Mid-range properties are 'hot' in St. Lucia
August 31, 2018
St Lucia's property market seemed in a better condition in 2017, but still recovering at a gradual pace from the global economic crisis almost ten years earlier, according to St. Lucia Sotheby’s International Realty CEO Christos Poravas.
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.
“The market has been very depressed since the 2008/2009 recession,” according to Doubloon Real Estate's Managing Director David Farrin. However, there is a growing interest in St. Lucia's property market, especially in the mid-level properties. "This is the best it has been in seven years. We’re seeing growth around the $500,000 market; it is quite active at that price range," Farrin added.
Mid-range homes priced around the US$350,000 mark are also gaining popularity at Blue Reef Real Estate, especially among foreign buyers from Canada and the United States. "We have continuous growth around that price," according to Blue Reef Real Estate's Sales and Marketing Co-Director Donnelly John.
John also expressed optimism in the housing market's future, despite currently being "not the greatest time [for the real estate sector]". "It is a good time to take advantage of all-time low prices – sometimes 15 to 25 per cent off the listing price. We only see growth from here."
Overall, the property market remains a buyer’s market. The “vast majority of transactions” are by vacation-home buyers, according to Poravas.
Poravas noted that he has numerous listings ranging from US$500,000 to US$10 million.
The north and south areas of St. Lucia currently have "a wide variety" of new houses and condominiums, according to Bellevue Properties managing director Heather Flossiac. A single-family home can be bought at US$166,000, while villas in high-end resorts are priced at around US$9 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 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.
"Tourism is the engine that drives real estate" in St. Lucia, says Poravas. However "it is still very much an up-and-coming destination, a much smaller market in its early stages of development" compared to other Caribbean countries like Barbados, St. Martin and Antigua. It was tagged as the fastest growing tourism destination in the region in 2017 by the Caribbean Tourism Organization.
Most foreign homebuyers in St. Lucia come from the United States, Canada, and the United Kingdom.
Tourism arrivals in St. Lucia reached a record high in 2017, rising by 10.9% y-o-y to 1,113,579 people, according to 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. The program was expanded in 2017, implementing changes including the removal of the 500-applicants cap allowed to apply every year.
"There is a lot of investor interest for projects that have been on pause or for new projects [and] there is land being sold to developers or people who plan to develop," says John. This was proven by the continued upswing of the construction sector in 2017. Aside from an over 850 new hotel rooms added to the island's inventory in 2017, there are also reports of major hotel chains heading to St. Lucia in the near future:
- a 350-room "Hilton" branded property on the island, as well as a150-room beachfront property by its sister brand ‘Curio, by Hilton’ in Rodney Bay Village;
- Honeymoon Bay Resort's 250-room all-inclusive resort, and an 80-room luxury property in Cannelles, Vieux Fort;
- a 120-room resort and 37 villas in Choiseul by Fairmont Hotels;
- Ritz Carlton Black Bay Development including a 180-room Ritz Carlton hotel in Black Bay, Vieux Fort.
“The Helen of the West Indies”
St Lucia is often called “The Helen of the West Indies” for its captivating beauty. With a total land area of about 620 square miles, St Lucia is one of the most beautiful islands in the world.
Residential property prices have risen only minimally in Saint Lucia over the past several years. Despite this, there have been numerous residential developments over the past decade, a notable feature being attractive tax incentives. St. Lucia has a somewhat odd economy, highly dependent on tourism, and with more than 20% unemployment. Yet there is an increasing 'buzz' about St. Lucia.
The island has excellent beaches, scenic waterfalls, mountains, rainforests, orchids and exotic plants. The twin mountain peaks of Les Piton drop dramatically to the water’s edge on the west coast. In the south, visitors get close to bubbling pools of lava and steaming sulfurous spouts at Sulphur Springs Volcano, or splash in the sulfur-infused waters of the Diamond Waterfall and Mineral Baths.
Despite sluggish house price rises, St. Lucia is increasingly seen as one of the world’s most interesting property markets, in many ways comparable to neighbouring Barbados, but with prices about 40% to 60% lower.
A note of caution. Yields on condos are some of the lowest in the world, at 2.3% gross. So if you are looking for income from your property, you need to be selective. Houses in St. Lucia, on the other hand, can earn reasonable rental returns, at 3.57% gross, according to Global Property Guide research.
Reasons for the rising buzz about St Lucia:
- The island is one of the most accessible in the region, with direct flights from the US, Canada, Germany, and the UK. British Airways recently increased direct flights from Gatwick to St. Lucia.
- St. Lucia has recently introduced its Citizenship by Investment program
- One of the region’s lowest crime rates.
- A tax haven with no VAT, no capital gains tax, no inheritance tax and no estate tax.
- Top destination for weddings and honeymoons
- St. Lucia boasts a world-class casino, plus a multi-million pound shopping mall with a multi-screen cinema, and new restaurants and bars.
- St. Lucia celebrates unique events every year such as the Caribbean20 Cricket Tournament (January), Nobel Laureate Week (January), St. Lucia Jazz & Arts Festival (May), St. Lucia Carnival (July), Creole Day (October), Oktoberfest En Kwéyòl (October), and the Atlantic Rally for Cruisers (December).
- St. Lucia has a new niche—health and wellness. With the support of the government and other private institutions, St Lucia’s Health and Wellness Retreat, an annual event where guests can enjoy an array of health and wellness activities, workshops, and other treatments, was launched in November 2011.
