‘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).

Two new residency programmes launched

In June 2019, the government of Anguilla launched two new residency by investment programmes in an effort to attract foreign investors seeking a tax efficient residence. Unlike other Caribbean nations such as St. Kitts and Nevis and Antigua and Barbuda, the Anguilla programme is not a citizenship by investment or second passport programme.

1. The Residency-by-Investment (RBI) programme (Permanent Residency)

A foreigner can acquire permanent residency in two ways:

  • Purchase or construct real estate for a minimum value of US$750,000 and maintain it for a minimum of five years;
  • Make a one-time contribution to the Capital Development Fund, a government fund established to finance public sector projects that grow, develop and diversify Anguilla’s economy. US$150,000 for a single applicant.
2. The High Value Resident Programme (Tax Residency)

To qualify as a tax resident in Anguilla, applicants must meet the following requirements:

  • Pay US$75,000 per year in annual worldwide income tax to the Treasury;
  • Own and maintain a property in Anguilla valued in excess of US$400,000 (inclusive of land purchase in excess of US$100,000);
  • Spend a minimum of 45 days in Anguilla last year;
  • Establish genuine links in Anguilla, such as bank accounts, memberships, etc.;
  • Declare that you have not spent more than 183 days per year in any other country;
  • Demonstrate the ability to readily transfer the first five years of tax payments;
  • Pay the programme application and due diligence fees.

From boom to bust

Anguilla experienced a property price boom from 2004 to 2007, driven by strong foreign demand, partly the result of celebrity sightings which made the island ´chic´. Brad Pitt and Jennifer Aniston spent their final days as a couple on the island. Denzel Washington celebrated his 50th birthday in Anguilla.

Anguilla experienced a construction boom in 2005:

  • A new extended runway enabled private jets to land easily on the island
  • The Temenos development was launched, with a Golf Club (the first golf course in Anguilla)
  • The Viceroy Anguilla Resort and Residences was also unveiled

However, construction activity almost ground to a halt at end-2008 due to financing difficulties faced by developers, coupled with a sharp drop in demand. Numerous projects were cancelled or delayed, including the The Flag project at Temenos, the Flag´s golf course development at Rendezvous Bay, the expansion plans for Altamer at Shoal Bay West, the Rendezvous Bay Hotel, the Privee at Shoal Bay, and the Fairmont Anguilla at Forest Bay, among others.

House prices started to decline in Anguilla in early 2009, according to Sotheby´s International Realty. From 2009 to 2012 residential lot prices dropped around 50% to 75%, and the falls continued in 2013 and 2014 at a decelerating pace.

In 2015, residential property prices stabilized. Transactions increased modestly. Construction started to gain momentum. The housing market improved further in 2016.

Unfortunately, Hurricane Irma, one of the most catastrophic storms in history, hit Anguilla in September 2017 with Category 5 force. Most homes, hotels and schools were levelled and the island’s only hospital was severely damaged. Total damages were EC$ 331.5 million (US$122.7 million), according to the United Nations ECLAC report. About 1,759 dwellings were affected, causing housing sector damage of EC$83.7 million (US$31 million). Hotels and resorts closed. Tourist arrivals plummeted and there were only few home sales.

Anguilla’s housing market has not yet fully recovered since.

Local price variations

Anguilla´s property prices are lower than nearby Caribbean islands such as the BVI or US Virgin Islands.

Western Anguilla has seen the greatest amount of development over the past years. In Meads Bay, one of the most beautiful beaches in Anguilla, a new boutique condominium development offers three 3-storey villas and 15 condominium units at prices starting at US$650,000 for one-bedroom condos and from US$1,950,000 for three-bedroom penthouse condos.

In Barnes Bay, a five-bedroom, five-bath villa that totals 9,500 square feet, located at the Four Seasons Anguilla (formerly known as Viceroy), is currently for sale for US$10 million. Another ultra-luxury 9-bedroom beachfront villa is offered at US$16 million.

In Rendezvous Bay, the price of five-bedroom luxury beach houses within an exclusive gated resort community ranges from US$4.25 million to US$7 million.

In the Island Harbour, an eight-bedroom villa near the Shoal Bay is currently priced at US$5.5 million, down from its listing price of US$6.5 million two years ago. Likewise in the Little Harbour, a ten-bedroom luxurious villa with two swimming pools on its beautifully landscaped 2.5 acres is currently offered for US$14.5 million, down from its previous listing price of US$17.5 million.

In Shoal Bay Beach, two-bedroom beachfront apartments are for sale for US$2.1 million while three-bedroom beachfront apartments are currently priced at US$3.28 million. A six-bedroom villa is also currently offered in the market for US$4.1 million.

At the Sandy Hill Bay, a 7-bedroom property perched on a cliff overlooking the beautiful beach and sea is valued at US$4,750,000.

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%.

Anguilla visitor arrivals

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.

Tourism recovering

Tourism in Anguilla is now recovering sharply. 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.

Anguilla stay over visitor

“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.

Most popular residential and resort developments

During recent years, Anguilla saw the construction of some property developments, while other projects have been renovated:

  • Four Seasons Resort and Residences Anguilla – spanning 35-acres and overlooking Meads Bay Beach and Barnes Bay, this is one of the most luxurious hotels in the Caribbean.
  • Opened in 2016, the hotel features 181 guest rooms, suites, and residences ranging from deluxe studios to five-bedroom beachfront villas. It also offers a fitness boot camp class, tennis courts, a multilevel rock climbing wall, waterfront spa, and an infinity pool, among others.

