Belize's luxury property market is booming
Lalaine C. Delmendo | March 29, 2020
“Scarcity in beachfront land and skyrocketing tourism rates are driving prices up,” said Andrew Ashcroft, developer of Alaia Belize on Ambergris Caye. “Since the crisis property prices have increased by 100% overall.”
Even in the country's rugged jungle areas, house prices are rising strongly, thanks to growing interest from foreign buyers. In the rural Cayo District, property prices have risen by about 5% to 7% annually over the past five years. For instance, a 15-acre coconut farm, which was recently sold for US$225,000, had changed hands for just US$165,000 five years ago, said Macarena Rose of Keller Williams Belize.
Actually, it is difficult to be sure how much house prices have changed, as there are no official house price figures. However, realtors estimate that house prices declined by as much as 25% to 30% during the global economic crisis. Property rebounded strongly in 2012, and has continued to rise since then.
Outside buyer interest in Belize rose rapidly from 2000 to 2007, partly due to the passage of the Retired Person Incentive Act (RPIA) in September 1999, and to the tourism boom. Tourists flocked to Belize's natural wonders - beautiful beaches and tropical forests, plus ancient Mayan temples. From 2003 to 2007, property prices in coastal and tourist areas rose by as much as 30% annually, while prices of inland properties rose by around 15% annually, according to local real estate agents.
Yet the average price for luxury homes in Belize is still less than US$1 million, well below the US$2 million average price of luxury home in some other Caribbean destinations, according to SANCAS Realty. In March 2020, the average asking price for a residential property in Belize was US$703,000 – about 190% below the average Caribbean property price, according to 7th Heaven Properties.
Residential rents also remain surprisingly low. The average rent for a one-bedroom apartment in the city center is US$350 per month while three-bedroom apartments are offered for around US$600 per month. Rents for apartments outside the city are about 25% to 35% lower.
Ambergris Caye and Southern Belize - Placencia - continue to be the two most popular areas for foreign homebuyers. Ambergris Caye has the most expensive housing in Belize, because tourists and expats are attracted to the beauty of the Barrier Reef. One- to two-bedroom oceanfront condominium units are priced at about US$300,000 to US$700,000, while three- to four-bedroom oceanfront houses are priced around US$1 million.
More affordable houses are found in the south, especially in the Placencia Peninsula and nearby areas such as Sitee River, where residential properties are usually priced 40% lower than those on Ambergris Caye. One- to two-bedroom oceanfront condominium units are priced between US$200,000 and US$500,000. In fact in new luxury small-scale resorts such as Falah del Mar, located in Placencia Peninsula, prices of studios start at just US$190,000, according to Ray Withers of Property Frontiers.
Some expats choose to settle in areas close to the border with Mexico or Guatemala. Corozal Town in the north (bordering Mexico), and the Cayo District in the west (bordering Guatemala) are some popular places for expat retirees. In San Ignacio, Cayo District, three-bedroom homes are priced around US$150,000 to US$400,000.
Aside from being the only English-speaking Central American country, and natural beauty, what attracts foreigners, specifically retirees, is the "Qualified Retired Persons" (QRP) program. Similar to Panama's Popular Pensionado Program, the QRP program gives tax and residency breaks to foreigners with the status of a Qualified Retired Person (QRP). To be designated a QRP under the program, the applicant should be:
- Aged 45 or older
- Citizen of the US, the UK, Canada or Belize
- Earning a monthly income of at least US$2,000 from investments or pensions
Beneficiaries of the QRP status are:
- Exempted from all taxes on income and receipts
- Exempted from all import duties and taxes on personal and household effects upon first importation into Belize (up to a maximum value of US$15,000)
- Exempted from all import duties and taxes every five years on approved means of transport (such as a motor vehicle, boat, or light aircraft)
- Have their dependents included in the program (spouse and children under the age of 18 or under the age of 23 if enrolled in college)
- Can conduct business within Belize, if the business activities are mainly outside the country, and not with Belizeans. QRPs can also own rental properties.
