Strong tourism performance that already exceeded pre-pandemic benchmarks, complemented by the increasing demand for vacation homes and competitive property prices, sustains the attractiveness of the Aruban residential market to foreign investors.

This extended overview from the Global Property Guide covers key aspects of the Aruban housing market and takes a closer look at its most recent developments and long-term trends.

Table of Contents:

• Market-Defining Features and Trends
• Real Estate Hotspots
• Rental Market
• Mortgage Market
• Socio-Economic Context

Market-Defining Features and Trends

Aruba's residential real estate market is generally characterized by stability, relative affordability, and investor-friendly policies, positioning it as an attractive destination for international buyers. With its favorable geographic location outside the hurricane belt and a selection of housing competitively priced compared to other Caribbean nations, the island has become a preferred option for many seeking to purchase a holiday home or an investment property.

According to the latest research by Global Property Guide, as of September 2024, the average price for residential properties in Aruba was recorded at USD 315,000 for a one-bedroom unit, USD 450,000 for a two-bedroom unit, USD 525,000 for a three-bedroom unit, and USD 670,000 for properties with four or more bedrooms. Analyzing the recent developments in his blog, Lars Niemeijer, a realtor with Keller Williams, noted: "Property prices in Aruba have remained competitive, with slight appreciation in high-demand areas. On average, home prices have increased (in September 2024) compared to the same period last year, with luxury beachfront homes experiencing the most significant gains. Demand for vacation rentals has also stayed strong, contributing to rising property values in popular tourist areas."

Foreign investors are allowed to purchase Aruban real estate with no restrictions, whether on a freehold or leasehold basis. The leasehold option typically involves long-term leases of up to 60 years from the government with options for renewal or transfer. Unlike in some countries, ownership in Aruba is not tied to residency, and the government maintains a straightforward and transparent process for foreign property acquisitions.

While no regularly published data on housing transfers is available for public use, local experts note growing foreign participation in the country's residential investment. Igmar Reyes, in his article for BonPaSa, analyzes data from Kadaster Aruba between 2012 and 2022, highlighting a consistently rising trend of international buyers activity, particularly from the US, Canada, the Netherlands, and Venezuela. Foreign buyers are primarily interested in luxury properties, vacation homes, and condominiums in highly sought-after areas such as Noord and Oranjestad. According to research by the Amsterdam Bureau for Economics, as of 2023, at least 11% of vacation rental properties in the country belonged to non-residents.

The residential construction sector in Aruba has experienced notable growth in the post-pandemic period. Data from the Central Bank of Aruba (CBA) shows that in 2023, the number of residential building permits issued increased by 28.82% year-on-year, with 84% of permits granted for single-family homes and 16% for apartments. However, following this period of heightened activity, the market began to stabilize, with the number of permits issued declining by 32.06% in H1 2024 as construction levels normalized.

Data Source: CBA.

Real Estate Hotspots:

Diverse Residential Landscape in Key Markets

Aruba's residential landscape offers a diverse range of options, each with distinct features catering to different buyer preferences, from the high-end communities of Noord and the vibrant capital feel of Oranjestad to the beachfront serenity of Savaneta or the transforming landscape of San Nicolas.

Given the absence of a centralized Multiple Listing Service (MLS) or publicly accessible real estate transaction records system, submarket assessment in Aruba is typically based on a compilation of data from various available sources and anecdotal evidence from local real estate professionals and agencies.

Noord

Noord, situated just north of Aruba's capital, Oranjestad, is one of the island's most prestigious and vibrant residential areas, particularly favored by expatriates and real estate investors. The region spans the northern coastline and includes some of Aruba's most coveted locations, such as Palm Beach, the focal point of the island's tourism sector, and Malmok, renowned for its oceanfront villas and proximity to premier golf courses.

Housing in Noord is a blend of vacation homes and permanent residences, both relatively high-priced due to their proximity to major tourist destinations and beach resorts. Modern developments, such as gated communities, are common, catering to high-income buyers. Notable residential projects in Noord include Gold Coast Aruba, Tierra del Sol, Opal Villas, and Esmeralda Residences. The area continues to experience rapid development, with ongoing construction projects like Orquidea Residences and The Moon.

As of October 2024, according to listings from the Association of Aruban Realtors (AAR), condominium and apartment prices in Noord range from USD 152,200 to USD 1,950,000. Detached homes, cottages, and villas are priced from USD 339,000, with high-end properties reaching up to USD 5,700,000. These figures underscore Noord's reputation as a premier destination for affluent buyers and investors.

