Who wouldn’t want to embark on a permanent vacation? No, not that kind–we’re talking about living in paradise, permanently. Year-round perfect weather, beautiful beaches, exciting local culture and clear waters don’t have to be a thing for just a few weeks out of the year if you decide to live where you vacation.
While it’s no secret that most markets took a massive hit during the Great Recession, many have been on the rebound and are now hotter than ever thanks to a boost from an uptick in tourism and consumer confidence, as well as a leveling off of luxury home resale prices. Adding fuel to the fire are political changes in Europe and the United States, which have resulted in an exceptionally strong dollar, meaning buyers’ purchasing power has never been better. We think there’s no better time to pack up and head south for at least the winter, if not longer. Here are our picks for hottest real estate markets in paradise.
The Bahamas, while a segmented market depending on which island you buy, is a real estate climate that wasn’t hit too badly by the global downturn. While sales slowed down, they didn’t altogether drop and since 2013, home prices have been growing 5-10% a year in the most desirable neighborhoods and islands. Overall, prices for luxury single-family residences range from $500-$1,500 per square-foot, with the lower threshold for luxury homes coming in at around $1 million.
Golfers and sailors alike call this archipelago home, and anyone who spends more than $500,000 is eligible for permanent residency while buyers of homes north of $1.5 million qualify for an expedited application. Foreigners have access to mortgages and can own property without restriction in the Bahamas. It pays to become a permanent resident: they don’t pay income or estate taxes. Because of this, most luxury properties in the Bahamas are owned by foreigners. A particular hot spot is February Point on Great Exuma, owing to its well-established and accessible island community, rumored to be home to more than two dozen of the world’s billionaires. Also bolstering the market is the development at Baha Mar, which is almost complete and features a Jack Nicklaus-designed golf course, among many other amenities.
Cabo San Lucas
The southernmost tip of the Baja peninsula is a must-consider for anyone who loves fishing, golf or simply living the good life, Mexican-style. With easy access to the west coast of the United States, as well as New York, real estate in Los Cabos has only been heating up as years pass. People love Cabo for its dry, warm weather year-round and the near-endless range of outdoor activities that exist, which range from hiking to diving and everything in-between.
The numbers say it all. In summer 2015, which includes June, July and August, 42 homes sold in Cabo San Lucas, according to the MLS. In the same period in 2016, 75 homes sold–almost double the previous year. In particular, gated communities seem to be a strong go-to, with single-family homes that almost always have swimming pools and come fully equipped with golf course and other luxury amenities. The bankruptcy and short sale climate remains thin, seeing as most home purchases are made from solid assets like IRAs, 401ks and cash sales. Better yet, there’s a wide range of options to choose from, with everything Cabo San Lucas, nearby San Jose del Cabo and the entire coast in-between seeing near-record high growth.
The Cayman Islands, long disregarded as just a tax haven, has property investors flocking to its shores for a more permanent kind of visit. We love it, in particular, for its exciting food scene, diving culture and miles of pristine beaches. The main island of Grand Cayman has about 58,000 full-time residents and is the largest of the three Cayman Islands–the smaller are known mostly for playing home base for diving enthusiasts. With a typical island economy, the Caymans were slower to recover from the housing crisis than other points further north, meaning the turnaround began around 2013, in earnest. Since then, inventory has fallen, the airport has expanded, hotels have sprung up and both visitors and buyers alike have been making their way, mostly to Grand Cayman.
The main island has seen steady growth in new construction, with luxury condominiums leading the charge. The famed, coral sand Seven Mile Beach commands the highest prices where, according to the Global Property Guide, prices can fetch up to $1,300/square foot. With growth concentrated there and in George Town’s Garden, Coco, Mystic and Sunset Retreat, there is plenty of room for buoyancy as growth picks up on other parts of the island.
All the destinations on our list are beautiful for one reason or another, but Costa Rica may be at the top that list. With over 70% of the country preserved as protected lands and national forests, you’ll have no shortage of outdoor wonders to enjoy. After a few years of lingering lulls caused by a hangover from the Great Recession, Costa Rica’s real estate market is back. But, that also means nice properties here are hot—and only getting hotter, especially with luxury properties. Costa Rica’s higher-end property markets in Guanacaste and the Central Coast continue to grow as foreign buyers continue to flock here hoping to find a slice of paradise at or near the bottom of the market. But, according to Mark Peterson of Palms Realty Costa Rica, if you want a vacation home in Costa Rica, 2017 might be your best chance for a “deal.”
