St Martin St Maarten Real Estate

View from Lay Bay toward Saba

St Maarten is one of the most diverse and interesting destinations in the Caribbean. The island is widely considered to be the gourmet food and sailing capitol of the Caribbean Sea. It also has the distinction of being the smallest body of land in the world to be controlled by two different countries: France (a sub-prefecture of Guadeloupe) and the Netherlands (part of the Netherlands Antilles with Curacao, Bonaire, Saba and St Eustatius) [Editor’s note: there has been some effort and considerable speculation that Dutch Sint Maarten will gain “status aparte” distinction, like Aruba, and become more of an independent state soon]. It is, probably, this split personality that makes St Maarten one of the most desirable places to retire or own a second home or rental property. This also happens to be the reason for the varied spelling of its name – Sint Maarten on the Dutch side and Saint Martin on the French side. There are no checkpoints, tolls or borders between the sides and passage is unencumbered. Each side clearly has its own personality – the Dutch being more touristy and developed and the French side being more, well, French. The Dutch side has the cruise ship port, casinos and touristy bars and shops, while the French side has more of the island’s fine dining, duty-free shopping and secluded beaches. English is spoken almost universally here, though more so on the Dutch side. Marigot is the capitol of the French side and Philipsburg the capitol of the Dutch side - also, the primary cruise ship port.

Population estimates are around 41,000 on the Dutch side and 36,000 on the French side. The official currency on the Dutch side is the Netherlands Antillean Guilder (Naf) and on the French side, the Euro. As an accommodation to practicality, US dollars are accepted everywhere throughout the island and most prices are listed both ways or in US dollars only. The country dialing codes are: 599 Dutch side and 590 French side. The time zone is Greenwich meantime minus 4 (the same time zone as eastern time in the US) and they are on the metric system. Starting in 2007, travelers from the US are required to hold a valid passport to travel to St Maarten and – officially - all entrants are required to show a round-trip ticket or onward passage to another destination, for entry. A very appealing feature of Sint Maarten is the region’s largest airport (originally built by America during the second World War) – Juliana Airport (located on the Dutch side), which recently completed a huge renovation and now boasts the finest air terminal in the region and a longer runway. Direct flights are available to/from: Atlanta (three hours flying), Miami (one hour flying), Charlotte, New York (three to four hours flying), Philadelphia and Chicago in the US; Toronto (and occasional charters from other cities) in Canada and Amsterdam and Paris in Europe. Flight schedules tend to change seasonally and frequently. In addition to the long-haul routes, there are also regional flights to San Juan, Jamaica, and 12 other nearby islands. The island is often referred to as “SXM,” which also happens to be the airport code.

The average daily high is around 80-91 degrees Fahrenheit (27-33 degrees Celsius), year-round and water temperatures remain fairly steady and warm. Driest months are typically from February to April, though the island rarely receives more than moderate rains (roughly 45” per year)… and yes, hurricanes are possible.

Demographically, SXM is very interesting because of the large number of expatriates who have settled-in from around the world. It is quite common to have new acquaintances over for drinks, who will then return the favor. Like most islands, the vibe is extremely laid-back and most things move slowly (as a prospective developer, this should be noted with emphasis).

St Maarten is located in the middle of the Antilles Islands, roughly 150 miles (240km) east of Puerto Rico. The Virgin Islands (US and British) lie to the west and the majority of smaller Caribbean islands lie 20-300 miles (30-500 km) to the south, southeast and southwest. Neighboring islands are the sparsely populated: Saba, Anguilla and St Eustatius as well as the trendy, popular and wildly expensive St Barth’s.

Sint Maarten is a very attractive place to invest in real estate for many of the obvious reasons mentioned above: the weather, gorgeous Caribbean Sea, sailing/boating, great airport, recreational opportunities, regional and European travel possibilities, gourmet dining, interesting character of the bifurcated nation and the like. The island is the site of many sailing regattas and is fast becoming a major mega-yacht port for the same reason that boaters of all stripes have been drawn to it for decades - its central location in the Sea and large, protected Simpson Bay Lagoon anchorage. SXM also plays host to culinary events, cultural festivals and has millions of annual tourist visits from around the world – via the airport and the busy cruise ship terminal. All of this attention and visitation creates strong recognition and demand for secondary residences and retirement homes. As an individual, non-resident, about the only requirement to buy on St Maarten is to present your passport to the notary. If buying under a company name, evidence of filings of your company/corporation and its good standing are required. Local banks can establish both personal and business accounts and monies can be freely moved from one country to another, with few limitations.

