The following article is from Canadian Real Estate Wealth Magazine.
Buried treasure can be found in the Caribbean, and you don’t need a pirate ship to find it. The treasure comes in the form of affordable real estate in five sub-tropical markets primed for growth. These areas are all poised to experience an economic boom in 2013 and beyond, and that has put wind in the sails of North American baby boomers. Each market has an inventory of move-in-ready properties that are suitable for retirement and investment purposes. They are also relatively inexpensive.
As well, the large ex-pat populations there provide Canadians with the social familiarity they need to call a place home. Savvy investors are now moving to capitalize on the opportunity to furnish North American snowbirds with rental accommodations, at the same time they make second homes for themselves. CREW selected these areas based on average prices, expected rents, and projected economic growth. We spoke to local experts who explain why the time to get in on the ground floor and set sail for big profits is now.
Believe in Belize
An increasing number of Canadians are tapping into Belize’s thriving real estate market.
Located in the middle of Central America, Belize originally failed to command the attention surrounding countries have. But in recent years, the country’s real estate market has matured and Canadian buyers are getting an eyeful.
The country’s economy is relatively stable, which is good news for buyers. According to data from the International Monetary Fund, Belize’s GDP growth is forecast to climb 2.5 per cent in 2013, and jump by another 2.5 per cent in 2014.
Marie-France Dayan, founder of The Zen Investor in Montreal, has been behind some successful developments in the country. As she explains, there are five main reasons why Canadian investors are warming up to Belize.
“If you look at Belize in relation to North America, it’s very easy to access, as it’s only one hour and 45 minutes from Miami.”
Investing internationally also has certain legal pitfalls that can trap investors. But there are no so such traps in Belize as their legal structure is similar to Canada’s.
“Belize is part of the British Commonwealth, and the legal system they apply is based on common law,” says Dayan. “So in terms of ownership titles, the terms are very similar to those used in Canada.”
The country is also considered a “tax heaven” in the sense that there is no capital gain in Belize, Dayan says. “When an investor sells a property, there is no capital gain, and that’s important for us here.”
More foreign investors have been discovering Belize recently, as its markets are quickly emerging as real estate hotbeds. “Belize has yet to be discovered (by investors),” Dayan explains. “There is so much potential for growth, new businesses and ventures, and the prices are relatively low compared to other Caribbean regions.”
Belize’s hot spots
The country’s top markets include the Cayo district, which includes Belmopan, Belize’s capital. Dayan notes that this area has resonated well with tenants who are interested in eco-tourism.
“I would say that the Cayo district would be the number one place to go,” says Dayan. “The return on investment in this area is very good because people are just beginning to discover it, and it’s a great place to attract eco-tourists.”
San Pedro is another hot area. This city, notes Dayan, is known to be a big hit with vacationers. “San Pedro is one of the most visited areas in Belize,” she says. “The main attraction there is the beaches. From an investment point of view, it’s a great place because you would have (tenants) pretty much all year long.”
Many countries have strict rules for foreign business. These rules often discourage buyers from entering their markets, and can create headaches for those who already have.
“Whenever Canadians invest offshore, it’s always tougher to get mortgage conditions,” Dayan says. “It’s difficult because if they default on their loan, the banks have no choice but to go after the property.”
Belize’s mortgage rules differ from those in Canada. “You’re looking at about 60 to 65 per cent LTV for Belize,” Dayan explains. “The interest rates are high, and can be anywhere from nine to 11 per cent and the amortization rates are only between five and 10 years maximum.”
As more foreign buyers begin to discover Belize, the market is expected to respond accordingly. Several new projects are in the works, a direct effect of the growing demand from those looking for retirement homes.