The Turks and Caicos Islands (TCI) take pride in their beautiful beaches, and are completely surrounded by a continuous coral barrier reef, the third largest in the world.

The 40-island archipelago is divided into two main island groups. The first group is the Turks Islands, comprised of the Grand Turk (the country’s historic capital), the Salt Cay and other adjacent cays. The other group includes the world-famous Providenciales (where 23,769 of the islands´ total population of 31,500 live), South Caicos, East Caicos, Middle or Grand Caicos, North Caicos, West Caicos, and several other private islands like the Pine Cay, the Ambergris Cay and the Parrot Cay. A British overseas territory, the Turks and Caicos Islands are located off the West Indies, approximately 575 miles southeast of Miami and 30 miles south of the Bahamas.

Tourism is the bedrock of the economy. In fact, almost half of Turks and Caicos’ gross domestic product (GDP) is generated by the hotel and restaurant sector.

Rapid economic growth blessed the Turks and Caicos Islands from the 1990s until 2006, with growing investment inflows, visitor numbers, employment, and revenues. Rapid expansion of tourism and the financial sector led to strong economic growth in the 1990s, peaking at 13% in 1995, and averaging 8% after that.

However after the 2008 financial crisis, the country’s economy, over-dependent on industries like tourism and financial services, compounded by the global economic crisis and the government corruption scandal, went into decline. The islands were also hit by hurricanes Hannah and Ike, which devastated the capital, Grand Turk, and smaller islands. Many hotels and resorts slashed their room rates from 30% up to 50% to attract guests.

Tourism development projects came to a halt, as foreign investors went bankrupt, resulting in diminished public revenues and expenditure. GDP, in market prices, fell by 18.49% in 2009 followed by a further decline of 2.33% in 2010, according to the Turks and Caicos Islands Development Strategy 2013-2017.

At the same time a commission of inquiry set by the Foreign and Commonwealth Office found widespread “political amorality,” causing the Foreign Office to partially suspend Turks and Caicos’ constitution, dissolve the government and the House of Assembly, and impose direct rule in August 2009.

Home rule was restored in November 2012 and a new parliament was elected.

Tourism greatly improved in 2010, partly due to the price-cuts. Tourist arrivals rose 25% for the first half of the year, according to the Turks and Caicos Tourist Board – most notably from Canada (a 97% increase). Arrivals from the Caribbean rose 27%, while 21% and 5% increases were recorded for the US and Europe. According to the Turks and Caicos Business Guide, the Providenciales International Airport saw an average of 50 commercial flights a week in 2012.

In 2012 Turks and Caicos attracted nearly a million tourists (79% from United States and 12% from Canada), according to the 2013 Turks and Caicos Business Guide - a huge jump from year 2000’s 151,372 visitor arrivals.

Residential prices and sales volumes are up

By the fourth quarter of 2014, average residential prices were up 17.1% compared to the fourth quarter of 2013, while the dollar value of total sales was up 20%.

“We are strongly approaching where we were prerecession,” claims Robert Greenwood, the president of the Turks and Caicos Real Estate Association (TCREA) and a director and broker of Regency Christie’s International Real Estate, adding that the property market registered an increase in sales by dollar volume of 287% from 2009 to 2013.

The strong recovery is largely attributed to the Islands’ easily accessible location, agreeable climate, miles of beaches, tax-friendly status, private environment, as well as its safety and security as a British Overseas Territory.

Kathryn Brown, former president of the TREA, pointed out that among the advantages the Turks and Caicos Islands have over its regional neighbors are minimal flight times from major US cities and Canada; low density physical infrastructure; no traffic jams; low crime rate; and the use of US money. Nina Siegenthaler, Vice President and Sales Executive of Sotheby’s International Realty, said that Turks and Caicos ranked higher than many other destinations in the high-end market.

The islands’ population has expanded by 58.2% from 2001 to 2012, with foreigners without family connection to the islands now comprising a majority of the adult population: 57.5% of the population aged 18 and older are “Non-Turks and Caicos Islanders”, and they particularly outnumber locals in Providenciales and North Caicos, according to the 2013 Turks and Caicos Business Guide.

Unsurprisingly, demand for luxury homes and private housing has also rebounded, especially on the highly populated island of Providenciales. Grand Turk followed its lead, with the help of the Grand Turk Cruise Center which continues to bring more and more stop-over tourists each year.

The Single Family Home Market finished up 95% in US$ sales volume and up 78% in average price over last year, led by the sale of luxury villas. The Condo Market increased a modest 9% in US$ sales volume, but was up 25% in units sold, illustrating scarcity in luxury inventory and a broader market of listings being sold.

The completion of Providenciales International Airport expansion and the grand opening of two new private air terminals to accommodate private jet activity, which ranks third in the Caribbean, are seen to further perk up demand through 2015.

