Investing in Ambergris Caye Belize Real Estate
In regards to investment, Belize is unique as it is both Central America & the Caribbean, the mainland including San Ignacio & Placencia has more similarities to the Yucatan Peninsula (Cancun, Playa Del Carmen, Tulum, etc), while Ambergris Caye Real Estate is more comparable to the Cayman Islands, The Bahamas, British Virgin Islands, Etc. The fact Ambergris Caye is an island, there is far more scarcity of property than being on the mainland in destinations like Placencia. As a real estate investor, scarcity works to your advantage for both rental income and property appreciation. The fact that Ambergris Caye is one of the few opportunities with high tourism growth and land available, makes it a unique opportunity in today’s market.
Why Ambergris Caye Belize?
Ambergris Caye is the largest island in Belize measuring 27 miles long. Ambergris Caye is located at the northern point of Belize’s coastline with the Belize barrier reef just off the east Coast. Ambergris Caye is the top tourist destination in Belize and sees hundreds of thousands of tourists visit every year. There are a number of reasons Ambergris Caye and San Pedro Town are so popular, but the leading reason is the fact that less than a mile off Ambergris Caye’s eastern shore, you’ll find the Belize Barrier Reef, the largest barrier reef in the second largest reef in the world and the largest barrier reef in the Western Hemisphere. The natural beauty of Ambergris Caye and the fact that the island has seen drastic increases in tourism every year make it the no-brainer choice when investing in Belize.
Ambergris Caye luckily has something we like to call “Island Economics”. When investing in an island there is only so much land available. The limitations on available land create scarcity, not only scarcity of property but also a scarcity of land and completed resale homes. There is only so much land on an island. Island economics means that you see greater property appreciation on an island due to scarcity of property and limitations on how much can be built.
Areas and destinations along the Yucatan Peninsula or other areas with nearly endless developable land eventually have an over-supply that is caused by the fact there is nearly unlimited room for development. Investors rarely see the same equity appreciation they see when they invest on an island. One of the difficulties of investing in a property that has nearly endless room for growth is the fact that developers continue to build, so real estate investors don’t see the same level of appreciation that they see on an island, where the availability of land is limited.
This is basic economics, Ambergris Caye has higher demand and less supply. Mainland destinations in Central America have less demand and nearly unlimited supply. On Ambergris Caye, you have far more amenities (with the reef 400 yards off the coast), with beaches on the East & West Coast.
The reason so many investors choose Ambergris Caye over mainland Belize destinations is largely due to the growth and investment potential. Ambergris Caye is the #1 tourist destination in Belize by a large margin. It also delivers the highest Average Daily Room Rate for an income property. It is also important to note that as an investor, you will have much higher margins, as resale properties on the island sell have more demand and higher returns on investment.
Ambergris Caye Real Estate Supply & Demand
To give you an idea of the growth and opportunity with Ambergris Caye Real Estate you have to look at the population and tourism growth statistics. Ambergris Caye (as of 2015) had an estimated population of approximately 16,444 people. Since then the population has grown with an even higher volume of foreigners moving to Ambergris Caye. Over the last 5 years, Ambergris Caye has seen a population growth rate of around 8% per year, and in the previous 10 years, prior Ambergris Caye experienced an annual population growth rate of roughly 17%.
It is also estimated that up to 25% more people reside on Ambergris Caye on a part-time basis (vacation or winter homes). Ambergris Caye as a destination for tourism has experienced incredible growth over the last 5 to 15 years. From 2017 to 2022 (the same 5 years) Ambergris Caye has seen tourism grow at a rate of 14.6% per year (over double-digit annual growth).
When you factor in the population growth and the influx of new residents with the growth in tourism, you really start to see the opportunity. As it stands right now, there is not enough vacation or long-term rental inventory to support the growth in tourism and the growing population.
Top Reasons to Invest in Ambergris Caye Real Estate
High Demand & Limited Supply
As we touched on above, Ambergris Caye is an island with limited supply. Even though the supply is limited, the demand has skyrocketed over recent years with more-and-more tourists visiting Belie. In 2019, Belize saw over 500,000 overnight tourists, most of which visited Ambergris Caye. These overnight tourism arrivals grew by 60% from 2015 to 2020. With 70-75% of overnight tourists who visit Belize heading straight to San Pedro and Ambergris Caye.
