Citizenship programme buoys Saint Kitts and Nevis property
Last Updated: May 30, 2013
What helped the housing market remain buoyant was the Citizenship-by-Investment Programme, which allows foreigners to acquire 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 under these conditions:
- The foreigner should purchase a property unit worth not less than XC$ 1,078,744 (US$ 400,000) in an approved real estate development in St. Kitts and Nevis (increased from US$350,000 in January 2012).
- Additional cash payments of XC$ 134,843 (US$ 50,000) for the head of the household, and payments of US$ 25,000 for adult dependents aged 18 to 25, for the spouse, and for each child below 18 years.
“I would estimate that at least 60 percent of real estate sales are linked to the Citizenship-by-Investment Program,” Mr. Tyson said.
St. Kitts and Nevis had, by May 2012, received an estimated 300 applicants for the Citizenship-by-Investment Program, and collected almost XC$ 60 million in processing fees, with up to 1,500 people estimated to have obtained passports through the program. Most of these homebuyers are from the Middle East, Asia and Russia.
The minimum investment requirement in the programme was increased from US$350,000 to US$400,000 in January 2012.
In the recent years, the pace of real estate developments has increased rapidly – with some slowdown more recently - spurred by the arrival of the Marriott Hotel in Frigate Bay, and increased number of air flights into the islands. St. Kitts was ranked 4th on the British Airways’ top 10 holiday destinations for 2011.
“Since the Marriott opened, property sales and prices have increased dramatically,” says local real estate agent Brian Kassab.
The local housing market is expected to stay healthy in 2013, as the economy recovers after having a recession for two consecutive years.
In Calypso Bay Resort, St. Kitts, resale prices of residential properties have quadrupled since the resort’s launch in 2001, says Ricky Pereira of St. Kitts Realty.
Investment Properties in St. Kitts and Nevis: rental yields range from 4.90% to 5.31%
Rental yields in St. Kitts have improved, based on the latest Global Property Guide survey . Investment properties located in Frigate Bay, Half Moon Bay and the South East Peninsula, the upscale neighborhoods of St. Kitts, cost less now than last year, but their rental income remains stable. Last year, condos and houses cost an average of US$690,000 and are rented at an average of US$2,180, earning a poor rental yield of 4.07%.
The investment climate now is better with the price of condos and houses dropping to an average of US$575,000, but the monthly rental income remains the same, and rental yields have risen to 5.11%.
In Nevis, house prices remain stable. Prices per square metre have fallen very slightly, from US$3,700 per sq. m last year to US$3,500 this year.
Minimal taxation of properties in both St. Kitts & Nevis
Rental Income: Rental income is not taxed.
Rental income remitted to individuals or companies outside of St. Kitts is subject to 10% withholding tax.
Capital Gains: No capital gains tax is levied, except on assets sold within one year, which are taxed at 20%.
Inheritance: There are no inheritance taxes.
Residents: The economic citizenship program of St. Kitts and Nevis was established in 1984 to attract foreign investors.
Buying costs are very high in St. Kitts & Nevis
Roundtrip transaction costs range between 22.5% and 37.5% of the property's value, the bulk of the cost being the stamp duty.
Sellers pay stamp duty, which is 18.5% for properties the South East Peninsula, 14% in Special Development Areas, 5% for condominiums, and 12% for other properties. The seller also pays the real estate agent’s commission, at approximately 6%.
Buyers pay for an Alien Land-Holding License at 10% of the property's value, and legal fees (1% - 2.5%).
The law is pro-landlord in St. Kitts & Nevis
Rent: Rents are freely negotiable between landlord and tenant. Most rental agreements are short-term contracts. Long-term contracts are possible, but usually last only one year.
Tenant Eviction: Evicting tenants is not difficult. The legal system is based on English common law.
Economic recovery in 2013The Federation of St. Christopher (St. Kitts) and Nevis (pop 40,000, spread over 100 square miles) is an autonomous British colony. An amicable relationship between the two islands has fostered political stability over the past decades.
St. Kitts and Nevis offers it all, beaches, tropical forests and fantastic scenery, in a way that no other Caribbean islands quite do. Economic progress led to significant improvements in living standards with a GDP per capita of US$ 12,804.
The economy in St. Kitts and Nevis has been sluggish for the past two years, with weak growth in 2010 (0.05%), a GDP decline of 1.9% in 2011, and a decling of 0.9% in 2012, was due to a sharper-than-expected contraction in construction.
In 2013, the IMF expects the economy to recover to around 1.8% due to Foreign Direct Investments.
Before experiencing a recession in 2009 (-4.2%), St. Kitts and Nevis’ economic growth rate averaged 4.2% during the period 1993 to 2008.
Sugar used to be the backbone of the economy. However, decreasing world sugar prices prompted the government to close the sugarcane industry in 2005.
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. To deal with the country’s large public debt, which threatens its economic growth, IMF and the government reached to a SDR 52.3 million (about US$84 million) worth Stand-By Arrangement (SBA) over 36 months in July 2011, along with a comprehensive debt restructuring of its public debt.
The IMF delegation in October 2012 reported that despite the continued sluggish global economic activity, St. Kitts and Nevis had met all performance criteria set by the IMF, and expected that the country could register a budget surplus of around 1.7% of GDP in 2013.