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Home Prices in Dorado, Puerto Rico, Are Still Golden
BY ANDREA LÓPEZ CRUZADO AT MANSION GLOBAL
With more storms forecast for Puerto Rico’s tumultuous economy, one spot on the island is still sunny. Dorado has seen a 15% increase in the median asking price of its properties from 2013 through February 2016.
In fact, this luxury destination on the northern coast of the U.S. commonwealth is the only city in Puerto Rico (of the island’s 13 largest) where asking prices have increased in the last three years, according to an analysis by Point2 Homes, a real estate search portal.
Point2 Homes analyzed price activity in cities with a population of over 13,000, including San Juan, Carolina, Ponce and Fajardo. In all but Dorado, prices went down from 2013 through 2016. Ponce suffered the biggest dip, at 35%; Guaynabo, another northern location popular with high-end buyers, saw the smallest drop, at 3%.
Puerto Rico is grappling with a 10-year recession and $70 billion in debt that is crippling growth. According to the Pew Hispanic Center, more Puerto Ricans are moving to the U.S. mainland than in any period since the Great Migration after World War II.
Still, the luxury real estate market continues to flourish.
Last year, Christie’s International Real Estate identified Puerto Rico as one of seven key real estate markets for “investment, exclusivity and getaways.” Sales of $1 million-plus properties— which represent 10% of the market—grew by 105% from 2013 to 2014, according to their 2015 “Luxury Defined” report.
The company attributes Puerto Rico’s flourishing prime property market to its status as a tax haven. Four years ago, significant property and corporate income tax exemptions were enacted to attract new residents.
“Residence in Puerto Rico means a shield from most federal income taxes, and prominent investors have been catching on rapidly since the law was passed in 2012,” the report noted.
For Leticia Brunet González of Trillion Realty Group, a San Juan-based Christie’s affiliate, Dorado owes its fortunes to the lifestyle it offers: beach, golf and tennis facilities, restaurants and spas, as well as security.“Those buying there are buying a lifestyle,” she said.
An early believer in Dorado was U.S. businessman and conservationist Laurance Rockefeller, who in the late 1950s built a hotel here that quickly became popular with A-listers including Joe DiMaggio, Ava Gardner, Gerald Ford and John F. Kennedy. Today, a Ritz-Carlton Reserve sits on the former Rockefeller estate. The hotel includes three 18-hole golf courses and the historic Rockefeller Nature Trail, an open-air sanctuary.
According to Brunet González, Dorado attracts a mix of families and business people. Foreign buyers come mostly from the U.S. and include several tech entrepreneurs said to be taking advantage of the affordable luxury prices (and tax incentives). While asking prices in Dorado went up in the last three years, they are still 13% lower than in 2010, according to Point2 Homes’ data. Luxury properties are available for as little as $2 million.
Trump Golf Course Sold in Puerto Rico
Reuters – Reporting by Hilary Russ; Editing by David Gregorio
Trump International Golf Course in Puerto Rico was sold to OHorizons Global LLC for $2 million cash and the assumption of contracts, bankruptcy filings showed.
Officially called the Coco Beach Golf & Country Club S.E., the Rio Grande property is one of 17 Trump-branded golf resorts managed by The Trump Organization worldwide.
But Trump himself is neither the owner nor developer of the club, Eric Trump, Donald Trump’s son and executive vice president of The Trump Organization, said in a statement.
The golf club’s developer and owner, construction company Empresas Diaz, licensed the Trump name for the club and has been in default for many months on its obligations to Trump, due to its “financial constraints and a difficult business climate in Puerto Rico,” he said.
The Puerto Rico golf club’s bankruptcy filing listed $9.2 million of assets, including two 18-hole golf courses, a club house, and reserve funds, and $78 million of liabilities.
The Puerto Rico Tourist, Educational, Medical and Environmental Control Facilities Financing Authority issued $26.4 million of tourism revenue bonds in 2011 on behalf of the club, according to securities filings.
