently, many of the local population weren’t very well-housed. Former 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.

In 2014, the NHC launched yet another two programmes, the NHC House Refinancing and Incentive Programme  and the NHC Land Refinancing and Incentive Programme, which lower interest rates for housing loans, provide waiver of interest arrears, and make land and house much more affordable to first time homebuyers.

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

“85% of the housing stock was damaged by Hurricane George in 1998,” 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.

Shrinking mortgage market

The prime lending rate stood at 5% in December 2015, down from 8.5% in the past two years, according to the ECCB.  Yet despite these declines in interest rates, though St. Kitts and Nevis’ mortgage market peaked at 25.5% of GDP in 2011, since the crisis the size of the mortgage market shrunk - to 24.95% of GDP in 2012, 22.72% of GDP in 2013, 20.49% of GDP in 2014 and 19.34% of GDP in 2015, according to the Eastern Caribbean Central Bank.

Saint Kitts and Nevis housing loans

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.

Improving yields, strong rental demand

Gross rental yields in St. Kitts and Nevis improved in 2014. From an average rental yield of 4.07% in 2013, the yield for two-bedroom condos and houses rose to 4.9% in 2014, while three-bedroom units yield 5.31%, according to the January 2014 research by the Global Property Guide.

Investment properties located in Frigate Bay, Half Moon Bay and the South East Peninsula, the upscale neighborhoods of St. Kitts, cost less in 2014 as compared to the previous year, but their rental income remains stable.

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.

Robust economic growth

St. Kitts gdp inflation

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.

The country recorded a strong economic growth of 6.2% in 2013, a sharp turnaround from prolonged contractions of 0.9% in 2012, 1.9% in 2011, 3.8% in 2010 and 3.7% in 2009, thanks to foreign direct investments, according to the IMF.

Before experiencing a recession in 2009, 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.

The economy expanded robustly in the following years, with GDP growth rates of 6.1% in 2014 and 5% in 2015.

In 2014, tourist arrivals surged 18.3% to 816,500 people from a year earlier. Then in Q3 2015, tourist arrivals rose by 38.5% to around 149,000 people compared to the same period last year, according to the ECCB. Visitor arrivals averaged 624,000 people per year from 2008 to 2013, from a yearly average of 318,000 from 2000 to 2007.