Improving property market in Belize
May 15, 2013
Belize’s real estate market saw significant improvement in 2012, after slow sales in 2010 and 2011 as a continued reaction to the financial situation in the US. Despite problems selling their homes in the US, Americans found ways of purchasing property in Belize.
This trend will continue through 2013, believes John Acott, Association of Real Estate Brokers of Belize (AREBB)’s director of the board and RE/MAX Property Center’s real estate agent. He expects prices to rise at least in line with inflation.
Belize has one of the highest-priced real estate markets in Central America, according to the 2012 Central America House Price Snapshot prepared by revealrealestate.com, in coordination with Global Property Guide, which covers Belize, Nicaragua, Costa Rica and Panama. But by international standards prices are low. The most expensive “typical house” – three-bedroom single family homes – are in Placencia Peninsula, priced at around US$ 575,000. A typical house in Ambergris Caye might cost US$ 295,000, while one in San Ignacio would cost US$ 255,000.
It is difficult to say how much house prices have changed in Belize recently, as there are no official house price figures. They declined by as much as 25% to 30% after the global economic crisis in 2008, according to M.H. Chebat & Company’s Michel Chebat. Older resale condos comprised most of the sales in 2009 and 2010, with condos priced below BZ$ 200,000 being more popular. In 2010, buyers began to consider properties with an upper limit of BZ$ 300,000. However in 2011, realtors were able to sell a number of condos and homes in the price range from BZ$ 400,000 to BZ$ 600,000.
Outside interest in Belize expanded 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.
As of 2012, travel and tourism directly contributes 12.4% of Belize’s GDP, but indirectly 34.1% of GDP, according to the World Travel and Tourism Council.
Belize’s natural attractions
A combination of natural factors – climate, the Belize Barrier Reef, a Caribbean flavor, as well as the Maya ruins make Belize truly Mother Nature’s best kept secret. Bordered to the north by Mexico, to the west and south by Guatemala and to the east by the Caribbean, Belize considers itself to be both Caribbean and Central American.
Belize has the world’s second largest reef barrier, and its Blue Hole can be seen from outer space. Three of the Western hemisphere’s most breath-taking coral atolls are off the coast of Belize. There are numerous varieties of wildlife shelter in the inlands. Bird watching, nature trailing, and water sports are popular in Belize.
Belize prides itself on being the seat of Mayan civilization. The Caracol, Lamanai and Xunantunich archeological sites are well-preserved, and easily accessible to tourists.
Belize’s real estate hotspots
The most popular destinations are Ambergris Caye and Placencia, which have most vacation and second homes. Corozal and Caye Caulker are also getting attention.
Ambergris Caye is the country’s high-end area. Prices of ocean view and beachfront condominium units in Ambergris Caye range from BZ$ 275,000 (US$ 135,947) to BZ$ 975,000 (US$ 481,993). Based on revealrealestate.com’s Central America House Price Snapshot, a three-bedroom single family home can be bought for US$ 295,000. The number of developments in Ambergris Caye has grown tremendously in recent years. The new ‘Costa del Sol’ area west of San Pedro is just now starting to attract developers and investors. House prices in San Pedro, the island’s main town, are quite expensive as compared to the other parts of the country, although still more affordable than prices in other Caribbean islands. At around BZ$ 250,000 (US$ 123,588) buyers can purchase a move-in-ready condominiums near town. Outside San Pedro, toward the north and south ends of the island, house prices are cheaper.
Placencia, the island’s southern coastal area, is catching up to Ambergris Caye. Most developments in the area can be found in Seine Bight village and Placencia village. In comparison to San Pedro, Placencia Village has fewer condo projects. However, the paving of the road from Maya Beach to the south is expected to spur real estate developments. Condominiums in Placencia can cost from around BZ$ 315,000 (US$ 155,721) up to BZ$ 1,275,000 (US$ 630,299). A three-bedroom single family home in Placencia costs approximately US$ 575,000.
Property prices in Corozal and in Cayo District, where Belize’s capital Belmopan is located, range from BZ$ 18,000 (US$ 8,898) to BZ$ 300,000 (US$ 148,306). In Caye Caulker, sea-view lots can be bought for below BZ$ 50,000 (US$ 24,718), while huge beachfront lots can fetch below BZ$ 100,000 (US$ 49,435). Three-bedroom family homes in San Ignacio can be bought at an average of US$ 255,000.
Buyers beware! In Belize, there are two prices for everything—the local price and the “rich foreigner” price. Since majority of properties for sale are not advertised, the best way to get a feel of the difference between the Belizean price and the non-Belizean price is to travel to the country and spend time there.
Famous retirement spot
Among the Central American countries, Belize (2012 pop. approximately 307,000) has the largest foreign population. In 2000, around 14.8% of the Belizean population was composed of foreigners, according to International Organization for Migration. Yet Belize remains one of the world’s least densely populated countries, averaging 12.2 persons per kilometer in 2006.
Aside from being the only English-speaking Central American country and its beautiful landscapes, 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.
In the September/October 2012 issue of the American Association of Retired Persons (AARP)’s The Magazine, Corozal, Belize was named as the 2nd top rated place to retire abroad. Belize also won the 21st place in the International Living’s Global Retirement Index: The World’s Top Retirement Havens in 2013. Belize scored highest in the ‘Cost of Living’ category with 85 points and ‘Integration’ with 83 points. ‘Real Estate’ and ‘Special Benefits’ categories also got high marks at 78 and 72 points, respectively. In 2012, Belize had around 917,870 total visitors, 277,136 of them stay-over visitors.
Slow mortgage market growth
Belize has a relatively small mortgage market, although loan-to-value (LTV) ratios offered range from 65% to 70%, with 15 to 20 year terms. Reasons for the small market include:
- Little demand for mortgage loans, as few Belizean property buyers meet the financial criteria
- Most buyers usually pay in cash; some foreigners tap into a home-country based line of credit
- Only a handful of local and international banks provide mortgage loans, making it difficult for non-resident buyers to get finance from banks
- Mortgage interest rates are usually 4% - 5% higher than US rates