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Vanuatu: Overview

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Last Updated: Sep 13, 2006

De Gaulle Ave leads into Winston Churchill Street

French influence is strong in Vanuatu, which won independence from Britain and France in 1980. As you arrive at the airport, there are signs in English and French, as in Quebec. As you go towards the central bank, you go past Avenue Charles de Gaulle which leads into Winston Churchill Street.

The "Ni Vanuatu" are charming, less aggressive than other Melanesians. The language, bislama, is pidgin French and English, entirely phenonetic - "smol bisnis senta" means small business centre. There is a wonderful yacht harbour, and great French restaurants. Many French people choose to retire in Vanuatu from New Caledonia. Vanuatu is quite expensive, but very hospitable for foreigners, no racial tensions.

The beaches are generally not great, though Champaign Beach near the huge US Base in the Northern Island of Santos is one of the best the Pacific.

Property prices have been steadily increasing over the years. The buoyancy in the market has been retained for several reasons: Hong Kong Chinese moving offshore before pre-1997; Australians pulling out of Papua New Guinea; and the perception by investors that the Vanuatu Government genuinely wishes to attract foreign investment, particularly in tourism.

No land in Vanuatu is freehold. Leases up to 50 years for residential lots (75 for commercial ones) are available. There are no restrictions on foreign ownership of property, other than land.

RENTAL YIELDS

Yields are moderate to high in Vanuatu

Residential property prices are around US$800 - US$970 per sq. m. (VUV 92,250 to VUV 111,850).

A 100 sq. m. property could be bought for VUV 11.2 million (US$97,000). This same property might rent for around VUV 77,250 (US$670) per month, thus producing a rental yield of 8.3%. Rental yields for larger properties would be less, at around 6.2% to 7.4%.

Property transactions are done in several currencies, including the Vanuatu Vatu (VUV).

Read Rental Yields  »

TAXES AND COSTS

Effective income tax rates are low in Vanuatus at 12.5%

Effective Tax Rate on Rental Income
Monthly Income US$1,500 US$6,000 US$12,000
Tax Rate 9.4% 9.4% 9.4%
Click here to see a worked example
Source: KPMG Vanuatu, BDO Vanuatu, & Loic Bernier Disclaimer

Rental Income: Tax is payable at a flat 12.5% of rental income. Effective rate are even lower.

Capital Gains: There is no capital gains tax.

Inheritance: There are no inheritance or property taxes.

Residents: A foreign investor seeking residency pays VUV20,000 (US$175) per year for each resident and spouse.

Read Taxes and Costs  »

BUYING GUIDE

Total transaction costs are moderate in Vanuatu

There is no freehold land in Vanuatu, and buying a property is actually a transfer of lease.

The round-trip transaction costs, i.e., the total cost of buying and selling a property, are around 13%. This includes the 5% real estate agent's commission. Other costs include stamp duty, lease transfer registration fee, and the solicitor's fee.

It generally takes about 60 days to finalize a transfer of property

Read Buying Guide  »

LANDLORD AND TENANT

Vanuatu doesn't have tenant protection laws

There is no landlord-tenant law in Vanuatu. So landlord and tenant relations are governed entirely by the contract, and can be freely agreed.

ECONOMIC GROWTH

Volcanoes, hurricanes and the economy

Vanuatu, an archipelago of approximately 83 islands, is situated in the South-western Pacific Ocean. Since independence in 1980 Vanuatu's local tourism industry has flourished, providing experiences not found elsewhere in the world.

The Pentecost Land Dive and the Toka Ceremony on Tanna island draw visitors from all over the world. Scuba diving is important. Vanuatu also has a significant offshore financial centre.

Yet real GDP per capita has been stagnant for the past two decades. About three-quarters of the 222,000 population live in rural areas, and practice subsistence agriculture, and their numbers are fast-growing.

Most of Vanuatu's 83 islands are inhabited. Some have active volcanoes; others are covered by tropical rainforests. The climate varies considerably from tropical to subtropical according to exposure to trade winds and elevation.

Vanuatu is prone to earthquakes, tidal waves and hurricanes. The most destructive hurricane hit the islands in 1987; it damaged or ruined most of the local dwellings. In December 2005, thousands of people flee their homes amid fears of explosion of Mount Manaro, on the island of Ambae.

 

  • High yields for beach houses
  • Moderate transaction costs
  • Flat rental income tax at 12.5%
  • Serious ownership restrictions
  • Stagnant income per person
  • Prone to natural calamities

RESIDENTIAL PROPERTY FACTS
Price (sq.m): $929 For a 140 sq. m. property, usually an apartment. Rental Yield: 7.38% For a 140 sq. m. property, usually an apartment.
Rent/month: $800 For a 140 sq. m. property. Income Tax: 9.38% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 13.0% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000. 		Cap Gains Tax: 0.0 Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord & Tenant Law: n.a. Rating is based on a detailed study of each country’s law and practice.
MARCH 2007
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