Market focus on St. Lucia
Friday January 12, 2007Saundra Satterlee
Rum punch sunsets, crystalline sands and turquoise seas form a magical background to a flurry of building activity as the central Caribbean island of St. Lucia prepares for the Cricket World Cup (CWC) 2007.
St. Lucia ? blessed with rain forests, palm fringed beaches and the verdant World Heritage-listed Piton Mountains that jut vertically from the forest floor ? will host England?s team, whose first match is against New Zealand on 16 March.
Prior to the announcement of the CWC, St. Lucia had been something of a backwater for property development compared with neighbouring Barbados. In the lead up to the World Cup the island has seen a spate of development, not only an upgrade of the Beausejour Stadium but also road and transport improvements alongside a swathe of new upmarket hotels and homes. Ernest Hilaire, who heads St. Lucia?s CWC 2007 programme, explained to Guardian Abroad: ?We are a small island with few natural resources. Our people are therefore our most important asset and the Cricket World Cup has provided us with a chance to invest in, develop and showcase this asset.?
Country and economyLike much of the Caribbean, St. Lucia was caught up in the colonial tug of war, most notably between England and France during the 17th and 18th centuries. England gained the upper hand in 1814, from which time the island remained a British colony until independence in 1979.
Since then the economy has presented a mixed picture. With the demise of sugar, bananas became Saint Lucia?s main export crop. But global trade liberalisation ? and a US push for the EU to drop its preferential trade regime with the Caribbean Windward Islands ? has also diminished St. Lucia?s important banana industry.
The good news is that a small revival is underway thanks to new Fairtrade banana certification for the Windward Islands. Meanwhile, the St. Lucian government is actively pursuing new income streams.
Nowadays the economy is on an upward swing relative to other Eastern Caribbean Currency Union countries. The IMF puts diversification at the forefront of St. Lucian economic development with offshore banking and tourism leading the way. Economic activity has been fuelled by an increase in construction. GDP per capita is just under $5,000. The IMF predicts that the existing GDP growth rate of around 5% will continue over 2007.
The extent to which cricket is boosting the economy is clear in the mind of former UN economist Frank Heaps, CEO of the island?s largest ever private capital project, The Landings: ?The government has stimulated private sector development of tourism infrastructure and is improving public infrastructure as well ? jobs, local spending, work for local suppliers and so forth.?
Property marketOver the last five years property prices have more or less doubled. ?In 2006 alone prices rose on average by 15% to 20%,? says Rufus Gobat, co-director of Prestigious Properties. But value for money is still exceptional according to Heaps, who puts comparable properties at as much as 65% less expensive than in Barbados.
With the games several months away Heaps notes that ?it?s not too late to cash in on high rental returns expected during the CWC tournament.? Not just short-term interest, but many fans will be smitten by this tropical paradise ? Nobel Laureate Derek Walcott describes his homeland as ?heaven? ? and will return for holidays or even to purchase property.
In addition to outright freehold, a buy-to-let type of rental pool option is increasingly widespread across St. Lucia. This hybrid form of ownership differs from one country to another. Marco Bonini, co-director of Prestigious Properties says: ?Like fractional ownership (where you own a portion of the property), you have restricted use. Unlike fractional, you own the freehold, all the bricks and mortar.? The ?buy-to-let/pool? system in St. Lucia is typically part of a hotel resort and in your absence your property reverts to hotel use.
From blue chip hotels like the Ritz Carlton (completion 2009) or five star boutique hotels such as Cap Maison (completion 2008), the buy-to-let/pool option for apartments, cottages or villas as part of a resort takes away the risk of upkeep, wear and tear, house-keeping, security or going through the hassle of finding rental tenants. Because owners are in a rental pool, whether or not a unit is occupied, everyone in the pool receives a share of income.
The upmarket buy-to-let/pool development of Jalousie Plantation, set on a 150-acre rain forest between the Pitons, provides a prime example. Freehold owners of the144 cottages and villas will each receive four weeks stay per year, with the other 48 weeks reverting to hotel use. ?You buy, own and can sell anytime you wish through any agent of your choice. But when you buy, there is a compulsory type of leaseback,? Bonini explains. ?Immediate income and future capital appreciation are inbuilt advantages of the scheme.? Priced from $485,000 to $1.2m, your four-week stay includes all food and beverage, a treatment in the spa every day, a dive and all water sports. Profit is worked out on a 50/50 basis where the typical rental return is 8% to 10% a year.
Priced from $800,000 is Cap Maison, a similar upmarket scheme with nine weeks annual use for a spacious apartment with an individual plunge pool overlooking a secluded sandy cove. Rental income is shared on a 50/50 basis with the management company and for the first year of ownership there is a guaranteed return of 5%.
More affordable is a small eco-resort located in a rainforest priced from $250,000, with views of the Pitons. Mago Estates features 22 one and two bedroom suites with kitchens on a buy-to-let /pool basis. Ownership entitles you to eight weeks stay a year with a 50/50 profit share.
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