Housing market snapshot, Noord:

Oranjestad

As the capital and largest city in Aruba, Oranjestad serves as a vibrant center for both locals and expatriates. Stretching along the island's western coast, the broader area surrounding the capital combines historical charm with modern conveniences. Residential options across the Oranjestad region range from colonial-style homes in the city's central districts to upscale apartments and condominiums near the harbor, appealing to a diverse range of buyers seeking either traditional or contemporary lifestyles.

Oranjestad's housing market is highly competitive, with property values reflecting the city's central location and access to essential amenities such as schools, hospitals, and shopping centers. The city's status as the island's economic and administrative hub drives steady property appreciation. Lars Niemeijer, a realtor with Keller Williams, highlighted in his September 2024 Aruban market overview that Oranjestad, along with nearby Eagle Beach and Palm Beach, remains a top choice for luxury buyers. "These locations have benefited from their proximity to major tourist hubs and scenic landscapes," he wrote.

As of October 2024, according to the AAR listings, condominium and apartment prices in Oranjestad range from USD 160,200 to USD 1,975,000. Detached homes, cottages, and villas are priced from USD 98,000, with luxury properties reaching as high as USD 2,450,000, highlighting the broad spectrum of residential offerings available in the city.

Housing market snapshot, Oranjestad:

Savaneta

Savaneta, situated along the southeastern coast of Aruba, is one of the island's oldest and most traditional communities. Renowned for its authentic local character, Savaneta features charming fishing villages, tranquil beaches, and a limited number of tourist attractions, creating an appealing environment for retirees and individuals seeking a more serene, low-key lifestyle.

The housing market in Savaneta is generally more affordable than in Oranjestad or Noord, with many properties providing beachfront access at competitive prices. The area showcases a diverse mix of older, locally built homes alongside newer developments. Increased interest in this coastal town reflects a growing demand for quieter, more secluded residential areas. Additionally, there is a wide array of land plots available for investors or individuals looking to construct custom homes with ocean views.

As of October 2024, according to the AAR listings, detached homes, cottages, and villas in Savaneta are priced from USD 169,500 to USD 3,500,000, making it an attractive option for a diverse range of buyers.

Housing market snapshot, Savaneta:

Paradera

Paradera is a serene suburban district located inland, northeast of Oranjestad. This area is increasingly popular among families and locals seeking a tranquil lifestyle away from the tourist-heavy regions. Paradera offers ample space for those interested in investing in larger plots of land or family homes, enhancing its appeal for residential living.

The housing market in Paradera is notably more affordable compared to coastal districts, making it an attractive option for middle-income families. The area features a diverse selection of single-family homes and townhouses, often priced lower than comparable properties in busier tourist areas. The district's rural charm is on the rise, with new developments, such as Reina Sophia Residences, emerging to cater to the growing demand.

Lars Niemeijer observes: "Mid-tier properties have also performed well (in September 2024), with suburban areas like Paradera attracting more budget-conscious buyers and long-term renters. This shift indicates that the market is not solely focused on vacationers but also appeals to those seeking second homes or rental properties."

As of October 2024, according to the AAR listings, detached homes, cottages, and villas in Paradera are priced from USD 206,500 to USD 715,000, positioning the area as a viable option for a wide range of buyers.

Housing market snapshot, Paradera:

Santa Cruz

Santa Cruz, situated centrally in Aruba, is primarily a residential and agricultural area that offers a rural lifestyle with convenient access to Arikok National Park and other natural attractions. This district appeals to individuals seeking a tranquil, nature-oriented environment while still remaining within a reasonable distance from the capital, Oranjestad.

The housing market in Santa Cruz is among the most affordable on the island, featuring a mix of traditional Aruban homes, modern residences, and agricultural plots. Property prices tend to be lower due to the district's rural character and its distance from the coastline; however, demand has been steadily increasing in recent years.

Lars Niemeijer notes: "Locally, there has been increased interest from younger professionals and families looking for properties outside the main tourist zones. These buyers are focusing on more affordable options in areas like Santa Cruz, where prices remain accessible but are steadily rising."

As of October 2024, according to the AAR listings, detached homes, cottages, and villas in Santa Cruz are priced from USD 222,000 to USD 1,395,000.

