Antigua and Barbuda’s property market flourishing, thanks to a surge in investments
The government has successfully attracted foreign demand through its Citizenship by Investment Program (CIP), offering full citizenship to foreign investors who invest at least US$400,000 in real estate.
With the opening of the US$45 million Airport Terminal at the VC Bird International Airport, and the construction of a new airport runway in Barbuda expected to start in September 2017at an estimated cost of US$15.9 million, Antigua is boosting both its lucrative tourism and offshore financial services industry.
Renowned as a luxury holiday and wedding destination, it has 365 beaches - one for every day of the year. With gorgeous views, landscape and good property values, it is an ideal location for a second home, attracting celebrities like Oprah Winfrey, Giorgio Armani, Richard Branson and Eric Clapton. It is now being promoted also for family-oriented vacations.
An amazing number of construction projects are underway - amazing, given that the islands' population is only 92,000. For instance, the US$2 billion Singularidevelopment, Antigua and Barbuda's first mega-resort, is expected to create 1,000 jobs. This 1,600-acre multi-hotel, residential and commercial project is being lauded as a major feather in the country's tourism cap. Singulari spans 900 acres of land in the north of Antigua and 700 acres of tiny islands. It includes several luxury hotels, hundreds of private homes, a school, hospital, marinas, golf courses, an entertainment district, horse racing track and the Caribbean's biggest casino.
Other resort and residential development projects:
- The Bau Panel is building around 5,000 homes across Antigua and Barbuda at a cost around US$200 million.
- A brand new Sandals Beaches Resort will be built on the Grand Pineapple Resort.
- Sandals Resorts International (SRI) is expected to build a new 250-room hotel in DickensonBay, next to the Sandals Grande, and will begin building Beaches Resort this year.
- A new residential complex with over 200 condominium units costing US$400 million is expected to open this year.
- Sunwing Travel Group is developing a 500-room resort under the Royalton Luxury Resorts brand at DeepBay, Antigua.
- A high-end residential development is being built on MaidenIsland.
- A hotel resort is being built on PelicanIsland.
- Replay Resorts intends to build a five-star hotel, along with oceanfront and hillside villas, cottages and estate lots at Half-MoonBay.
- A new hotel resort at LongBay is being built.
- Yida International has started building 50 three- and four-bedroom villas on the mainland as part of the GuianaIsland development project.
- A US$250 million hotel project on Barbuda is being developed by Hollywood actor Robert De Niro.
- South Point, a boutique hotel, is to be situated in the FalmouthHarbour.
- There is also continued development of resort and residential tourism projects at Pearns Point, HarbourIsland, Hodges Bay Club, MorrisBay, and TamarindHeights.
There are no official house price records in Antigua and Barbuda, and reliable information is hard to come by. But based on recent research by the Global Property Guide, not a lot has changed recently. Two-bedroom houses still average around US$350,000 while three-bedroom and up houses might cost about US$600,000.
During the boom years, house prices in JumbyBay increased 60% to 100%, according to the Global Property Guide. However, the market was hit by the global financial crisis in 2008, halting the construction of several residential developments. Tourists stayed away - and since the nation's economy is largely driven by tourism, real GDP went down and construction and foreign direct investment declined.
The economy expanded by 3.7% in 2016, after GDP growth rates of 3.8% in 2015, 4.8% in 2014, 1.4% in 2013 and 3.5% in 2012, according to the International Monetary Fund (IMF). Economic growth is projected at 2.2% this year, and 1.7% in 2018.
Antigua and Barbuda: rather expensive, and are low
Not a lot has changed in the housing market of Antigua and Barbuda over the past year, though there has been a cooling since the overheating of 2008, when Antigua and Barbuda seemed to be the new ‘in’ place.
2-bedroom houses still average around US$350,000. 3 bedroom and up might cost US$600,000.
Gross rental yields are low, averaging around 4%.
Antigua and Barbuda’s rental income tax is high
Rental Income: Net rental income is taxed at a flat rate of 20%, withheld by the tenant. Income-generating expenses and depreciation expenses are deductible from the gross rent to arrive at the taxable income.
Capital Gains: There are no capital gains taxes in Antigua and Barbuda.
Inheritance: There are no taxes on inheritance in the islands.
Residents: Residents are taxed on their worldwide income at progressive rates, from 8% to 25%.
Buying costs are high in Antigua and Barbuda
Roundtrip transaction costs are around 21% to 24% of the property value, inclusive of the agent’s commission (5% to 7%). The biggest chunk of the cost goes to stamp duty at 10% (7.5% paid by the seller and 2.5% paid by the buyer). The buyer also pays for the Alien Land Holding License (ALHL), which is 5% of the property value).
Tenancy protection laws
Short-term leases, a week’s time or so, are the most common tenancy agreements in Antigua and Barbuda.
Tourism-dependent economyAntigua and Barbuda’s economy largely depends on tourism which in turn is determined by economic trends and social trends of foreign markets. Weather conditions also directly affect the tourism industry and the country is very vulnerable to hurricanes. Tourism accounts for about 60% of GDP and 40% of investment in Antigua and Barbuda.
In 2016, visitor arrivals dropped 3.4% to 875,093, according to the Antigua Statistics Office, in sharp contrast to the 14.3% growth recorded in a year earlier.
- Stay-over visitors increased 5.9% y-o-y to 265,187 in 2016. The U.S. accounted for 41% of all stay-0ver visitors, followed by the UK (29%), Caribbean (12%), and Canada (8%).
- Cruise ship passengers dropped 7.1% y-o-y to 591,579 people in 2016, after increasing by more than 21% in a year earlier.
The economy of Antigua and Barbuda expanded by 3.7% in 2016, after GDP growing 3.8% in 2015, 4.8% in 2014, 1.4% in 2013 and 3.5% in 2012, according to the International Monetary Fund (IMF).
The islands achieved super-rapid growth from 2003 to 2007, when GDP grew an average of 7.2% a year and reached over 12% in 2006, due to a tourism and construction boom as the nation prepared to host the Cricket World Cup.
However, during the financial crisis the economy contracted by 10.7% in 2009, by 8.5% in 2010, and by another 1.9% in 2011. The country’s gross debt has soared to 102.7% of GDP in 2014, up from 86.4% in 2012. Gross debt declined to 99.1% of GDP in 2015 and to 92.7% in 2016.
For decades Antigua and Barbuda's politics were dominated by the Bird family. Vere Bird led the country into independence in 1981. He remained in office till 1994, when he was succeeded by his son, Lester, who then spent a decade in office. But behind this stability was a succession of scandals and allegations of corruption.
The opposition United Progressive Party led by Baldwin Spencer won a landslide victory in general elections in March 2004. A lifelong labour activist, Baldwin Spencer was born in the working-class community of Green Bay, and he promised that "crimes committed against the people" would not go unpunished. But to date the government has been clearly pro-business.
Spencer was succeeded by Gaston Browne, who took office on June 12, 2014. PM Browne vowed to transform the country into an economic powerhouse. He alsoannounced that the government will build 1,000 subsidized homes during Labour’s first term. The homes, which have market value of US$300,000, will be sold for just US$200,000. The government is also expected to offer homebuyers the option of low-interest mortgages from the Antigua and Barbuda Development Bank and commercial banks.
“If they were placed on an open market the cost might be $300, 000, but since there is no cost built into the construction, and that the land is sold as the barest minimum, then the cost to the purchaser is greatly reduced, and that is called subsidized government housing,” said the government’s chief of staff Lionel Hurst.