For information about other golf courses and residential projects for sale in the Caribbean Adam Greenfader.
Leonardo DiCaprio working with Delos to build eco resort on private island
Leonardo DiCaprio has announced that he’s opening an eco resort on his private island in Belize. The actor picked up the 104-acre Belizean island, Blackadore Caye, in 2005 for just $1.75 million.
The planned luxury resort will feature villas on a platform over the water, artificial reefs with “fish shelters” and a nursery growing marine grass to feed manatees, according to Curbed. It is expected to open in 2018.
“The main focus is to do something that will change the world,” DiCaprio told the New York Times. “I couldn’t have gone to Belize and built on an island and done something like this if it weren’t for the idea that it could be groundbreaking in the environmental movement.”
DiCaprio is working with NYC developer Delos to build 68 resort villas and 48 private houses to sell. DiCaprio owns a unit in the Delos Living building at 66 East 11th Street.
The units will cost between $5 million and $15 million. Jason McLennan, author of “The Philosophy of Sustainable Design,” has been tapped to design the project. [Curbed] – Christopher Cameron
Say Belize, please, for bargains on Caribbean luxury
By The Real Deal
Belize is an under-the-radar bargain in the market for Caribbean real estate, according to a new report by an affiliate of Christie’s International Real Estate. Christie’s affiliate Sancas Realty suggests in its report that Belize has the potential to become a leading destination for wealthy buyers of luxury villas and beachfront homes.
The report detailed several lures of luxury homes in Belize. For starters, the fixed exchange rate of the Belizean dollar against the U.S. dollar is two-to-one. Gil Castillo, president of Sancas Realty, said in the report, “American buyers can be assured that their investment in Belize real estate will continue to appreciate on pace with the U.S. dollar.” Luxury homes in Belize have an average price under $1 million. Starting prices for luxury homes in markets worldwide average $2 million, according to Christie’s, which relies on local standards to define properties as luxury homes.
Infrastructure upgrades and low property taxes in Belize also have supported the development of luxury homes there. Major air carriers have added flights to Belize from hub cities including Panama City, Panama, as well as Los Angeles and Houston.
Sancas Realty also reported that foreign nationals already account for 95 percent or more of the luxury-home purchases in Belize in beachfront locations.
Dolphin Capital Investors has launched sales for luxury villas in the Dominican Republic
By Katherine Kallergis, The Real Deal
Miami Beach-based Pierre Charalambides of Dolphin Capital Investors has launched sales for luxury villas in the Dominican Republic – and is looking to lure New York and local buyers. Charalambides, co-founder and managing partner of London-based Dolphin Capital is leading development of the 200-acre Amanera resort and villas, part of a long-term 2,400-acre project in Playa Grande. The resort, which opened at the end of November, features access to a 180-acre golf course, club house, spa and health club, restaurant and outdoor activities. The Amanera resort and villas are part of the first phase. “If the first phase does not go exactly as planned, and you have a lot of land around it, you have a lot of room for error,” Charalambides told The Real Deal.
The villas, priced from $4 million to $8 million, range from 2,400 square feet to 8,600 square feet.
Buyers will have the option of joining the hotel rental program. “We know owners [of a nearby resort] that make $600,000 to $1 million on rental villas a year,” Charalambides said. He’s sold five of 35 villas and expects to sell out within the next three years, and said the units offer a value as compared to South Florida and the Northeast. “We think the opening coincides with a great time in the market. Prices in Miami and New York are very high,” he said. Dolphin Capital, with regional offices in the South-of-Fifth neighborhood of Miami Beach, and listed on the London stock exchange, has a $150 million investment in the project. That includes about $50 million in debt. The deposit structure is 40 percent to purchase the lot and receive a title, then the remaining 60 percent in three installments. From start to finish, each villa takes about 18 to 24 months to deliver. So far, the biggest demand is from the finance industry in New York, he said. But the firm is also targeting high net-worth individuals from West Palm Beach and Miami. According to a Knight Frank wealth report released earlier this year, Miami has become a hot spot for the wealthy, and will remain among the world’s top 10 cities for the super rich through at least 2025. Underlying that is the demand for luxury properties. “Obviously, there’s less reason to leave Miami to go to Dominican Republic. [But] the more Miami prices are rising now and the more the city is becoming more and more [congested], it becomes more of an escape,” he said.