According to Mr. Peterson, “Our market lags a few years behind North America, so there were a few slower than normal years. Since 2015, things have started to heat up again on the luxury and investment side. We expect pricing to begin to rise later in 2017 and well into 2018.”
Costa Rica has proven attractive not only because of great weather, recreation and all its natural beauty, but because of open investment and trade policies—as well as for being the most politically stable country in Latin America – make it highly attractive for foreign buyers – Mark Peterson, Palms Realty Costa Rica
There are no restrictions on foreign buyers in Costa Rica, meaning this Central American jewel is ripe for investing and owning a vacation home.
Real estate-wise, the Dominican Republic is moving away from package tourism and having its moment. An island with something for everyone, those looking for world-class surfing, windsurfing, perfect beaches and a vibrant local culture will find a happy home in this Spanish-speaking country that is well-connected to the United States with many daily flights from three cities with international airports. Luxury property transactions increased by 10% in 2015 and net rental yields are as high as 10% annually in some areas. The highest priced home in the country is listed at $25 million, and luxury homes are generally priced between $100-$450/square-foot.
We are not only seeing an increase in the Real Estate market, but we see an increase everywhere. Cruise ships arriving. New excursions, Restaurants, Spa’s etc. but definitely also very unique amenities like Los Establos and Scape Park. Personally I would say, people trust the market again. – Roos Voermans, Classical Realty, Cap Cana
Like Turks & Caicos, there are no restrictions on foreigners buying property in the Dominican Republic. There are other incentives, too. Pension income from foreign sources is tax-free, foreign buyers receive a 50% exemption from property tax, payment of dividends and interest is tax-exempt whether generated in-country or overseas, mortgage tax is 50% exempt for foreign buyers and developers are relieved of all national and municipal taxes for ten years, including transfer of ownership to the first purchaser of a property. To buy, would-be homeowners are looking at the capital, Santo Domingo as well as the beautiful Atlantic coastal towns of Sosua and Cabarete, as well as the Samana peninsula and Puerto Plata.
San Miguel de Allende
Mexico’s creative haven is seeing another kind of boom, this time in real estate. A strong expatriate community, well-connected flights to the United States out of Guanajuato, a beautiful colonial city coupled with a growing Mexican economy and an affordable peso have made this artist colony a destination for many seeking good times and pleasant weather while being in the mountains, instead of the beach. After a 20-30% drop in home prices falling the market crash in 2008, this recovery is a breath of fresh air, especially as more and more properties north of $1 million are added to the market. Gabriel Rubiera, president of AMPI (Asociacion Mexicana de Profesionales Inmobiliarios), the Mexican Association of Real Estate Professionals said more properties were sold in 2015 than in the previous four years combined, and that 2016 is likely to have done better.
Prices are also bolstered by a strong interest within Mexico too, as its proximity to Mexico City means many wealthy families have decamped here for their second homes. Overall, American buyers make up 60% of all sales, while the other 40% is split evenly between Canadians and Mexicans. Real estate in San Miguel de Allende offers a world of possibilities for investors: the classic idea in this town is secrecy. A simple colonial facade often belies sprawling, stunning properties behind their walls with original stonework, carved wooden doors and ornate courtyards. What could be better for discrete, discerning home buyers?
Turks & Caicos
The idyllic coral atoll of Turks & Caicos has been seeing steady real estate growth over the last several years, up from when it was caught in the throes of the Great Recession and saw home prices drop around 18%. Unlike other islands, however, the market recovered beginning in 2010 and has seen steady, significant growth ever since. Buyers come here for seclusion, whether in the less-populated regions of Providenciales or other, smaller islands, its sugar-sand beaches and its continuous coral barrier reef, which is the third largest on the planet.
Overall, 2015 real estate prices rose 17.2% in 2015 to a median home prices of $826,727, according to Sotheby’s International Realty. Villa prices rose by 7.8% and land prices by 84% in the same time period. Grace Bay commands some of the highest prices, with owners forking over $300,000 for a studio apartment to over $10 million for a penthouse condominium. Fueling this is the nation’s lack of restrictions on foreign property ownership along with no requirements to develop land within any amount of time. Adding to the benefits, property owners don’t continue to pay taxes, but rather pay a one-time stamp duty payable to the Turks & Caicos government. We say buy up and build away!
By Jackie Bryant