Housing market snapshot, Santa Cruz:

San Nicolas

San Nicolas, situated in the southern part of Aruba, is the island's second-largest city. Historically recognized as an industrial center due to the nearby oil refinery, San Nicolas has undergone significant revitalization efforts in recent years. Among notable projects is the Aruba Cultural Mall, a new social hub featuring shops, educational facilities, and community gathering spaces. Additionally, a new hotel Secrets Baby Beach Aruba by Hyatt (scheduled to open in 2025), and various infrastructural improvements to utilities and public services are expected to support the growing population and increasing visitor numbers in the area.

San Nicolas is currently regarded as one of the most affordable residential areas in Aruba, making it particularly attractive to first-time homebuyers. The housing stock here comprises a blend of older homes and newer constructions, with property prices generally lower than those in other parts of the island. As redevelopment initiatives continue to progress, the area is anticipated to experience gradual price increases.

As of October 2024, according to the AAR listings, detached homes, cottages, and villas in San Nicolas are priced from USD 117,000 to USD 505,000.

Housing market snapshot, San Nicolas:

Rental Market:

Dynamically Developing STR Segment and Higher Yields for Larger Units

Similarly to other tourism-focused destinations in the region, Aruba's rental market is notably tilted towards timeshares, vacation homes, and short-term holiday rentals. A 2023 analysis by the Amsterdam Bureau for Economics points out that vacation home rentals have over 4,200 units that make up 11% of the housing stock on the island and provide more rooms than hotels and timeshares.

The growing popularity of alternative means of accommodation, including short-term rentals (STR), is also evident in the Aruba Tourism Authority (ATA) reporting that shows the market share of visitors staying outside of traditional hotels, resorts, or timeshares growing from 13% in 2009 to 28% in 2023. In the first eight months of 2024, the share of tourists staying in 'other' accommodations approached 33%. The average occupancy of vacation rentals increased from 49% in 2019 to 57% in 2023.

As of October 2024, the data from AirDNA shows the largest number of active short-term rental listings concentrated in Noord. Among the more active local submarkets (with 50 or more active listings), the highest average daily rates, exceeding AWG 500 (USD 278), are reported in Eagle Beach, Noord, and San Nicolas. Seasonal occupancy levels fluctuate between 80-90% in February and 50-60% in October.

Key short-term rental indicators across selected submarkets as of October 2024:

The active development of the short-term rental segment raises concerns regarding its possible contribution to the housing shortage on the island and exacerbation of housing affordability issues for the local population, as entire homes are withdrawn from the regular residential stock and turned into commercial operations, often held by sizable market players rather than individual home-owners.

At the same time, long-term rent remains highly relevant for the Aruban population. The 2020 Census data showed that 22.3% of the country's housing units were occupied by paying tenants.

According to research conducted by the Global Property Guide in October 2024, average monthly rent in Aruba stood at USD 1,000 for a 1-bedroom unit, USD 2,300 for a 2-bedroom unit, and USD 2,750 for a 3-bedroom unit. Larger units with 4+ bedrooms averaged USD 3,150 a month. Corresponding gross rental yields for residential properties averaged 5.79%, with larger multi-bedroom units demonstrating better potential performance.

A brief summary of the regulations in the rental sector published by the Government Information Agency stipulates that rental prices in Aruba's housing market are free and primarily determined by the property's location, size, and state of maintenance. At the same time, the country's Civil Code provides for a certain level of government involvement in rental matters, including rent setting and rent increases in specific cases. For example, a government-appointed rent assessment committee is authorized to establish the maximum rent for premises with a market value of AWG 150,000 (about USD 83,300) or less. A more detailed overview of the recent amendments to the civil code relating to rents is available from HBN Law & Tax, a legal firm specializing in the Dutch Caribbean.

Mortgage Market:

Stable Interest Rates and Steady Expansion of Residential Lending Stock

Aruba has a sizeable financial sector, dominated by four commercial banks, the largest of which is local, and the rest are foreign subsidiaries of banks in Canada and Curacao. There is also a specialized mortgage bank and a number of credit unions, insurance companies, and pension funds that provide lending services to the population.

The housing mortgage portfolio maintained by the country's financial system has been growing steadily, annually expanding by 3.4%, on average, in the last decade and reaching AWG 2.25 billion (USD 1.25 billion) in Q2 2024, according to the data from the Central Bank of Aruba (CBA). The largest share of outstanding housing credit (73%) is held by commercial banks, and the remainder is split between the mortgage bank (9%) and other financial institutions (18%).

Data Source: CBA.