Caribbean Resorts Lure Private Equity as Banks Retreat
Bloomberg business by Ezra Fieser
Dec. 2014
Private equity companies from Bain Capital Partners LLC to billionaire Sam Zell’s Equity International were boosting investments in Caribbean resorts as the region’s traditional lenders scaled back operations.
While Canadian banks including Bank of Nova Scotia and Royal Bank of Canada shuttered some businesses in the islands, U.S.-based private equity firms have spent $329 million on hotel developments this year, the most in a decade, according to Real Capital Analytics Inc., a New York-based commercial real estate research company.
“Private equity makes for an interesting hero in this situation,” said Robi Das, managing director in the Miami office for Newmark Grubb Knight Frank, a commercial real estate company. “The traditional lenders have been hesitant to participate in the Caribbean. I wouldn’t say they’re out of the market, but the new debt that’s coming in is private equity.”
Struggling with some of the heaviest debt burdens in the world, Caribbean governments are seeking to take advantage of rebounding tourism as the U.S. economy recovers. In May, Zell led the approximately $500 million purchase of Decameron Hotels & Resorts, which operates in countries including Jamaica and Colombia. Now, Cuba provides a new opportunity as U.S. tourists prepare to take advantage of an easing in travel restrictions.
“The Cuba story is huge, no question,” Das said.
While investors wait and see what financial safeguards will be put in place, U.S. hotel chains including Marriott International Inc. and Hilton Worldwide Holdings Inc. said they are interested in the Cuban market or monitoring developments there.
Closing Branches
As part of a larger international pullback, Toronto-based Scotiabank on Nov. 4 said it would close 35 branches in the Caribbean and take C$109 million ($94 million) in losses related to three Caribbean hotel development loans.
Those cuts followed Royal Bank’s sale of its Jamaica operations and Canadian Imperial Bank of Commerce’s May announcement of C$123 million in losses and a C$420 million goodwill impairment charge on CIBC FirstCaribbean International Bank. Royal Bank said on Nov. 21 that it would shutter its wealth management business in the Caribbean.
Scotiabank, which is weighing a sale of its Puerto Rican banking unit, will continue to implement “operational efficiency initiatives,” spokesman Marcelo Gomez-Wiuckstern said in a Dec. 11 e-mail. CIBC had no comment, spokesman Kevin Dove said via e-mail.
Luxury Development
Cuba’s opening to more U.S. tourists may change that trend. Five decades after closing operations in the communist country, Royal Bank’s Chief Executive Officer David McKay said Canada’s second-largest lender by assets is evaluating a return to the island.
“We see a very attractive, long-term marketplace in Cuba,” McKay, said in an interview last week in Toronto.
Traditionally the dominant lenders in the region, banks were stung by a drop in tourism and falling revenue for hotels in the wake of the global financial crisis. Tourist arrivals fell by 3.6 percent in 2009 to 22.1 million, the fewest since 2005, according to the Caribbean Tourism Organization. Revenue-per-available room for Caribbean hotels, a key measure of the sector’s health, fell 7 percent in 2008 and about 16.6 percent the following year, according to Smith Travel Research.
Macao Beach
The downturn ensnared projects such as Roco Ki, envisioned as a luxury development with four golf courses, a Westin hotel and $3 million estates built on a 2,500-acre (1,011-hectare) bluff above Macao Beach on the Dominican Republic’s east coast. The development said it received $85 million in loans from Scotiabank and the European Investment Bank. Construction stopped in 2008, leaving shells of buildings on a bluff overlooking the sea.
