Investment Property in Belize

Investment Property in Belize:

With Belize being one of the fastest growing markets in the world, and being considered the most affordable Caribbean market, there is no surprise that so much attention has been focused on the country lately. Belize also offers a very generous retirement program, known as the QRP, which helps attracting new residents from North America and beyond, thereby increasing the demand for new quality housing and the opportunity to build new homes.

Reasons to Invest in Belize:

Belize is widely recognized as a private-enterprise led economy, with very few restrictions on foreigners owning- and operating businesses in the country, as well as no restrictions on property ownership.
Very favourable tax laws and the ability to repatriate 100% of your earnings has made the country a very attractive base for financial service companies, the insurance industry, banks, as well as wealth management – but there are also opportunities available in a wide range of industries.

The economy is growing at a good rate, and the demand for property in Belize has increased significantly, as foreign retirees are able to take advantage of Belize’s “QRP” opportunity, which allows you to retire in the country without investing in a business, working in a highly skilled job etc – it is the only “pure” retirement visa in the Caribbean.

Belize also has a VERY rapidly growing demand from eco-tourism operators, who come to the country to explore the large untouched rain forests, go hiking, and experience some of the best diving sites in the world.

The seven most dominant sectors offering the best opportunity as has been identified by Beltraide (www.belizeinvest.org.bz) are:

Tourism accommodation Agribusiness Information & Communication technology Energy Creative handicrafts Business & Professional services Consumer products (Import/Export & Distribution)

Strategic advantages of investing in Belize:

Bilingual work force (English & Spanish) Investor friendly climate Easy to form new companies, allows 100% foreign ownership Long history of political stability Abundance of natural resources Well trained work force, available at very competitive rates Easy access to Government incentives Modern banking & telecommunication systems Currency pegged to the USD Ability to repatriate earnings Strategic location with access to many international markets

Buying Development Land in the Path of Growth:

Across the world for generations, the “smart money” has focused much of its attention on buying development land in the path of growth, to be able to create a maximum return on investment.

Building costs in Belize are significantly lower than in the UK and US (roughly $60 per sq.ft) so a savvy investor can also choose to exit out by building a home for resale when the time is right.

Holding costs for land are much lower than for a finished property, and you also have no issues with maintenance, insurance, high taxes etc. – you simply hold on to the asset for as long as desired.

All land is Freehold Most affordable Caribbean market Tax free environment Currency pegged to USD, eliminates currency risk Growing economy even during the last few years Significant growth in demand from retirees and expats

Population Growth:

The population of Belize grew by 2.65% last year, which is one of the fastest growth rates in the Western world. The stable political system has seen an influx of workers from the nearby countries, which has further increased the demand for housing.

The Most Affordable Caribbean Market:

Belize is generally considered to be the most affordable Caribbean market, although the increase in demand seen over the last few years has put upward pressure on the prices of real estate.
The ability to buy residential land, or vacation homes, at a price of just a fraction of what it would cost on one of the islands has not gone unnoticed.

The option of buying U.S. issued title insurance guarantees you free and clear title, and there is also no Capital Gains taxes to pay once you sell your investment.

Low Cost – High Quality of life:

The mixture of a low cost of living and a high quality of life has seen a large number of retirees and families from the United States and Canada relocate to Belize, which has increased the demand for accommodation significantly – especially homes in planned residential communities that are similar to the ones found “back home”.

The QRP program:

The QRP is a program that allows anybody to retire in Belize without having to make an investment into a local business, or be offered a highly skilled position with a local employer. As long as enough income in retirement through any means can be proven (savings, investments, social security) the person is allowed to relocate to Belize, and can also bring a large number of personal effects (cars, furniture, other large items) without paying any import duties.

British Heritage and Legal System:

Belize used to be known as “British Honduras” up until 1981, and the laws- as well as title system in the country is based on the British system, including the way real estate transactions are carried out.

The Belizean title system does allow for ownership thru foreign companies, foreign individuals, and foreign trusts, and allows ownership of both finished properties as well as vacant land.

Increase in Mortgages:

Though they have started to come down, interest rates remain very high, at 11-13%, which currently means that many real estate transactions are carried out either using cash, or using seller financing. Traditionally, once interest rates are under control and bank financing becomes available, the real estate market is almost always affected in a positive way.

Free Trade Zone:

There is a Free Trade zone on the border between Belize and Mexico, just north of Corozal Town, which is bringing retailers, manufacturers, and other services to the area which has further increased the demand for housing.

A new border processing facility has been installed and crossings are now seamless, and you can travel from Corozal Town to Chetumal in just 10 minutes.

Buy to Let Investment in Belize:

The Buy to Let market in Belize is still at an early stage, though opportunities exists to let your property out either long-term, or on a short term basis, to tenants looking for a temporary home for the season, or on a short work assignment.

Most properties in Belize that are bought by investors are purchased for cash, though mortgages are becoming increasingly available.

Typical returns, based on either building your own home, or purchasing an existing property could look like:

As you can see, the yields from buying an existing property are not very enticing - you may off course be able to find properties at lower prices, and you may also see significant growth. The more favourable way may be to use the second option:

Now you do however have a brand new house, and the margins on constructions are usually around 30% in Belize, so based on this alone, you should be able to sell your house under Scenario B for roughly $125,000 – which is very reasonable in today’s market.

Many investors are currently land banking – buying up the underlying asset, and are then looking to sell it on to developers in the next few years, as more and more retirement- and permanent residences are being built across Belize.