Saint Barth’s Real Estate market

Overview

This arid, volcanic rock of just eight square miles is home to an eclectic mix of iguanas, night-blooming cactus, and fabulous beaches as well as luxury yachts, designer boutiques, and celebrities… Peopled primarily by descendents of the original French settlers and transplanted Europeans, this is an island with a strong, independent personality. The language, cuisine and culture are definitely Creole & French.

Its scenic capital Gustavia, which is also the main harbor to the island, welcomes large yachts, sailboats and some well-known boat races.

Saint Barth’s certainly features some of the most beautiful white sand beaches of the Caribbean islands and offers a very high quality of services in its hotels and villas. Total security & privacy, conveniently located just a stone’s throw from the US, makes this unpretentious chic island the perfect gateway for Americans.

Real Estate Market

St Barths is a luxury market drawing visitors from all over the world. Most property buyers are people experiencing an emotional bond for the island, after one or more stays. The villa rental market is extremely active from November to mid-August and is a large as a share of the overall lodging capacity on the island. Such villa experiences lead a number of guests to own their own villa. As an essential support , restaurants, in-villa private chef, spas, water activities centers… allow Saint Barth’s to gain a reputation of excellence. As such, one could identify lifestyle as a key motivator.

In the current environment, most foreign buyers are looking for a holiday villa, or a parcel of land to develop, and they consequently pay attention to the required ingredients – great views, privacy, accessibility - for such project to be successful. If purchased at the right price, the St Barths property is commonly viewed as a safe and enjoyable asset, able to maintain its value throughout the turbulent times in the markets.

The procedure of purchasing real estate in St Barth is the same as in France. A preliminary contract is generally drawn by a French notary with a 10% deposit held in escrow by the latter, and the closing is generally scheduled about three months later. If there are any precedent conditions, such as securing a building permit or a mortgage, the delay can be extended pending agreement between the parties. A faculty of substitution, allowing the buyer to substitute an entity at no cost before the closing, is usually included.

The deed of sale must be prepared and formalized by a French notary, who is responsible for doing the due diligence work between the contract and the closing. He is also responsible for the payment of any taxes owed to the government in relationship with the sale, for clearing the right of first refusal by the Island Council, and later for filing the deed with the relevant government office. This office “Conservation des Hypothèques” or Mortgage Registry, together with the “Service du Cadastre” or Land Registry, keep the formal ownership records updated. Ownership type is freehold, unlimited in time.

The local St Barths Tax Code is the one applied if a property is located on the island. There are no yearly property taxes. Upon purchase, the one-time transfer tax is currently around 6% of the property sale price which includes all related taxes and notary fees. In case of capital gain at the time of a sale, there is a capital gain tax to be settled with the local government. While such tax rate is currently 25%, it is important to point out that a discount is in effect, increasing over time according to the years of ownership. For a holiday residence, as an example, there are no more capital gain taxes after 15 years of ownership.