St. Lucia’s currency is pegged to the US dollar at EC$2.7 to US$1.
French patois culture
French influence is deeply felt in St. Lucia today, in the names of its cities, towns and bays, in the architecture and in the French-inflected patois spoken by the islanders. However, English is spoken at all major hotels, major tourist attractions and restaurants. The UK and France spent almost two centuries fighting to control the island.
French music, arts, and dance have had a strong influence on St. Lucia’s culture.
St Lucia’s world-class annual events add to its appeal to tourists and holiday makers. Popular events include the Atlantic Rally for Cruisers (ARC), the Rose Festival and the Jazz Festival.
Citizenship by Investment expected to lift property demand
In January 2016, St. Lucia's government introduced the Citizenship by Investment program, following fellow Caribbean countries Dominica, Grenada, Antigua & Barbuda, and St. Kitts & Nevis in offering citizenship to foreign investors. Under the program, foreign investors are offered four distinct investment paths:
- Minimum investment of US$300,000 in any approved real estate project;
- Minimum investment of US$100,000 in the country’s National Economic Fund;
- Minimum investment of US$3.5 million in any approved enterprise project that creates at least three permanent jobs, and;
- Minimum investment of US$500,000 in a non-interest bearing government bond held for 5 years.
The program has gained more interest last year, as significant changes were implemented at the beginning of 2017, such as:
- Lowering the minimum qualifying investment in the National Economic Fund to US$100,000 from US$200,000 in 2016;
- Eliminating the requirement of providing a sworn affidavit to declare at least US$3,000,000 worth of financial resources;
- Having the option for successful applicants to sign the oath of allegiance before an attorney-at-law, a Consular Officer of Saint Lucia, an Honorary Consul of Saint Lucia, a Notary Royal or a Notary Public;
- Including a non-refundable fee of US$50,000 to bond investors buying non-interest bearing government bonds; and
- Abolishing the cap of 500 applications per year, allowing more investors to apply for the program.
Successful applicants do not need to renounce their citizenship in another country since St. Lucia permits dual citizenship. Though, the impact is not fully realized, it is expected that the program will boost property demand in the coming years.
Underdeveloped mortgage market
Property in St. Lucia is usually bought for cash, in foreign currency (US dollars). Because of this, the mortgage market remains small, rising from 14% of GDP in 1997 to 22% of GDP in 2017.
In March 2018, St. Lucia's prime lending rate stood at 7%, down from 9% between August 2011 and July 2015. Interest rates for residential mortgages range from almost 7% to 12%. St. Lucia’s banks offer mortgages to non-residents. Maximum loan to value (LTV) ratios range from 60% and 70%, with terms up to 25 years. Non-residents can borrow up to US$1.5 million.
During the first quarter of 2018, loans for property acquisition in St. Lucia slightly rose by 0.3% y-o-y to EC$ 1.01 billion (US$ 380.95) million, according to the Eastern Caribbean Central Bank (ECCB). Of the total, 36% was for house and land purchases, while around 64% was for home building and renovation.
Most landlords prefer to rent to short-term vacationers
The supply of long-term private rental properties in St Lucia is limited, as most landlords prefer to rent to short-term vacationers. Rental properties are concentrated on the northwestern coast, especially in Castries.
In the Cap Estate Development, the monthly rent for a one-bedroom Bougainvillea Condo in Gate Park was US$1,000.
There is no tax on rental income for the first 10 years of property ownership.
There were about 58,919 housing units in St. Lucia, according to the 2010 Census conducted by the Central Statistics Office.
Economy buoyant in 2018
St. Lucia's economy remained buoyant in 2017 as real GDP grew by 3% from the previous year, according to the International Monetary Fund (IMF). This was a strong follow-up from previous years' GDP growth rates of 3.4% in 2016, -0.9% in 2015, and 3.6% in 2014. St. Lucia's economy is expected to expand further by 3.5% in 2018 and 3.7% in 2019.
After two years of deflation, consumer prices slightly increased by 0.1% in 2017, according to the Central Statistics Office (CSO).
St. Lucia's unemployment rate slightly improved, declining to 20.2% from 21.3% in 2016, based on the figures from the CSO.
Construction & tourism ― St. Lucia’s economic pillars
Economic growth in St. Lucia is driven by tourism and construction. Following the robust growth of the tourism sector from 2013 to 2015, tourism dropped in 2016 due to weaker cruise ship arrivals. However, there was a strong recovery in 2017, with a significant rise in cruise passenger arrivals combined with strong growth in stay-over arrivals.
In 2017, the total number of visitor arrivals in St. Lucia reached a record high at 1,113,579 people, a 10.9% increase from the previous year.
Out of the total visitors in 2017, around 60% were cruise passengers, 34.7% were stay-over visitors, 4.5% were yacht passengers, and 0.8% were excursionists. The stay-over visitors mostly came from the United States (44%), other Caribbean countries (20%), the United Kingdom (19%), and Canada (11%).
For the third consecutive year, St. Lucia's construction sector continued its robust growth, rising by 10.8% in 2017, after increases of 5.1% in 2016 and 14% in 2015, according to the Central Statistical Office(CSO) of Saint Lucia.
Several private sector projects dominated in 2017, such as the completion of the Royalton Saint Lucia Resort & Spa, and the Harbour Club's near finalization. Numerous hotels were also renovated and expanded last year, including the Windjammer Landing Villa Beach Resort, Tides Sugar Beach, and the Coconut Bay Beach Resort & Spa.