'Residency by Investment Program' to buoy the housing market in Anguilla
Lalaine C. Delmendo | September 03, 2019
Anguilla's property market is expected to expand in coming years, thanks to the Residence by Investment Program (RBI), launched by the government in June 2019, which offers permanent residency to foreign investors who invest at least US$750,000 in real estate in the country.Moreover, the reopening of the territory's top hotels and resorts after a year-long restoration process following Category 5 Hurricane Irma is attracting foreign investors again. Also, the territory's vital high-end villa market is back in business, including the Long Bay villa resorts and the ultra-luxe Tequila Sunrise.
“We're preparing ourselves for a bumper year in 2019 with operators already reporting strong bookings as visitors plan their post-Irma return to the Island,” said Carolyn Brown of Anguilla Tourism Board.
“The market has been fairly robust,” confirmed Scott Hauser, the owner of Anguilla Properties Sotheby's International Realty, though property prices remain “discounted about 25% to 30%”.
Currently, the average price of a residential property is US$747 per square foot (sq. ft.), according to 7th Heaven Properties. Prices for fully furnished condos, townhouses and villas range from US$750,000 for a high-end studio to US$10 million for a luxurious five-bedroom beachfront home with a pool.
Anguilla is a very mixed market. It attracts affluent foreigners seeking a third or fourth home but it also offers affordable condominiums to budget homebuyers. The low end offers a sprinkling of $200,000 condominiums, who Anguilla also has mega-villas priced as high as $25 million, said Hauser.
Most foreign buyers in Anguilla are Americans. There is also increasing interest from Britons, Canadians and Russians.
The East Caribbean dollar (XCD) is Anguilla's official currency, but many property listings and transactions are in US dollars.
The economy grew strongly by 10.9% in 2018, following y-o-y declines of 6.6% in 2017 and 2.5% in 2016 and annual growth of 3.2% in 2015 and 5.1% in 2014, according to the Eastern Caribbean Central Bank (ECCB).
Non-belongers are required to obtain an Alien Land Holding License to purchase property, which can only be up to half an acre. If more land is needed, further permission from the Government of Anguilla is required. A fee of US$1,200 per year is payable for a permit to rent out a property.
Analysis
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Yields are high at 38.8% in Anguilla
Current yields are around 38.8% for properties with at least 12 bedrooms located in prime coastal areas particularly the West End, the center of Anguilla's rental market. This figure applies to short-term leases, usually one week, and takes into consideration varying rates during peak season and off-peak season.
The government has abandoned a previous rule that foreign-owned property cannot be rented out. The restriction was aimed at stopping tax evasion by non-resident owners. Instead, from 2007, all landlords must appoint locally-registered representatives to be responsible for tax payments.
Rental income tax is low in Anguilla
Rental Income: Properties rented by tourists are liable to the 10% Accommodation Tax, which is levied on the gross rent.
Property: Property taxes are levied at 0.0175% of the property's assessed value.
Capital Gains: There are no taxes on capital gains in Anguilla.
Inheritance: There are no inheritance taxes in the island.
Residents: There are no taxes on income in Anguilla. But stamp duties and fees are levied on certain types of income.
Buying costs are high in Anguilla
Roundtrip transaction costs are between 21.55% and 24.70% of the property value. The Alien Land Holding License is 12.5% of property value with a filing fee of ECD1,075 (US$398). Stamp duty is 5% while legal fees are typically at 2%. Real estate agent's commission ranges from 2% to 5%.
Anguilla's tenancy protection laws
Tenancies in Anguilla are usually short-term. It takes an average of 91 days to evict a tenant.
Economy heavily relies on tourism
From 2004 to 2007, Anguilla’s average annual GDP growth was 15%, amidst tourism boom. However, tourism in the island declined sharply in 2008-2012, due to the global crisis. As a result the economy experienced a prolonged and deep recession.
The economy contracted by 1.34% in 2008, plunged by 18.5% in 2009 and by another 4.6% in 2010. GDP declined by 5.8% and 0.7% in 2012 and 2013, respectively. The economy then expanded by 5.1% in 2014, buoyed by a 17% growth in tourist arrivals. In 2015, Anguilla's economy grew by 3.2%, according to the ECCB. But when Category 5 Hurricane Irma struck the territory in September 2017 tourist arrivals plummeted and the economy contracted by 6.6%. In 2018, the total number of tourist arrivals fell by more than 41%.
During 2018:
- The number of stay-over visitors fell by 20.1% y-o-y to 54,533 people. The number of Americans, Canadians and Britons who visited Anguilla dropped sharply, while the number of Caribbean residents increased.
- The number of excursionists plunged 59.2% y-o-y to a record low of 32,812 people.
Travel and tourism contributes more than 60% of Anguilla’s GDP every year.
Recently, tourism is showing signs of recovery. In the first four months of 2019, visitor arrivals surged by 178% to 66,119 people compared to the same period last year. Over the same period, stay-over visitors rose by 174% while excursionists increased 184%.
Anguilla’s top hotels and resorts have recently reopened - from the venerable Malliouhana to the transformed Cap Juluca. The territory’s high-end villa market is back in business, including the Long Bay villa resorts and the ultra-luxe Tequila Sunrise.
“We’re thrilled that 2019 has got off to a fantastic start and hope this will set the pace for a great year for the destination,” said Cardigan Connor, Anguilla’s Parliamentary Secretary for Tourism.
For the third year in a row, Anguilla was voted as the best island in the Caribbean in 2019 by Travel+Leisure magazine. “Anguilla has gorgeous beaches, plentiful activities, warm hospitality, and a great location that combines convenience with seclusion,” said Travel+Leisure.