Outside of the 2020 spike (when the tourism-dependent economy of Aruba contracted sharply), the total value of housing credit has remained relatively stable in relation to the country's GDP and stood at 33.9% of GDP in 2023. At the same time, the CBA reporting shows that the overall expansion of the mortgage portfolio has been primarily driven by the commercial banks whose exposure to residential real estate increased from around 61% of the total lending to households in 2014 to nearly 79% in Q2 2024, and continues to grow.

According to the technical assistance report from the International Monetary Fund (IMF), while the CBA has yet to introduce borrower-based macro-prudential measures, individual banks already apply conservative standards to manage exposure risks, allowing an LTV of 60% for non-residents purchasing a property on the island and an LTV of 70-80% of execution value for local mortgage buyers.

Data Source: CBA.

The weighted average interest rate on housing mortgages issued by commercial banks in Aruba gradually climbed down from the 6-7% level a decade ago and has been relatively stable between 5.0% and 5.5% in the last three years. Most recently, the CBA reported the indicator at 5.2% in Q2 2024.

Over the last 10-15 years, lending rates in Aruba have generally declined, in part due to the increasing competition between lenders, the relatively weak loan demand, and the excess liquidity in the system, notes the 2023 IMF technical assistance report.

Mortgage interest rates are now considered stable, and a significant rise is unlikely in the future, according to the IMF.

Despite the dominance of fixed-term contracts and stable interest rates, domestic demand for housing loans remains constrained. The results of a recent consumer confidence survey published by the CBA showed that only 10.4% of respondents saw taking a mortgage as suitable. While the total value of new housing mortgages taken out in Q1 2024 amounted to AWG 62.1 million (USD 34.5 million) and showed a 5.6% year-on-year increase, the actual number of these loans dropped by 2%, according to the central bank's reporting, indicating higher value of individual loans due to growing prices rather than increasing demand.

Overall, based on the latest figures from the CBA, mortgage loans in Aruba are primarily used by the resident population and businesses, with only 6% of the total mortgage assets of the commercial banks (combining housing and commercial mortgages) attributed to non-resident borrowers. The IMF assessment also notes that a large part of the non-resident investors on the island continue to settle their purchases with cash.

Socio-Economic Context:

Strong Performance of Tourism to Sustain Economic Growth in the Medium Term

The economy of Aruba continues to rely on tourism as its main source of income and a driver supporting the development of construction and other related sectors. After a sharp decline in both stay-over and cruise segments in 2020 and 2021, the industry recovered rapidly, showing 81.6% and 21.4% year-on-year growth in visitor arrivals in 2022 and 2023, respectively.

According to the CBA reporting based on data from the Aruba Tourism Authority and the Cruise Tourism Authority, in 2023 the country exceeded the pre-pandemic benchmark and welcomed over 2 million visitors (of which about 61% were stay-over tourists and about 39% were cruise passengers). A corresponding strong growth was also observed in the gross tourism credits indicator (compiled from transactions in foreign currency, traveler's checks, and credit cards, as reported by foreign exchange banks), which reached AWG 4.7 billion (USD 2.6 billion) in 2023.

This upward trajectory for tourism in Aruba continued in 2024. The total number of visitor arrivals in the first half of the year exceeded the comparable period of 2023 by 14.5%, while the tourism credits grew by 13.8% year-on-year, based on the figures from the CBA reporting.

Most stay-over tourists arrive on the island from the US (75.7%, as of 2023); other prominent countries of origin include Canada (5%), Colombia (4.2%), The Netherlands (3.1%), and Brazil (1.1%).

Data Sources: CBA, Aruba Tourism Authority, Cruise Tourism Authority.

Fueled by the sustained strong performance of the tourism industry, Aruba's economy continues to grow. The speed of its expansion, however, has moderated after the initial post-pandemic rebound. The country's real GDP growth slowed to 5.3% in 2023, compared to 27.6% and 10.5% in 2022 and 2021, respectively.

The August 2024 economic outlook from the CBA expects the earnings related to tourism activities and the resulting tourism exports to continue to be the strongest contributor to Aruba's GDP growth in 2024 and 2025, as well as in the medium term (2026-2028). According to the central bank, "buoyant hotel and non-hotel accommodation sector performance" complements high visitor arrivals.

While the latest CBA growth forecast for real GDP expansion in 2024 is optimistic at 6.1% (based on upturns in exports, investment, and consumption), earlier projections from international experts see a further slowdown. In March, Fitch Ratings estimated a 2.3% growth, on average, for 2024-2025, while the IMF projection currently stands at 1.1% for 2024 and 1.0% for 2025.