Calls to the lead developer, Macao Beach Resort Inc., went unanswered. Press officials at Westin owner Starwood Hotel & Resorts Worldwide Inc. did not respond to calls and e-mails by Bloomberg News seeking comment.
“The traditional lenders have been very, very slow, to return to the market, particularly for new construction,” said Parris E. Jordan, managing director at HVS Caribbean, a hotel consultancy that evaluates projects.
While the regional economy has rebounded, growth remains uneven. The economies of the Spanish-speaking Caribbean are forecast to expand by 4.1 percent next year, compared with 2.2 percent in the English-speaking countries, according to the United Nations. Vulnerable to hurricanes and earthquakes, Caribbean nations have an average debt-to-GDP ratio of nearly 80 percent, according to the UN.
25 Million
More than 25 million visitors are expected to visit the Caribbean this year, according to the region’s tourism organization. Jamaica Tourism Minister Wykeham McNeill said Nov. 29 that more than $300 million in hotel investment is helping boost an economy that is expected to grow by 1 percent or less this year. Fitch Ratings on Nov. 21 raised the Dominican Republic’s credit rating, citing the strength of the tourism market in the Caribbean’s largest economy.
Private equity firms are entering the market largely through joint ventures with hotel operators, including Marriott and Hyatt Hotels Corp.
“Our goal is to have 150 hotels open by the end of 2017 and the Caribbean plays a large part in that development story,” said Craig S. Smith, Marriott’s president for Latin America and the Caribbean.
For investors, working with the established hoteliers is “a shorter trip to the cash register than building new,” said William Sipple, managing director at Denver-based HVS Capital Corp, which consults on Caribbean hotel purchases.
Billionaire Sale
At least three such joint ventures bid on Occidental Hotels & Resorts’ portfolio of hotels, being sold by Amancio Ortega, the billionaire owner of the Zara clothing-chain, and Banco Bilbao Vizcaya Argentaria SA, Spain’s second-largest bank.
Caribbean Property Group LLC, a New York-based private equity company, and Spanish hotel operator Grupo Barcelo plan to resume discussions in the coming weeks with Occidental for a deal that could be valued at $625 million, said a person with knowledge of the talks who asked not to be identified because the talks are private.
“The attraction is that this type of capital can help position you to grow,” said Javier Coll, chief strategy officer of Apple Leisure Group, a travel company that manages 37 resorts, including seven in the Dominican Republic and two in Jamaica’s Montego Bay. Apple Leisure last year sold an undisclosed equity stake in its operations to Bain Capital.
Virgin Islands
The company’s hotel management subsidiary AMResorts has since opened all-inclusive resorts in the Mexican Riviera and new markets, including the U.S. Virgin Islands.
“The demand from visitors is there,” Coll said.
Caribbean all-inclusive resorts have evolved from their yesteryear image of cramped rooms, crowded pools and long buffet lines, said Ryan Cotton, a Bain Capital principal who led the investment in Apple.
“More and more passengers are going to come to four- and five-star American-centric” resorts, Cotton said in a Dec. 15 telephone interview. “So it’s a perfect time for transacting. We’re pretty compelled by that.”
Growth in the Caribbean has also brought investment from China, which is offering cheap loans, construction services and equity investments in hotel developments.
In the Bahamas, Chinese firms provided a $2.6 billion construction loan, $150 million in equity and about 4,000 workers to develop the 1,000-acre Baha Mar resort, the largest single development in the history of the Caribbean. That project, delayed by six months, is expected to open early next year.
Daniel Liu, senior vice president at China Construction America, Inc., which is building Baha Mar, said the company expects to expand throughout the region. The company, a wholly owned subsidiary of China State Construction Engineering Corp., is targeting projects of $100 million or more, he said at a conference in Punta Cana, Dominican Republic last month.
“We are really pushing ourselves in the Caribbean,” Liu said. “We’re going to be a driving force, I’m very sure about that, in the Caribbean market.”