	Single Family Home		Condo
	Average price	US$ sales volume	Average price	US$ sales volume
Q4 2010	625,432	11,883,212	821,021	27,914,700
Q4 2011	847,051	33,035,000	645,625	36,155,000
Q4 2012	1,279,891	58,875,000	675,142	55,361,610
Q4 2013	656,032	34,113,650	955,928	65,003,073
Q4 2014	1,169,298	66,650,000	841,149	70,656,500
Source: Turks and Caicos Real Estate Association (TREA)

Plans for future tourism growth

Tourism growth is largely concentrated in the island of Providenciales. Popularly called Provo, the island is famous for the beautiful 12-mile Grace Bay Beach. It caters to a total of over 360,000 stay-over visitors each year while the Grand Turk Cruise Center, the country’s first cruise port, has hosted more than 700,000 tourists every year since its opening in 2007.

The Turks and Caicos Islands Development Strategy 2013-2017 projects GDP to increase from US$625.9 million (US$549.6 million inflation-adjusted) in 2011 to US$939.5 million (US$636.6 million inflation-adjusted) in 2017. There´s a new BBB+/Stable/A-2 Sovereign credit rating from Standard & Poor’s (S&P).

Stop over non-resident visitors are projected to grow from 354,000 in 2011 to over 413,000 by 2017, leading to government revenues expanding from US$193 million in 2011 to almost US$278 million by 2017.

Source: Turks and Caicos Islands Development Strategy 2013-2017

The country has been reaching out to the South American travel market – particularly Brazil – while exploring opportunities to attract Asian luxury travelers. The country recently received "Approved Destination Status" from the Chinese government.

Percentage share to the economy by industry, 2006-2011 (%)
	2006	2007	2008	2009	2010	2011
Hotels and Restaurants	28.39	28.66	35.2	31.65	35.51	41.85
Financial Intermediation	10.86	12.53	11.7	13.88	12.41	11.54
Public Administration and Defense; Compulsory Social Security	5.47	8.24	7.07	9.72	10.35	8.46
Real Estate, Renting and Business Activities	8.43	7.8	7.39	8.82	8.62	8.35
Manufacturing	1.71	1.78	1.41	1.66	1.24	1.15
Agriculture and Fisheries	0.98	0.89	0.63	0.79	0.64	0.65
Source: Turks and Caicos Islands Development Strategy 2013-2017

Turks and Caicos offers many property choices

Grand Turk. Home to the Grand Turk Cruise Center, the historic island of Grand Turk is the capital of the Turks and Caicos Islands. Although it lags behind the progressive island of Providenciales in terms of tourism, population growth, and economy, the capital island still has so much to offer. In 2012, there were 677,000 visitors to Grand Turk via the Grand Turk Cruise, and the number is expected to reach 1 million tourist visits by 2014-2017. The island is also the seat of the national government and the Financial Services Commission.

Grand Turk’s slower population growth compared to Providenciales means more properties in prime locations are still available for development. It is also home to the country’s most historic sites and other notable events such as the Grand Turk Carnival in July and the Grand Turk Summer Jam in summer.

Providenciales. Although only the third largest island in Turks and Caicos, the island of Providenciales is the most populous, with nearly 24,000 residents (a majority foreigners). It is the main entry point to the Turks and Caicos islands as it houses the country’s largest international airport.

The island is home to the 12-mile beach of Grace Bay, consistently rated one of the world´s best beaches by Trip Advisor, Conde Nast, and The Times.

North Caicos. The seat of the government of the Turks and Caicos Islands in the 19th century, the North Caicos is the second largest of the 9 inhabited islands of the Turks and Caicos. It is known for its lush green lands and abundant wildlife, thus, the island is more commonly known as the “Garden Island” and the “bread basket of Turks and Caicos.” Most of the agricultural supply of the archipelago is produced inthe 41-sq. mile island.

North Caicos has benefited from the high tourist arrivals to nearby Providenciales, which is accessible via daily ferry service. Most vacation homes on North Caicos are in the Whitby area, home to white sandy beaches. Several luxury property developments are underway.

Middle Caicos. The 48-sq. mile Middle Caicos (also known as the Grand Caicos) is the largest island in Turks and Caicos, but one of the least populated. It was the home of the indigenous Lucayan Indians, the original inhabitants.

Visitors go to Middle Caicos to enjoy an array of water activities such as snorkeling, kayaking, bone fishing, and sailboat racing. It also features the Conch Bar Caves, the largest above ground cave system in all of the Bahamas and Turks and Caicos archipelago. Middle Caicos still remains undeveloped with only a few guest houses and villas for rent. Regular ferries travel to North Caicos, which connects to Middle Caicos via a causeway.

South Caicos. Popular for its rich marine life, avian species, diving and rich history, this is the fishing capital of Turks and Caicos Islands. A Fisherman’s Day was introduced locally in honor of the contributions of the local fishermen to the economy of the South Caicos.

South Caicos also hosts one of the most anticipated annual events in the country, the Big South Regatta, every May in commemoration of the visit of Her Majesty Queen Elizabeth II in South Caicos in 1966.