Waterfront and water-view properties often sell at a significant discount to most popular US destinations. This little cluster of islands - which includes Saba (to the south), Anguilla (to the north), St Eustatius (to the southwest) and St Barth’s (to the east) - is very appealing, in general, but varies greatly in terms of prospective investment. Anguilla (British) is flat, virtually featureless, involves a ferry to get to and from, is sparsely developed and is procedurally more involved to buy on. Saba and St Eustatius (both Dutch islands) are sparsely developed and populated (Saba has 1,500 and St Eustatius or Statia approximately 2,500 inhabitants) and don’t have the beaches, culture or other options (including, again, ease of access) of St Maarten. For most investors - unless you are looking for a secluded home away from the bustle of a tourist area and prefer more pristine eco-systems to gorgeous beaches, St Maarten will be the most appealing of these options. St Barth’s (a.k.a. St Bart, Saint Barthelemy), a French prefect, is very trendy and appealing in its own way - something of a “St Tropez” of the Caribbean jet-set, but costs are dramatically higher for access, service and property. We believe this leaves SXM as the most appealing in the group for the majority of investment options.

As a prospective investor, you will want to inquire into the obvious areas of price, quality, location, type of residences available and the like, but the differences in styles of government from the French to the Dutch sides demand further inquiry into the separate and distinct development and ownership regulations of each side.

At first glance, the Dutch side is, generally speaking, considerably more attractive for most value-investors and, for that reason, we will concentrate more on that side. The reasons for the Dutch side’s appeal are primarily favorable tax status and zoning/permitting restrictions. On the Dutch side, there is a one-time transfer tax of approximately 4%, plus civil law notary fee (total fees around 6%), but there are NO property/land taxes and, further, there are NO capital gains taxes paid on profits made from the sale of properties, here to the local government. In contrast, on the French side, the transfer tax and notaire fees are roughly 9-11%, there are property taxes (which are difficult to estimate but should be between 1-3% annually) and there is a capital gains tax of 33 ½% payable to the French government on any profits from resale. Obviously, those costs have to be factored in to any investment. Additionally, while the Dutch side has few restrictions on the ownership of raw land, the French side will typically involve a requirement of development within 6 months of purchase or additional taxes will apply. This can be a considerable burden to a buy-and-hold land investor or developer buying into a bad cycle, financing negotiations or the like. With all of this in mind, the French side has some extremely attractive properties and is far less developed than the Dutch, primarily for just these reasons. There is more raw land available, less development in general and prices are often discounted. A contrarian investor might do very well taking advantage of the apparent handicaps to investing on the French side.

A quick note on golf: there is only one course on the island and it has fallen into great dis-repair. There is a new Greg Norman/Troon-managed golf course on neighboring Anguilla, a short boat/ferry ride to the North.

For investors thinking of renting-out their property either full or part-time, room taxes do apply. They are typically integrated into rental contracts and then made payable to whichever government controls the side of the island the property lies on. High season is generally December through April, when rates are considerably higher and vacancy rates much lower. Properties typically discount their rates during the low season of May-November. Rental pools for condominiums and some villa management programs vary widely in terms of fees, rent-sharing with other units in a development and the like. If unit rental is contemplated as part of your buying decision (e.g., you are hoping to offset your mortgage, taxes, insurance, HOA and other expenses with rental income), we recommend you look CAREFULLY into these fees, costs and special conditions as they will make a dramatic difference. By way of example, one developer's standard rental "pool" would treat a unit that rented for 2 weeks the same as one that rented for 50 weeks. Each would share equally in proceeds and costs to replace worn-out furnishings. NOT an appealing prospect.

