30 June 2022

Island Living – Real Estate Investment vs Private Property Investment

Citizenship by Investment in the Caribbean has traditionally been aimed at high-net worth individuals who wish to obtain passports. Most are unlikely to be investing for the express purpose of living there.

Historically, this has been of mutual benefit to both investors and the tiny island nations with their limited space and resources. Citizenship purchased through donation to a government fund, or a real estate investment in a hotel or resort project have been crucial in boosting the individual island economies, as well as the regional economy. (The former being an essential source of funding for islands almost entirely dependent on tourism and vulnerable to hurricane damage. The latter provides critical funding for public/private partnerships in the kind of high-end resort developments that have the most economic benefit for these islands as they meet growing demands for tourism infrastructure and facilities.) Investment in private residential properties, even if considerable, would have been of far less benefit to both the majority of investors and the islands. Consequently, that option has not been offered as part of regional CIP.

However, with the rapidly changing landscape of global investment migration, that looks set to change. The Covid-19 pandemic has had a devastating impact on tourism in the Caribbean. Furthermore, EU (and to a slightly lesser degree UK and US) pressure on Caribbean CIP – within a call to end citizenship-by-investment programs globally – is prompting urgent amendments to the former status quo – among them a broadening of the target market for Caribbean Citizenship-by-Investment.

Residential Property Investment in as a future option for Caribbean CIP

This target market remains high-net worth individuals, but there’s a subtle shift in emphasis. The above factors have already resulted in a few small, but very significant, amendments, to some of the CIP programs. These range from adjusted price points and time-sensitive discounts for CBI, to increased scope and lowered costs for family citizenship.

Oligarchs and other ‘high-risk applicants’ who are only after visa-free access to regions such as the EU, are ‘out’; a broader category of wealthy applicants who may be more interested in settling in the Caribbean, are ‘in’. Investment in private residential property now has the potential to be far more beneficial to Caribbean CIP. And it may well be a major factor in the continuation of the citizenship-by-investment schemes in the future.

Saint Kitts and Nevis appears to be leading the way in 2022 – with what might well be an inaugural Private Residential Property Investment option for Caribbean CIP.

Citizenship from Saint Kitts and Nevis through Private Property Investment

As the first Caribbean nation to offer citizenship-by-investment, the tiny island nation of Saint Kitts and Nevis has the most experience in CBI. Consequently, it has been at the forefront of adaptation in Caribbean CIP. It’s no surprise then that St Kitts and Nevis is the first to add a Private Residential Property Investment option to its CBI program, in addition to the ‘standard’ Donation and Real Estate Investment options.

This allows applicants to purchase a home they can either live in permanently, rent out, or keep as a second home, instead of investing in an eco-resort or hotel. And it is theirs to sell whenever they like, after the holding period.

The USD 400 000 minimum purchase price for the Private Property Investment option is still aimed at high-net worth individuals; however it opens up citizenship-by-investment in the Caribbean to a class of applicants (single, couple or family) who might otherwise have been excluded or more likely to opt for a cheaper CBI or residency scheme elsewhere.

Moongate: Private Property Ownership in Antigua through the CBI Real Estate Investment option

Moongate Antigua is a 49 Suite Hotel & Spa overlooking Half Moon Bay and a government approved development for Antingua’s CIP program. It is a little different though. Moongate is being marketed as having a ‘design ethos predicated on the notion of building a community of like-minded individuals seeking an authentic experience (of an) ideal island life with the amenities and ambience of a modern Caribbean Open Plan.’ In other words, despite being termed a ‘hotel’, it’s being developed for investors to take up residency.

Investors get full freehold title ownership, with the option of full personal use of their property or participation in the Moongate Property Management program should they wish to let out their properties long-term (min. 12 months).Although this CBI investment option is not necessarily unique in CBI Real Estate Investment on a global scale, it is unusual in the Caribbean in that it explicitly promotes the benefit of being able to take up residency in the ‘hotel’ once the development is completed.

Moongate offers three Suite options – starting at USD 250 000 for a standard suite and going up to a one-bedroom penthouse for USD 600 000. Exclusive, but with all the amenities offered – such as clubhouse, pool and spa – a highly attractive option. Moongate offers luxury hotel-style living, a pampered and fully serviced retirement, with everything on hand, or a significant rental income from a luxury apartment on a beautiful tropical island.

Moongate appears to be a Private Residential Property option for CBI in all but name.

Potential Benefits of a Private Residential Property investment option for CBI in the Caribbean

Private Property Investment has the potential to be far more attractive to applicants who would normally have gone for the Real Estate investment option, but who’d prefer to not risk their money on a public/private development partnership, or the promise of future ROI when it simply cannot be guaranteed.

There have also been a very few unfortunate instances in other Caribbean islands where the CIP approved Real Estate developments have come to some form of bad end – with investors losing their money entirely, if not their citizenship. This may not be of major consequence to a certain type of migration investor – as long as they get to keep their passport – but it is certainly a concern for the majority of applicants.

As citizenship by investment in the Caribbean becomes more accessible, likely more residency focused, and the overall applicant profile shifts, it may well become the best option. Private Residential Property offers the closest thing to a guaranteed future return on investment.

It remains to be seen if the other Caribbean CIP nations follow suit in offering the option of purchasing private property in exchange for citizenship. If the EU pressures lead to implementation of residency requirements as part of their citizenship-by-investment programs, it’s all but a certainty that they will.

In such a case, Citizenship-by-Investment in the Caribbean is set to become more attainable and attractive to a far wider spectrum of wealthy investors and their families, and more authentically about offering ‘Caribbean island living’ than ever before.

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