  • Malliouhana Hotel and Spa - The legendary resort, first opened more than 30 years ago, recently underwent full-scale renovation. Set on 25 acres of beachfront it offers 55 rooms, two beaches, two restaurants and bars, an extensive array of sports and fitness facilities, and a spa. Its coastline provides access to two of Anguilla’s best beaches – the Meads Bay Beach and the Turtle Cove Beach.
  • Zemi Beach Resort and Spa - a new resort and residential development on a white-sand beachfront in Shoal Bay East, offering 50 luxury residences. Prices for studios start at US$600,000 while two- and three-bedroom residences are priced from US$2 million to US$3.1 million. Zemi Beach Resort and Spa also includes other first-class amenities such as on-site restaurants, bars and lounges, a wine cellar, infinity-edge pools, a spa and fitness center, and an outdoor yoga terrace.
  • CuisinArt Golf Resort and Spa - this new resort offers a total of 98 luxurious suites and private villas with pools. The project also includes a new hotel featuring a ballroom to accommodate 200 people (the first in the island). Other amenities includes restaurants, an award-winning Venus Spa featuring Aquatherapy, a Fitness Center, and an 18 hole Greg Norman signature design golf course. Both CuisinArt Golf Resort & Spa and its sister property, The Reef by CuisinArt, reopened last year after undergoing major renovations following Hurricane Irma in 2017.
  • Frangipani Beach Resort - on a beachfront on Meads Bay, this luxurious 19-room boutique property has long been regarded as one of the island’s best boutique hotels. It also boasts its award-winning Straw Hat Restaurant.
  • Anguilla Great House Beach Resort - this boutique beach resort has also undergone modernization, particularly its pool and pool deck area. It is famous for its lively cottages and breathtaking view of Rendezvous Bay.
  • Belmond Cap Juluca – located on Maundays Bay on the southern coast, this development has reopened in December 2013 with some enhancements such as new menus and a refreshed Pimms, the resort´s signature restaurant. It offers 66 rooms and 42 suites, with a spa, a bar, an infinity pool and two restaurants.
  • Anacaona Boutique Hotel - in The Valley, near Rendezvous Bay Beach.  Recently reopened with a spa known as The Balinese Petite Spa.
Anguilla interest rates

Mortgage market continues to shrink

Anguilla’s mortgage market stood at 28.2% of GDP in 2018, down from 56.3% of GDP in 2009.  Housing loans outstanding fell by 8.5% to EC$234.85 million (US$86.9 million) in Q1 2019 from a year earlier, according to the Eastern Caribbean Central Bank (ECCB).

  • Loans for house and land purchases plummeted by 22.6% y-o-y to EC$36.28 million (US$13.4 million) in Q1 2019.
  • Loans for home construction and renovation fell by 5.3% y-o-y to EC$198.57 million (US$73.5 million) over the same period.

Mortgage interest rates in Anguilla range from 7% to 10% in Q1 2019, almost unchanged since Q3 2013, according to the ECCB. Anguilla’s prime lending rate is currently at 10%.

Anguilla housing loans outstanding

Mortgage interest rates are linked to the US prime rate or the US LIBOR. The Eastern Caribbean dollar, the official currency of Anguilla, is pegged to the US dollar, at XC$2.70 to US$1.

The maximum loan-to-value ratio is 70%, with loan terms of 15 years.

Foreign property ownership restrictions

While advertisements on timeshares and fractional ownership in Anguilla are widespread on the internet, no law in the islands allows for these types of property ownerships.

With its area small (102 sq. km), the government restricts foreign land ownership. Anguillan law prohibits non-belongers (local term for foreigners) to own sandy waterfront or beachfront properties. These locations are reserved strictly for tourism or commercial developments.

Government´s policy allows non-belongers to purchase real estate only on rocky coastline, Cliffside or inland lots of up to half acre for building a house with a minimum gross external floor area of 2,000 sq. ft. Construction should be completed within 18 months from the date the license is issued otherwise penalties are charged or, worse, the land may be forfeited.

Celebrities’ haven

With its 33 immaculate white-sand beaches, Anguilla has become a haven for the rich and famous. Celebrity sightings have included basketball legend Michael Jordan, actors Jonah Hill, Michael J. Fox, Liam Neeson, Ellen DeGeneres and Portia de Rossi, Sofia Vergara, billionaire Roman Abramovich, Shaquille O´Neal, rapper Drake and Queen Latifah, among others.

Yet Anguilla remains relatively uncrowded, and has avoided the damage done elsewhere by over-development.

Anguilla population

A flat island, Anguilla is covered with arid scrub, growing out of solid rock, devoid of dramatic scenery. Visitors come to this island not for the scenery, but for its exceptional beaches.

Small and lightly populated, Anguilla´s residents (pop: 15,000) are easy going. Since the island isn´t good for farming, its people became seafarers, known throughout the Caribbean for boat building and fishing skills.

Of its 33 pristine beaches, Shoal Bay is the most famous where A-list American celebrities have traditionally flocked. It made the decision in the 1980s to develop upper-end tourism, and concentrated on luxury hotels and villas.

Sources:

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