Data Source: IMF.

Consumer Price Index (CPI) inflation in Aruba slowed down from 5.5% in 2022 to 3.4% in 2023 and was most recently reported at 2.9% in August 2024. The CBA projects a twelve-month average inflation rate of 1.6% in 2024 and 0.5% in 2025, with the core component of inflation being the main determinant of total inflation. The IMF forecast currently sees average consumer prices in Aruba growing by 2.3% in 2024 and 1.8% in 2025.

Despite the expected lower level of inflation in the next two years, the central bank notes that price hikes still constitute a risk to the forecast. Among the main global factors that could potentially affect the rate of inflation in Aruba are ongoing geopolitical conflicts, supply chain disruptions, and oil market volatility. Domestically, the risks include further adjustments to utility tariffs, upward pressures on wages due to tight labor market conditions, as well as weather events that threaten agriculture.

Data Source: IMF.

Nationwide unemployment in Aruba in the last two years dropped from 8.8% in 2021 to 6.6% in 2022 and 5.7% in 2023, moving safely below the 30-year average. Labor market conditions remain tight, which could potentially constrain tourism-driven growth unless the assumed by the authorities volume of labor imports meets the growing industry needs.

The upcoming increase of the island's tourist accommodation capacity with the launching of new hotels such as JOIA Aruba By Iberostar (opening in December 2024) and St. Regis Aruba Resort by Mariott (opening expected by the end of 2024), as well as the ongoing expansion and modernization of Aruba Airport, are likely to create additional demand for labor in the near future.

The overall economic outlook for Aruba is favorable, with moderate growth expected in the medium term. In March 2024, Fitch Ratings affirmed the country's 'BB+' standing and revised its outlook to positive, citing the greater institutionalization of the country's fiscal framework, a rapidly declining debt trajectory, continued growth driven by the tourism sector, and strong institutional and financial support from the Netherlands.

Sources:

1. Central Bank of Aruba (CBA)
   1. Exchange Rates: https://www.cbaruba.org/
   2. Monthly Tables: https://www.cbaruba.org/
   3. Quarterly Tables by Sector: https://www.cbaruba.org/
   4. Annual Statistical Digest: https://www.cbaruba.org/
   5. Monthly Economic Bulletins: https://www.cbaruba.org/
   6. State of the Economy: https://www.cbaruba.org/
   7. Economic Outlook: https://www.cbaruba.org/
   8. List of Financial Institutions Under Supervision of the CBA: https://www.cbaruba.org/
2. Central Bureau of Statistics (CBS)
   1. Census 2020, Housing Tables: https://cbs.aw/
3. Aruba Tourism Authority
   1. August 2024 Monthly Report: https://aruba.bynder.com/
   2. 2023 Annual Report: https://aruba.bynder.com/
   3. Local Sentiment Research Highlights: https://aruba.bynder.com/
   4. Knowledge Base: https://www.ata.aw/
4. Government Information Agency
   1. Renitng a Home (NL): https://www.gobierno.aw/
   2. Aruba Airport Authority N.V. Announces the Next Phase of the Gateway 2030 Project: https://www.gobierno.aw/
5. Amsterdam Bureau for Economics
   1. Vacation Home Rentals and Carrying Capacity: https://www.deaci.aw/
6. International Monetary Fund (IMF)
   1. Country Overview: Kingdom of the Netherlands-Aruba: https://www.imf.org/
   2. IMF Staff Country Report: https://www.imf.org/
   3. Kingdom of the Netherlands-Aruba: Technical Assistance Report-Financial Stability Diagnostic and Scoping Mission: https://www.imf.org/
7. Association of Aruban Realtors (AAR)
   1. Real Estate Listings: https://arubalistings.com/
   2. 7 Things You Need to Know Before Buying a Property in Aruba (for non-residents): https://arubalistings.com/
8. AirDNA
   1. Short-Term Rental Markets: Aruba: https://app.airdna.co/
9. Fitch Ratings
   1. Fitch Revises Aruba's Outlook to Positive; Affirms at 'BB+': https://www.fitchratings.com/
10. HBN Law & Tax
    1. Recent Changes To Aruba Lease Law: https://hbnlawtax.com/
11. BonPaSa
    1. We Must Secure Access to Housing for the Future (ES): https://www.bonpasa.com/
12. Lars Niemeijer
    1. Aruba Real Estate. September 2024: https://www.linkedin.com/