If you’re considering purchasing overseas property in the Caribbean then Bill Mackay’s article is a must read.

Article Written by: Bill Mackay
Title: St Kitts and Nevis – Does It Make A Good Investment?

Coming just eight months after BA’s first Gatwick to St Kitts service opened up the isle to Brits, this was big news for anyone scouting for a second home in an unspoilt corner of the Caribbean.

The BA effect is already being felt on the relatively undeveloped island and its even quieter twin, Nevis. Ricky Pereira, founder of St Kitts Realty and a fourth-generation Kittitian, says: “The BA flight has made a huge difference because of the easy flight access. Both islands have always been of interest to British clients because of their history and links [St Kitts was first British Caribbean colony isle]. But they always seemed so hard to get to.”

While the first BA service eased journey times from the UK, the two weekly flights, on Tuesdays and Saturdays, will increase flexibility for British tourists, with obvious implications for the buy-to-let market. Suzanne Gordon, owner of Sugar Mill Real Estate in Nevis, has been witnessing a rise in rental occupation by Brits: “While the UK market has always been strong, I am seeing at least as many renters coming from the UK as from the US, and probably the easier airlift has contributed to this. There are obviously other economic issues involved, but the BA flights have made the islands more accessible.”

If you’re looking at buy-to-let here, there are a few factors to consider. Firstly, get to know the difference between the isles. More tourist-driven St Kitts has a better long- and short-term rental market than Nevis. Owners benefit from the shortage of rental options available, and St Kitts has more hotels and tourist facilities whose managers and staff require lodgings. There are also medical and veterinary schools on St Kitts, which draw students from the US and Canada. Meanwhile, the unspoilt, laid-back beauty of Nevis attracts retiring expats and long-term residents, which accounts for the greater variety of vacation rentals on offer and higher vacancy rates.

Secondly, the rental market is seasonal and largely limited to the high season, December to April. Suzanne Gordon cautions that renters will need to market through many different channels to achieve several weeks’ rental a year, with 10 weeks’ rental being a safe estimate for Nevis buyers starting out. Ricky Pereira, on St Kitts, estimates four to five months’ rental would be considered very good on that island. “Rental prices vary on location and time of year,” he says, “but normally fetch a good return. For example, a penthouse condo that we have for sale at the moment at £350,880, price negotiable, rents for £1,830 a month long-term. A one-bedroom in Frigate Bay, one of the most desirable locations, rents for around £610 a month long-term — that’s for six months or more.”

Whether you’re looking to buy a holiday home or move here lock, stock and barrel, your main problem will be limited stock.

Particularly if you are looking below the £350,000 mark. At just 93 square kilometres Nevis, in particular, is a very small place — more residential than tourism-led, with a very small property market. In contrast, St Kitts — once an exclusive playground for American jetsetters in the 60s — is developing into a major market for groups, package tours and cruise ships. Development has been relatively cautious on both islands over the last eight years: kick-started by the Marriott, which put St Kitts on the map in 2003.

Now, on St Kitts several new developments are reaching completion despite the recession, which stalled many projects. Leading the way in high-spec development is the luxury, low density, 2,500-acre Christophe Harbour Development, now under construction. This millionaire’s playground is set to include a Tom Fazio-designed golf course, 125-room Mandarin Oriental and 300-slip marina with plenty of berths for mega yachts.

Next door lies the much smaller, more affordable 340-acre Coast to Coast Developments, with prices from £152,700. Waterfront lots start at £457,860 — fully serviced with views of the Atlantic, Caribbean Sea, mountains and coastlines. Or there’s Ocean’s Edge, a low-rise 40-acre mixed resort development of 210 properties, also priced within the grasp of mere mortals. The three-storey apartments, cottages and ‘bespoke villa’ plots overlooking North Frigate Bay include beachfront one-bed apartments from £220K and poolside two-bed cottages at £322K.

Unsurprisingly for these islands, most of the completed phases one and two of Ocean’s Edge have already been sold, according to UK sales representative Pauline Bonanni of Savills Select Resorts. Phases three and four — all cottages — are being built. Some properties are already occupied by owners or are let. “A rental programme will be offered once all the facilities are in place,” says Bonanni. “But for now, as there’s a shortage of good accommodation for key expat workers, some owners have arranged long-term rentals and are earning an income already.”

The London-based developer of Ocean’s Edge is also behind Pinney’s Estate on Nevis where thirty-five lots have been released for reservation so far; information is available through Savills International Residential in the UK.

Certain developments such as high-end Kittitian Hill on St Kitts, and the West Indian-style villas and condos at Seaside at Cliffdwellers on Nevis are expected to offer fractional ownership schemes.

It’s worth noting that many new-builds over US$350,000 (around £214,200) carry the added benefit of Economic Citizenship — which brings tax advantages attractive to Brits and Europeans, such as no income tax or inheritance tax. Check the development is an ‘officially approved project’ before you buy.

If you’ve got the funds and you’re looking for a ‘forever home’ in the sun, resales on Nevis can offer good value, says Gordon. “Early residents got the best lots,” she says. “Some of the resale homes built 10 to 20 years ago are on incredible pieces of land with great views and now remarkable mature gardens. People have bought older homes on incredible lots, even for £620,000 or so, then put another 300K into them for renovations, resulting in homes that are probably worth much more.”

Say you manage to snap up your dream home while it’s hot. What next? Property tends to be bought in cash, but you can turn to the Royal Bank of Canada or The Bank of Nova Scotia for financing; they normally require a 30 percent deposit. Next, apply for an Alien Landholders License, a simple application, and pay 10 percent sales tax to the government on approval before closing.

Of course, investing in an unspoilt landscape carries risk of change. At least these islands have the benefit of hindsight. “Being late developers St Kitts and Nevis have learnt from other islands’ mistakes,” says Pereira. “Developments are taking place under the watchful eye of residents, backed by a local government focused on long-term, high quality sustainability.” With prices generally stable during this downturn and set to rise, it’s worth sticking around to see if he’s right.

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Bill Mackay works and writes for the leading offline and online magazine Living Abroad Magazine. The magazine is your monthly guide to living and buying abroad, with a wealth of information, stories, and guides. http://www.livingabroadmagazine.co.uk/