Based on the International Living's Annual Global Retirement Index, Belize was among the top 24 best places to retire in 2020. The index was based on several factors including cost of living, retiree benefits, climate, and healthcare. Likewise, Forbes also listed Belize as one of the best places to retire abroad last year.
“Many international buyers are just beginning to discover the potential opportunities of investing in this tiny central American nation bordering the Caribbean Sea,” said Christopher Todd of SANCAS Realty. “Savvy buyers can find tremendous value in Belize, especially on the Placencia Peninsula in the Stann Creek District, and in the Cayo District to the west.”
Around 15% of the Belizean population is composed of foreigners, according to International Organization for Migration. Yet Belize is one of the world's least densely populated countries, currently averaging 14.1 persons per kilometer.
Foreign nationals represent 95% of homebuyers in Ambergris Caye, in the Cayo District, and the Placencia Peninsula, according to SANCAS Realty.
Most foreign buyers come from the United States. There are direct flights from numerous U.S. cities, including Houston, Chicago, Dallas, Miami, Charlotte, Atlanta, Los Angeles, and Newark. There is also a growing interest from Canadians, Britons, Italians and Russian investors.
Most property transactions are done in cash, as Belize's banks charge high interest rates. The Belizean dollar is tied to the US dollar at a fixed exchange rate of 1 USD = 2 Belizean dollar.
There are no restrictions on foreigners purchasing real properties in Belize.
Property in Belize - Ambergris Caye prices stable
House prices in Ambergris Caye remain stable, with an average selling price of US$450,000. Last year houses sold for an average of US$ 420,000.
This year, included condos in our research. Condos in Ambergris Caye sell for US$2,660 to US$3,330 per square metre.
Belize has low income tax
Rental Income: Rental income is considered as business income, and is taxed gross at a flat rate of 3%.
Capital Gains: There is no capital gains tax in Belize.
Inheritance: There is no inheritance tax in Belize.
Residents: Residents are taxed at a flat rate of 25% on their employment income. Income from other sources is subject to business tax, wherein the applicable tax rate depends on the classification of the income.
Buying costs are moderate in Belize
Roundtrip transaction costs are around 14% to 19% of the property value. The stamp duty is 5% with the first BZD20,000(US$10,000) tax-exempt. Real estate broker's commission is typically 6% to 7% for houses and 10% for land.
Sale of new properties is subject to 10% General Sales Tax.
Belize's rental law is pro-landlord
Rent: The initial rent can freely negotiated. The Rent Restriction Act, however, limits rent increases to 10% annually or at a level mandated by the district Rent Assessment Board.
Tenant Security: Non-payment of rent and sub-letting without the landlord’s knowledge are grounds for eviction. Landlords, through a court order, can forcibly enter to reclaim the property from tenants, and claim compensation for damages and unpaid rent.
Economy struggling; unemployment risingBelize’s economy contracted by 2.8% in Q4 2019 from a year earlier, following y-o-y declines of 0.4% in Q3 and 0.8% in Q2 and annual growth of 5.2% in Q1, after the ongoing drought adversely affected the sugar industry. Yet, the International Monetary Fund (IMF)’s October 2019 projections remain optimistic, at 2.7% growth, following y-o-y expansions of 3% in 2018 and 1.4% in 2017 and an annual decline of 0.6% in 2016.
Despite this, external trade remains strong. In 2019, Belize’s total merchandise exports rose by 4.6% to BZD 411.8 million (US$) from a year earlier, while imports increased 2.9% to BZD 1.97 billion (US$), according to the Statistical Institute of Belize (SIB).
The economy is expected to expand by 2.1% this year and by another 1.8% in 2021, according to the International Monetary Fund (IMF).
Unemployment stood at 9.9% in 2019, up from 8.7% in 2018, 9% in 2017, and 8% in 2016, but still lower than the annual average of 12.5% from 2009 to 2015. The country’s jobless rate is expected to rise further to 10.4% this year and to 11.1% in 2021, based on IMF figures.
In January 2020, inflation stood at 0.2%, unchanged from the previous month but up from -0.2% in a year earlier, based on figures from SIB. Inflation averaged 0.6% from 2009 to 2019.