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Anguilla’s Real Estate Outlook

Over the past number of years, the American stock market has been slumping while the US real estate market has been doing very well--as have all of those sectors of the US economy involved in the property process (i.e. realtors, contractors, financers, etc) with the primary reason for this dichotomy being historically low US interest rates. In Anguilla during that same period, while real estate activity has been steady, it has not shown the same rate of growth (in either appreciation or investment) as one might have expected considering what has been happening in the USA--in fact, real estate activity on island is just now beginning to accelerate. When one considers the reasons for this disparity, a number of interesting observations can be made--some of which are apparently contradictory but all of which are illuminating.

In contrast to the above referenced low interest rates in the USA, interest rates on Anguilla (with primary focus on mortgage rates) have remained exceptionally high, averaging 10.5%--nearly double the rates available to the north. Although economies of scale do come into play (with Anguilla being an unusually small market by any objective standard) the high interest rates have been seen to be a detriment to development--both internal and external. Interestingly those interest rates have just recently begun to fall and the concomitant loan details (such as down payment percentages and loan repayment terms) have also become more customer friendly--all of which has coincided, not surprisingly, with an increase in real estate activity.

But insofar as a primary engine (perhaps the primary engine) of real estate development on Anguilla is expatriate investment, and insofar as most expatriate investors are not dependent on Anguilla’s mortgage rates or terms, the question as to why real estate activity has increased just as the local lending institutions have made their loans more affordable, is intriguing. Expatriate investors normally either self finance their projects (as is the case with most personal homes) or finance their projects off island (which is the case with larger tourism projects)--in contrast, Anguillians normally finance their investments (either personal or for profit) from local lending facilities...as such, perhaps the reason for increased the real estate activity is not as dependent (or not as solely dependent) on local interest rates as one might initially expect.

With regard to recently approved or recently initiated projects on island, there are a number of very impressive undertakings on the board or underway which can be seen to be contributing to Anguilla’s now robust real estate environment--including: the current road improvement project which is upgrading the island’s infrastructure; the long awaited airport extension project which will improve international access; the sale of the Sonesta Hotel and surrounding land for the development of a world class hotel along with the island’s first golf course which will both bring more attention and activity to the island; the expanded focus of the tourism horizon to include an annual international regatta to coincide with Anguilla’s summer carnival and the introduction of a jazz festival featuring internationally recognized performers timed to jump start the season each fall will improve occupancy rates and revenues; the ambitious tennis facility slated for Blowing Point will be a focus in and of itself as well as hopefully being a catalyst for the long anticipated improvements to the port area nearby; and the not to be underestimated happy resolution to the issue of allowing and respecting the rental rights of foreign home owners which facilitates investment by the all important individual high net worth investor.

With the foregoing impressive list in mind, one can see an impressive mix of projects and concepts along with an impressive mix of funding scenarios--some international grants, some local private investment, some local financing, some foreign private investment, some foreign financing--all of which creates an environment that makes lower local interest rates reasonable (and most welcome).

U.S. born Scott Hauser moved to Anguilla in 1976. He developed and managed Cinnamon Reef Resort, was President of the Anguilla Hotel and Tourism Association, earned a Professional Development Degree from the Harvard Graduate School of Design, and earned a Masters Degree in Real Estate Development from MIT. Mr. Hauser is now an Anguillian Belonger, a naturalized British Dependent Territories Citizen, a Commissioner for Oaths and the Director of Professional Realty Services (Anguilla) Ltd —Anguilla’s premier real estate brokerage firm.

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