Martinique: Overview

RENTAL YIELDS

Last Updated: Mar 04, 2009

Pricey Martinique coastal houses

Residential real estate tends to be expensive in Martinique, at around US$4,650 per square metre (sq. m.) on the coast.

A 275-sq. m house along the coast might cost around US1.2 million. When rented out, this same property is likely to achieve a gross rental yield of only around 3.8%, which is low by any standards. Smaller houses of 80 sq. m achieve around 4.8% - better, but not excellent.

Coastal area apartments sell at around US$4,960 per sq. m. for small properties of 35 sq.m.

Apartments in Fort-de-France tend to slightly less expensive, with 120 sq. m. apartments averaging US$3,200 per sq. m. These properties generate the highest average gross rental yields that we found in our Martinique sample, at 5.29%.

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TAXES AND COSTS

Last Updated: Oct 21, 2008

Rental income tax is surprising low in Martinique

Martinique’s tax system exactly mirrors that of France.

Rental Income: Rental income earned by nonresidents is taxed at a flat rate of 20%. Distinction between furnished lettings and unfurnished lettings is important because it has implications for taxation, primarily for deductions allowed.

Capital Gains: EU residents and residents of France now pay 16% on the net gain, after inflation relief, and after deduction of acquisition and improvement costs. Non-residents of an EU country pay CGT at a rate of 33.3%, subject to any applicable double tax treaty.

Inheritance: French private international law uses the standard double rule on inheritance: the law of the deceased’s domicile applies to moveable assets, and the law of the location of the property applies to immoveable assets.

Residents: French residents are taxed on their global income at progressive rates from 5.5% to 40%.

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BUYING GUIDE

Martinique transaction
costs range from high to very high

Total round trip transaction costs , i.e., the cost of buying and selling a property, range from 16% to 27% for old properties (more than 5 years old).

New properties without previous resales have round trip transaction costs of 27.6% to 44%, because of the 15.4% VAT. Notary fees for old properties are fixed at 8%, but range from 2% to 5% for new ones.

LANDLORD AND TENANT

Last Updated: Sep 11, 2006

Tenant protection laws are onerous in Martinique

Martinique follows French tenancy law, which is very pro-tenant.

Rent: Though the initial rent can be freely agreed, the rent can only be revised once a year, and not more than the increase in the (new) INSEE rental index. In combination with a highly restrictive contract structure, this means that rentals of old apartments have tended to drag well behind new rentals and prices.

Tenant Security: An unfurnished property contract has, as a minimum, a three-year term, though furnished property contracts may be for one year. In both cases, even when the contract ends, the owner can only recover the property if he or a family member intends to live there, or he intends to sell. In addition, eviction through the legal system takes a long time.

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ECONOMIC GROWTH

Last Updated: Sep 11, 2006

The “other” French Overseas
Department in the Caribbean

Martinique (pop 414,500) flourishes as a tourist destination, with an average per capita income of US$10,700, catering almost entirely to the French market. It is one of France’s two Caribbean ‘overseas departments’ (DOMs) with Guadeloupe as the other one).

After the French revolution, many of Martinique’s French aristocracy were executed, which gave breathing space to the middle-class and partly in consequence Martinique is more dynamic and less liable to independence movements than Guadeloupe.

Departments are integral parts of the French Republic. French taxes apply, and French citizenship rights are given. The Departments send representatives to the National Assembly, the Senate, and elect a member of the European Parliament (Martinique is now represented in the French parliament by four deputies and two senators). They also use the Euro as their currency.

Martinique is getting ready for international investment. Previously, Martinique gave quite a cold shoulder to tourism. There is definitely a feeling that Martinique should be moved toward high-end tourism. The quality of housing is very good.

Martinique is extremely beautiful, particularly the East Coast which has a wild, unexplored feel, like the Grenadines, without all the yachts. It still has that getaway feel, in a Caribbean which is increasingly built-up. There is nice landscape, bananas, sugarcane, pineapple fields. Physically, you can also easily get into the island…unlike St Lucia, The middle of the island is very quickly and easily accessible, it is relatively easy to see very interesting geography. And then there is very good food.