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St. Lucia's thriving property market
Property buyers who invest in St. Lucia “are persons who have visited and have developed a love affair with the destination,” said Jason Applewhite of Christie’s International Real Estate. Most foreign homebuyers in St. Lucia come from the United States, Canada, and the United Kingdom.
Aside from the increased interest from foreign homebuyers, developers and investors are also starting to return to St. Lucia, according to local property experts.
Property prices dropped 20% to 30% from 2009 to 2014, due to the global crisis. The housing market started to pick up only at the end of 2014.
“People have recognized that we have hit the bottom, and there literally has not been a better time to buy property in St. Lucia than right now,” said Christos Poravas, CEO of St. Lucia Sotheby’s International Realty.
Overall, the property market remains a buyer’s market. However, some sellers have recently “raised their asking price by 25 percent” as the property market continues to pick up, Poravas added.
The higher-end residential market is the strongest. Larger apartment prices have risen from US$2.15 million maximum in 2011, to more than US$3 million in recent months.
Currently, residential property prices in St. Lucia vary from US$700,ooo to US$15 million, with most luxury homes in the US$2 million range, according to Poravas.
- Three-bedroom apartments in a five-star resort are priced at around US$2 million
- Six-bedroom villas located on Rodney Bay are selling for about US$5 million
In The Landings, in Rodney Bay on St Lucia’s northwest, two-bedroom apartment prices now start at US$700,000. The Landings was St. Lucia’s first residential private yacht harbour. It opened in December 2007. About 70% of buyers are British.
In the Allamanda, villas now sell at US$1.95 million, slightly up from US$1.9 million in 2014 and from US$1.85 million in 2011. The Allamanda is in Anse Galet, on St Lucia's northernmost tip.
In Mount du Cap estate, situated in Gros Islet, three to four-bedroom luxury homes are priced from US$2.5 million. Also located in Cap Estate, Gros Islet is the Tradewinds Golf Villas development, where prices of high-end villas start from US$1.1 million.
In the Windjammer Landing, located in the Gros Islet, prices of private suites and villas ranging from one to four bedrooms start from US$700,000. At The Ocean Breeze development on Mount Layau, prices of three to four-bedroom villas start from US$437,000.
Villa Atlantis, a six-bedroom villa with a 60ft infinity pool, is currently selling for US$3.99 million. On the other hand, one of the Glenconner Beach Residences, located in Sugar Beach, is on sale for US$16 million.
The lower-end market is also strong. Condominiums located in Rodney Bay, which range from US$200,000 to US$550,000, are always in demand, said Maria Buchner of Blue Reef Real Estate.
Tourist arrivals in St. Lucia continue to rise. In 2015, the total number of visitor arrivals in St. Lucia increased 3.8% to 1,073,019, after rises of 7.6% in 2014 and 3.2% in 2013, according to the St. Lucia Tourist Board.
In addition, in January 1, 2016, St. Lucia started to accept applicants to its Citizenship by Investment program, joining Dominica, Grenada, Antigua & Barbuda, and St. Kitts & Nevis, as a Caribbean country offering citizenship to foreign investors.
In 2015, the economy grew by 1.6%, after minimal GDP growth of 0.46% in 2014 and 0.14% in 2013 and a contraction of 1.1% in 2012. St Lucia's economy is expected to expand by 1.4% this year and by another 1.9% in 2017, according to the International Monetary Fund(IMF).
Rental incomes in St. Lucia – poor rental yields, at 3.57%
There has been a modest increase in the average price of houses in St. Lucia this year. Last year’s average house price was US$1,826 per square metre (sq. m.), and this has increased this year by 4%, to US$1,915 per sq. m..
This slight improvement is welcome since in St. Lucia, house prices have been falling since 2009. The most dramatic fall was in 2010, when prices fell for as much as 20%.
Rents have not yet risen with prices. As a result yields are now poor. A 200-sq. m. house earns a rental return of 3.57%, whereas last year, the same house might have earned a rental return of 5.25%.
Rental income tax is high
Rental Income: Rental income is taxed at progressive rates. Tax rates start at 10% and can go up to 30% depending on the tax base.
Property: Property taxes are levied at a flat rate of 5% of the property’s annual rental value, as determined by the Inland Revenue Department.
Capital Gains: Capital gains are not taxed in St. Lucia.
Inheritance: There are no inheritance taxes in the island.
Residents: Residents must pay taxes on their worldwide income.
Buying costs are very high in St. Lucia
Round-trip transaction costs, i.e., the total costs of buying and selling a property, range from 11.50% to 21.50%. If the seller is a foreigner, the vendor’s tax is 10%. The seller also pays for the 6% real estate agent's commission. The buyer pays legal fees (0.50% to 2.50%) and stamp duty (2%). Foreigners need an Alien Landholding License to buy landed properties.
Research in progress.
Meagre economic growth, high unemploymentSt Lucia's economy is largely tourism-dependent. It has been weak in the past several years, due to the global financial crisis, aggravated by the eurozone debt crisis. It is expected to expand by 1.4% this year and 1.9% in 2017, according to the International Monetary Fund (IMF). In 2015, the economy grew by 1.6%, after minimal growths of 0.46% in 2014 and 0.14% in 2013 and a contraction of 1.1% in 2012.
Tourism started to recover in 2013, after falling in 2011 and 2012. In 2015, the total number of visitor arrivals in St. Lucia increased 3.8% to 1,073,019 people, after annual rises of 7.6% in 2014 and 3.2% in 2013, based on figures from St. Lucia Tourist Board.
Of visitors last year, 63.1% were cruise ship passengers, 32.1% were stay-over visitors, 3.9% were yacht passengers, and 0.8% were excursionists. Most stay-over visitors came from the United States, Canada, the UK, and other Caribbean countries.
Visitor expenditures in St. Lucia increased 1.7% to EC$1.07 billion (US$397 million) in 2015 from a year earlier, according to the ECCB.
Consumer prices declined 1% in 2015, in sharp contrast with inflation rates of 3.5% in 2014, 1.5% in 2013, 4.2% in 2012, 2.8% in 2011, and 3.3% in 2010, according to the Central Statistical Office.
St. Lucia’s unemployment stood at 22.1% in the first quarter of 2016, up from 20.6% in the previous quarter but down from 27.2% in a year earlier, according to the CSO.