Dominica: the real estate option revived for investors

Every Caribbean programme offers a contribution to a public fund, which is lost for good, and an approved real estate investment, in principle recoverable on resale.

Dominica requires about $200,000¹ for the contribution. Antigua and Barbuda sets its real estate option at from $260,000², Grenada at from $270,000³, Saint Lucia at from $300,000⁴ and Saint Kitts and Nevis at from $325,000⁵.

The real estate option is therefore always more expensive than the contribution, by a margin that corresponds to the theoretical value of the asset recovered.

The reasoning is simple: you pay more, but you keep a property. The question is what that property will be worth at the time of resale, and who will buy it.

A third route exists in some programmes: subscribing to government bonds, offered notably by Saint Lucia. It is just as recoverable as real estate, without exposure to the local market, but it introduces sovereign risk.

These three options are therefore compared on the same grid: what you lose for good, what you tie up, and what you risk not getting back.

Eligible properties belong to approved projects, generally hotel or residential developments built for this market. They are not aimed at local buyers.

Their secondary market therefore consists mainly of other applicants to the same scheme. The property's liquidity depends directly on how attractive the programme is.

A minimum holding period is also imposed before any resale, which ties up the capital for several years.

We do not publish the holding periods imposed by each programme, resale costs or secondary market data: they do not appear in the official sources we have been able to verify, and no public statistics document these resales.

This lack of data is a signal in itself. A market whose liquidity cannot be measured should be treated as illiquid.

The correct comparison is not between face amounts. It concerns opportunity cost: capital tied up for several years without a return costs the return you forgo.

To this cost must be added a probable resale discount, which the absence of a documented secondary market makes hard to estimate — and therefore to rule out.

The calculation is therefore as follows: the contribution lost on one side; on the other, the return lost on the capital tied up, plus the expected discount, plus resale costs.

Depending on the assumptions made about the discount, either option may come out ahead. What is certain is that the real estate option is not free simply because it is recoverable.

Ancillary costs, finally, are the same in both cases: non-refundable due diligence — $10,000⁶ for the main applicant in Saint Kitts and Nevis — and unregulated agent fees.

A shrewd investor will therefore ask the question differently: would they buy this property if no passport came with it? If the answer is no, it is not an investment but a disguised contribution, and the calculation must be redone on that basis.

• A passport does not move your tax residency: that requires actually going to live there.
• These states do not have zero taxation: Dominica taxes income at up to 35%⁷.
• Visa-free access depends on decisions by third countries, and it has already been withdrawn from Vanuatu.
• Due diligence fees are not refundable if the application is refused.
• For a French national, the mobility gain is nil compared with about 145⁸ destinations.

Finally, it should be remembered that these islands are highly exposed to hurricane risk. Dominica was hit hard by Hurricane Maria in 2017, and reconstruction absorbed a significant share of the programme's revenue. A property acquired under this framework therefore carries, on top of market risk, a physical risk that is expensive to insure.