Dominica’s property market remains stable
Last Updated: August 24, 2015
North Americans remained the top real estate investors, though there was increased interest from U.K. homebuyers and Dominicans living overseas.
Dominica’s capital city, Roseau, remains one of the most popular locations for foreign investors, especially in the Castle Comfort and Wall House areas.
Despite the fact that the property market remains restricted in Dominica because there are no direct international flights from the U.S., Canada or Europe, foreign investors are being enticed by its natural beauty and the introduction of the Citizenship by Investment Program (CIP), which is the most affordable in the world.
Dominica’s CIP allows foreign investors to acquire citizenship by purchasing approved real estate valued at a minimum of US$200,000. The property purchased must be held for at least 3 years and may be eligible for re-sale if owned for 5 years. Dual citizenship is allowed and there is no actual requirement to reside in Dominica before or after citizenship is granted.
There are no official records of house prices in Dominica, and reliable information on the property market is hard to find. However, based on some property listings, two to three-bedroom houses can be bought for an average price of US$500,000, depending on the location, area, quality of construction materials and other factors. For an instance, a three-bedroom house located Roseau measuring 3,129 sq. ft. is currently listed at US$650,000. On the other hand, a 4-acre land plos situated at Giraudel is priced at US$522,000.
Dominica’s real estate market is expected to remain stable this year and the coming years, amidst slow economic growth. The economy grew by just 1.1% last year, after y-o-y contractions of 0.9% in 2013, 1.4% in 2012, and 0.1% in 2011, according to the International Monetary Fund (IMF). The economy is expected to expand by 2.4% this year and by another 2.9% in 2016.
The government is quite lenient to foreigners purchasing property in Dominica. Non-residents can acquire property up to one acre (4,046 sq. m) for residential purposes, and up to three acres (12,140 sq. m) for commercial use. Only those who plan to buy more need to obtain an Alien Landholding License.
Very poor yields in Dominica
Gross rental income returns (yields) are around 4% to 5% for properties located in Dominica’s coastal areas, in some cases it can reach up to 6.7%. Rents in the islands are predominantly seasonal but these yields figures are for long-term rentals.
Rentals have not risen during the last five years, save around Picard. A two bedroom property rents for about US$800. Some higher end rentals have dropped as the offshore industry has declined.
Income tax is high in Dominica
Rental Income: Rental income earned by nonresidents is taxed at progressive rates, from 15% to 35%.
VAT is also levied at rental income at a flat rate of 15% but a special rate of 10% can apply under certain conditions.
Capital Gains: There are no taxes on capital gains.
Inheritance: There are no inheritance taxes in Dominica.
Residents: Residents are taxed on worldwide income at progressive rates, from 18% to 35%.
Buying costs are high in Dominica
Total roundtrip transaction costs, i.e., the cost of buying and selling a property, are at 28.45% of the property value.
The Alien Land Holding License fee is 10% of the land's market value. The buyer pays legal fees (3% + 15% VAT), judicial fees (2.5%), and the assurance fund (1%). The seller usually pays the agent's commission of 5%. The buyer pays 4% stamp duty, while the seller pays 2.5% stamp duty.
Dominica law is pro-landlord
Rent: The rent can be freely agreed, except when less than US$300 a month, where the highly pro-tenant Tenancies and Rent Control Act applies.
Tenant Security: The recovery of premises from an unsatisfactory tenant must go to the High Court, and this can take time. But a tenant who thinks he has no defense to a claim for possession would normally vacate upon commencement of proceedings. To do otherwise is to bear unnecessary legal costs.
Modest economic growth for 2015Dominica (pop 71,000, GDP per capita US$7,437) lives up to its name as the “Nature Island of the Caribbean.” It is the youngest of the Caribbean islands, and there truly is a lot to explore.
A haven for nature lovers; its mountainous terrains proliferate with virgin forests, natural springs, and a multitude of rivers cascading down steep cliffs to meet the coast. Moreover, it is one of the world’s premier diving spots, its surrounding reefs emanate from the Island’s volcanic origins.
Highly dependent on agriculture, Dominica's economy remains very vulnerable to climatic conditions and to international economic developments. The economy grew by an average of 2.9% per year from 2000 to 2010.
The economy grew by just 1.1% last year, after y-o-y contractions of 0.9% in 2013, 1.4% in 2012, and 0.1% in 2011, according to the International Monetary Fund (IMF). The economy is expected to expand by 2.4% this year and by another 2.9% in 2016.
Dominica’s tourism industry has blossomed, despite the lack of direct flights. Businesses like bars, restaurants, and hotels are happy, and locals look forward to seeing and hearing about the big “Pirates” celebrities like Johnny Depp, Keira Knightley, and Orlando Bloom.
In 2014, the total number of tourist arrivals soared by 18.2% to 378,812 persons from the previous year, based on figures from Discover Dominica. Among the more than 78,000 stay-over tourists, 54% came from other Caribbean states, 20% from the U.S. 6% from the U.K. and 3% from Canada.
However in Q1 2015, total visitor arrivals fell by 8.6% to 177,586 persons from the same period last year. While stay-over visitors were almost unchanged from a year ago, at 22,573 persons, cruise ship passengers dropped 10% to 148,635 persons.
In an effort to boost the tourism industry, the government has allocated an additional XCD2 million (US$ 740,741) to promote the country internationally.