The newest development for vacation homes is Sailrock, located in the Peninsula Passage.

Salt Cay. As its name implies, Salt Cay, the smallest inhabited island in Turks and Caicos, used to be home to the country’s bustling salt production industry. The salt industry’s rich history includes providing salt to George Washington during the American Revolutionary War and aiding Canadian and American fishing fleets with preserving their catches. Buildings constructed during the island’s glory days remain, along with the salinas from which salt was harvested. The Salt Cay became a UNESCO World Heritage Site in 2012 along with other historic sites in the island including the White House, the Historic District, and the District Commissioner’s House.

Salt Cay also offers one of the best scuba diving and whale watching spots in the world especially during the months of January and April which are the migration seasons for humpback whales passing through the Columbus Pass. Another popular activity is bird watching, as migratory birds like blue heron and pink flamingos stop at the island to rest during migration.

Other private islands. The other smaller cays including the Parrot Cay, Pine Cay, and the Ambergris Cay are home to the most luxurious resorts and residential homes in the Turks and Caicos Islands. Parrot Cay island resort hosts the vacation homes of stars like Bruce Willis, Christie Brinkley and Keith Richards. The private residential island of Ambergris Cay in southeastern Caicos is home to the Turks & Caicos Sporting Club. The club received two impressive awards in 2009 – the “Best Private Island of the Year” and the “Best Development of the Year” – both from Caribbean World Magazine. Pine Cay houses the Meridian Club, also a luxury property development.

Property market highly accessible to foreigners

There are no restrictions on foreign property ownership, and no requirements to develop land within a certain period of time. Undeveloped land can be held indefinitely for future use or investment.

Furthermore, after payment of a one-time stamp duty charge payable to the Turks and Caicos Government on the purchase of property, the buyer is no longer burdened by taxes.

There are no income taxes on revenue from property; no capital gains tax on property transfers; no estate or inheritance taxes; and no corporate taxes or exchange controls. Indirect taxation only comes in the form of customs duties, stamp duty on certain transactions, and departure tax, according to Sotheby’s International Realty.

As a British territory, the Turks and Caicos Islands’ political environment and legal system is considered more stable than other Caribbean neighbors. Another attractive factor is that Turks and Caicos uses the United States dollar.

Interest rates track US rates

To date, only 7 licensed banks operate in the Turks and Caicos Islands, including reputable names such as CIBC First Caribbean, Royal Bank of Canada, and Scotiabank. In place of a central bank, the Financial Services Commission (FSC) regulates all banks and bank activities, trust companies, and money transmitters.

Banks in Turks and Caicos follow United States interest rates, ranging from 0.4% to 2% for deposits to 4.5%-6.5% for secured lending and 9%-17% for unsecured lending, according to the 2012 FSC Annual Report.

Wide variety of mortgages

A wide array of mortgage options is available to home buyers. They can acquire financing through banks, trust companies, and private funds from investors.

In the Turks and Caicos, the primary lenders are RBC, Scotiabank and CIBC First Caribbean, all Canadian banks doing business in the Turks and Caicos. Trust companies take investor money and lend them out as mortgages. These loans generally go up to 50% of the value of the property. The third option is usually facilitated by law firms on the islands who hold their clients’ money to invest.

According to the Financial Services Commission, the amount of loans extended to borrowers for property purchase, which makes up around 85% of total personal loans, increased slightly by 0.08% year-on-year to US$415.4 million in the third quarter of 2014.

Remarkable growth of the Islands’ rental market

The tremendous growth of the country’s tourism industry has meant equally remarkable growth in the rental market. Rental yields are hard to pin down, given that most rental property is short-term and subject to unpredictable vacancy rates. According to Conch Development’s Blog, up to 10% rental yields are to be expected at 95% occupancy. According to PropertyWorld.com, one can expect a rental yield of 6% or more for rental properties in the country. However, neither source is at all reliable.

Well-developed construction sector

While commercial work essentially dried up during the crisis, activity in high-end single-family home construction has grown over the past three years, keeping many of the local firms afloat. New commercial projects in the pipeline will represent a big boost to the construction sector, according to Steve Thompson, managing director of Projetech, a long-established local firm.

Turks and Caicos has one of the region´s highest construction costs, according to BCQS International, as annual exposure to tropical storms and other weather conditions have necessitated high-quality building codes. Turks and Caicos now meets or even exceeds the standards of Florida.

David Hartshorn, principal of Projetech, explains that although relatively higher compared to neighboring countries, construction costs in Turks and Caicos are commensurate to the quality of the buildings and the workforce.

Turks and Caicos Construction Costs US$/sq.ft.
Residential high quality	250-410
Residential medium quality	140-230
Residential modest quality	110-180
Hotels/condos five star urban	280-460
Hotels/condos five star low-rise	300-490
Hotels/condos three star economy	160-260
Source: BCQS International 2013/2014 Market Trend Report