The number of hotel rooms and lodging inventory for rentals has not seen the same growth and is not meeting the tourism demand. What is being developed on Ambergris Caye in the next five years will not be able to sustain the increasing tourism demand. Therefore, many industry experts predict Ambergris Caye real estate prices and nightly rental rates will continue to increase. This will lead to greater equity appreciation and a higher cash-flow yield.
Just to illustrate the popularity of Belize real estate, you can see the transaction volumes for RE/MAX Belize (all offices & agents in Belize) below (most of which have been on Ambergris Caye);
Ambergris Caye has become a top destination and as the tourism sector continues to boom and popularity increases there is a need for additional lodging and/or rental inventory. Even though demand is on the rise, the supply has remained stagnant. With increased awareness comes increased demand but the lodging and vacation rental inventory supply does not meet the demand growth. You can see the tourism growth in Belize from 2014 to 2019 below;
Even though tourism is growing and we have seen Belize tourism rebound in 2022 to pre-COVID numbers, the total rooms for rentals have stayed stagnant with almost no new inventory and often even a decline in inventory. Tourism pre-COVID grew by over 60% in 5 years (over double-digit annual growth of 14.6%) but lodging and inventory stayed the same. Even now, rental inventory saw a -2% decrease from Q2 to Q3 of 2022. Below you can see the lodging and rental inventory on Ambergris Caye over the last 3 years;
As you can see, the 3-year trend has been consistent with many quarters seeing a dip in rental inventory (even with an increase in demand). This creates a unique opportunity for investors. With the shortage in supply and increase in demand, there is a need for more lodging and rentals.
Belize is English-Speaking
The official language in Belize is English. Belize is one of the very few English-speaking countries in the region. Not only does the population speak and use English, but English is also used for all real estate transactions, legal matters, and business contracts. Being an English-speaking country with British Common Law makes Belize an easy place for Americans & Canadians to invest and do business.
Belize is a Low-Tax Jurisdiction
When you buy Belize property or invest in Belize Real Estate you will first notice how low the property taxes are in Belize. If you are investing in Ambergris Caye Real Estate you will have a property that appreciates in value. In Belize, there is no Capital Gains Tax or Estate Tax, so when you sell the property in the future for a profit, the Belize government does not tax your earnings. Belize also enjoys low corporate taxation which makes doing business in Belize even more desirable.
When looking at the income tax rate in Belize on passive real estate rental income the taxation rate is at the corporate tax rate of only 1.75%. The property taxes are also below 1% of the property value. Most property taxes are around 1% of their assessed value. What is even more appealing is that property or land assessments are usually way less than the appraised value or resale value of the property. For example, property taxes for land around Belize Secret Beach start at $75 per year. Property taxes in Mahogany Bay are $108 per year.
It is also important to remember that Belize is governed by British Common Law, which for real estate investors and people investing offshore that as a foreigner you have full property ownership with land title, just as in the US and Canada. In other destinations in the region like Mexico, Panama, Honduras, and Costa Rica foreign citizens cannot own property as easily and have more restrictions on investment.
Ambergris Caye is a Vacation Rental Market
Since Ambergris Caye is such a popular tourist spot and vacation destination, the market demand is for nightly rentals, as opposed to long-term or monthly rentals. With nightly vacation rentals, owners and investors see a much higher yield on their investment and multiply the income potential of many investment properties. vacation rentals also give an owner or investor more flexibility and control, allowing them to occupy a residence for their own personal use. Ambergris Caye (due to the high demand and limited supply) sees a much higher nightly rental rate than other destinations, it is not uncommon to see $400+ per night rental rates on properties that would otherwise rent for under $2,000 per month on a long-term lease.
Being in a short-term and vacation rental market, you are able to control the rates and adjust more quickly making it a perfect real estate investment during periods of high inflation.
Why Ambergris Caye Real Estate?
Belize is at a tipping point and at RE/MAX Belize we like to make a hockey reference. As Wayne Gretzky famously said, “I skate to where the puck is going, not where it has been.” Over the last few years, Hilton, Marriott, Wyndham, Margaritaville, Four Seasons, and Six Senses have all started on projects here on Ambergris Caye. There is a reason these brands choose the locations they do and why they are betting on Ambergris Caye over any other destination in Belize. The due diligence team of these large resort brands is much more thorough than an individual investor.
To put it more simply, “success leaves clues.” These brands essentially do the heavy lifting, building a brand around an area, which leads to more development and allows owners to reap the reward. These brands and resorts funnel millions of dollars into marketing and building awareness, which will continue the upward trajectory of Belize most of all Ambergris Caye. As JFK famously said, “a rising tide lifts all boats.”