Ownership is either fee simple (as in most of the US) or long lease – either government or private. Deeds are registered by the notary/notaire and title insurance is not a factor as the notary guarantees the transfer and verifies ownership. A side note on utilities: all modern amenities, including some form of high-speed internet access and wireless phones are available in most areas (except in some of the more remote or undeveloped portions of the island). Typically, a substantial deposit is required for service for non-residents - expect somewhere between $1-3,000 US to establish service. They did this because of difficulties in getting non-residents to pay bills. The deposit is typically transferred upon the sale of the residence.

Most desirable areas seem to be on the east and west sides of the island. The west side, for example Cupecoy Beach and the Dutch Lowlands, has been quite pricey for some time and the east side – Dawn Beach, Oyster Bay and Guana Beach and such – has been coming on strong, of late. Tourist infrastructure - like shopping and restaurants - has yet to catch-up on the east side, but several large developments - including the large Westin development at Dawn Beach, which recently began operation - will change things dramatically. These areas tend to have great views of St Bart's the very expensive and trendy neighboring island to the east. The Simpson Bay Lagoon area (south central) is a bustling tourist area where all things marine are based – sailing, scuba, motor-yachts, etc.. It is also close to the airport and areas like Maho and Cupecoy Beaches and other west end beaches and attractions on the Dutch side. Beware the noise from inbound aircraft in the Maho Beach area (there are amusing postcards showing large jets coming over the beach itself at perhaps 100' as they approach the runway just behind the beach). Areas to the south of the island and east of Simpson Bay through to the capital of Philipsburg and beyond tend to be more hilly, less developed and far less touristy. If you are looking for a quieter, second-home type setting, these may be more appealing. For the most part, you seem to get a bit more for your money, as one would expect. The majority of the villas on the Dutch side appear to be on the hillside overlooking Simpson Bay Lagoon (Cole Bay area) or Great Bay/Philipsburg to the south and southeast.

There is quite a variety here, though there are few crowded areas on this, larger side of the island. Marigot is the Capital of the French side, located at the northeastern tip of Simpson Bay Lagoon and roughly the center of the island. There are numerous bays close to town, many with stunning beachfront locations. The other bustling area is the tourist/beach area around Orient Beach on the east/northeast side of SXM. The largest resorts, most well-known and frequented beach and the most tourist amenities on the French side are found here. The other notable area of the French side is Grand Case, which is considered to be the gourmet food capital of the Caribbean. Various bays and beaches abound from Long Bay to the west clockwise around the island to the north all the way around to Oyster Pond and the Dutch side to the east. Lots tend to be larger and far more sparsely developed throughout the French side.

***OUTDOOR LIVING NOTE – when selecting a property, particular emphasis should be placed on decks, terraces, balconies, hammocks and pool areas or the like, as meals, tea, reading, sunning, etc. are commonly taken there. Most expatriates spend a tremendous amount of their time in SXM enjoying the outdoor portion of their homes. Cooling trade winds and near constant 80 degree days make sitting outside a particularly delightful experience. People tend to congregate in their outdoor spaces to eat breakfast, read the paper and tend to do most of their entertaining in their outdoor space. This is not unlike how lanais are used in the Hawaiian islands. It is quite common to meet people (e.g., other ex-pats) while out at dinner and end-up fast friends hanging-out on each others' patios or pool decks having drinks later the same evening. This tends to be the way the "social scene" works in SXM. While in the US, for example, kitchens, bathrooms and master suites/closets are some of the largest selling points, in the islands, this outdoor space is prized and, consequently, valued most of all. An interesting trend here has rooftops of mid-rise condominiums being sold as additional space for sundecks, bars, barbecue areas and the like. ***

Dutch side – Lots are typically smaller with anything larger than an acre going toward commercial development or multiple dwelling unit (e.g., condo development). Lot prices can be $50-150,000 for a quarter to half acre (1-2,000 m2) inland or near Philipsburg to $500,000-1,000,000 for a quarter to full acre (1-4,000 m2) in desirable parts of the east or west coasts. There is rarely any availability in the Dutch Lowlands area on the far west part of the island, though some hillside lots on the east of Simpson Bay Lagoon offer views over the whole west side of the island. Typical island rules of - the further away from the water, the cheaper it gets – operate in SXM, as well.

Four-tenths acre (1,627 m2) lot near Philipsburg in planned community with all utility access - $150,000 asking.

French side – Lots range widely in size and price. Prices are typically in Euros and, therefore, subject to fluctuations in valuation against the US dollar. There are far more beachfront home locations available, particularly those that have yet to be developed on this side. Fewer lots seem to be available at any given time, largely due to steadily low demand and the onerous building restrictions, which make it very expensive to sit-on undeveloped property once purchased.

Two and a half acres in Terres Basses (10,100 m2) under contract for $800,000 US.

Income to be generated from vacation villa rentals from investment properties or while not in use by the part-time owner ranges widely. During high season – December to April, villas may rent from $1-12,000/week depending on location, amenities and the like. During the remainder of the year, rentals will be 20-40% lower on average. Of course, you will have to factor-in a management company’s fees for checking guests in and out, maid service, maintenance and the like (fees seem to be about 20-40% also, depending on who you ask and what services they provide), unless you plan on managing the property yourself. Proximity to beaches (particularly the well-known ones), prime restaurant areas (e.g., Grand Case or Simpson Bay), casinos or the like obviously enhance rental potential. Amenities, such as pools, larger decks, better panoramic views or direct sea views raise costs and rental potential as expected.

1,500 s.f. (approx.) - Three-bedroom, one and one-half bath villa in Little Bay (just west of Philipsburg) without pool and with views of the lagoon, asking $275,000 US.

2,900 s.f. - Five-bedroom, four-bath villa (3/2 with two 1BR studios) located in Almond Bay with views over Simpson Bay Lagoon, asking $575,000 US.

2,000 s.f. - Three-bedroom, two-bath villa directly on the beach in Pelican Key, asking $750,000 US.

1,400 s.f. - Three-bedroom, two and one-half bath villa with pool, built in 2005 and over-looking Orient Beach asking $715,000 US.

4,200 s.f. - Five-bedroom, three and one-half bath with pool, built in early 1990s, asking $1.2m US.

Much like land and villas, the size, location and amenities of condominiums/apartments varies greatly. There has been a trend over the last few years to do the same sort of tear-down of existing single-family structures on beaches and replacement with multi-dwelling unit (MDU) structures we have seen in the US. The value of land seems to draw the developers, who tend to primarily construct US beachfront style condominiums. Developers from the US and other locales have been building-up the east and west Dutch sides rapidly since about 2000. Many of these newer developments (e.g., the Rainbow Beach Club, Aquamarina, Dawn Beach, Aquarius, etc.) are mirror images of their US counterparts. They typically come fully furnished (option to discount the purchase price and furnish yourself), including all appliances, finishes, linens, etc. and are turn-key ready. Most seem to trend toward high-end finishes - European appliances, granite countertops, Italian tile and marble throughout bathrooms, etc.. They usually have on-site management and security, some services and all the usual resort amenities - pool(s), sun decks, some tennis courts, and the like (see note above regarding golf, if that is a significant factor).

Bluemarine (pre-construction) - mostly one-bedroom units with views of Simpson Bay Lagoon, Maho Beach area, from $185-300,000s US.

Aquarius (pre-construction, 2-3 stories) - 1BR, 2BR and Villas, Red Pond Estates in Guana Bay area, from $380k to $2.4 million US.

Barbaron Palm Beach (pre-construction, nine stories) - One-bedroom, one and one-half bath to two-bedroom, two and one-half bath units in the Belair area (between Simpson Bay and Philipsburg in the south, from $330-600,000 US.

Rainbow Beach Club - 2BR/2BA units on Cupecoy Beach (most face the Caribbean, some have oblique views) on the west end near Maho Bay and the "golf course", asking from $400k for non-view 1,000 s.f. to $600,000+ for 1,400 s.f. Caribbean-front.

Three bedroom, one and one-half bathroom in French Oyster Pond, asking $327,000 in US Dollars.

1,300 s.f. - Two bedroom, two bath in Grand Case, asking $787,000 in US Dollars.