Aruba Real estate market reforms: After several years of falling house prices, due to strong economic growth and continued tourism growth, Aruba’s property market is now recovering.
There are no official data such as average house prices per square meter and rental prices in Aruba, so it is difficult to analyze the market. However, the price of a two-bedroom house with a pool was around the US $ 325,000 in 2013.
Aruba’s property market began to slow down in 2009, after a decade of rising house prices, amid the global economic and financial crisis. According to real estate experts, house prices have fallen from around 15% to 25% since 2009. The economy declined by 11.3% in 2009, while in 2010 there was a contraction of 3.3%.
Amid healthy economic growth in 2013, the property market is now recovering.
North Americans, particularly those from the United States, are the largest collection of homebuyers in Aruba. However, recently, there has been rising interest from South American, mainly Brazil and Venezuela.
Residential construction is also gaining momentum. In 2013, the number of construction permits granted for homes and apartments increased by 18.8% to 582 permits.
Mortgages are available, although most homebuyers prefer to pay in cash. According to the Central Bank van Aruba, in 2013, the total amount of outstanding housing mortgages was the US $ 894 million, up 3% from a year earlier. In the fourth quarter of 2013, the average interest rate for housing mortgages was 6.7%, slightly lower than the 6.8% in the same period last year.
In 2013 there was healthy tourism development in Aruba. According to the Aruba Tourism Authority, international visitors to Aruba increased 8.3% to 979,256 in 2013 compared to a year earlier.
According to the Central Bank van Aruba, after a contraction of 1.3% in 2012, 3.5% in 2011 and 3.3% in 2010, and 11.3% in 2009, Aruba’s economy grew by 3.9% in 2013.
The average price per square meter of houses in Aruba has decreased from US $ 1,676 last year to the US $ 1,582 this year. Currently, a 150-square-meter house located in an upscale neighborhood of Aruba, such as Bakwal, costs approximately US $ 224,000, compared to the US $ 290,000 last year.
Rental yields remain moderate to good, though now slightly lower at 6.19% compared to last year’s average of 6.67%.
Three-bedroom homes showed the highest rental returns at 7.32%. Homes with more than four bedrooms typically have a rental return of 5.06%.
Taxes and costs
Rental income tax can be very high
Rental Income: Net rental income is taxed at progressive rates of 7% to 58.95%.
Capital Gain: Capital gains derived from the sale of immovable property are taxed at progressive income tax rates.
Inheritance: Inheritance of spouse and children is subject to inheritance tax ranging from 2% to 6%. Aruban is liable to pay special property transfer tax levied at 8% on the value of the inherited non-resident property.
Resident: Residents are taxed at progressive rates on their worldwide income. Residents are entitled to various deductions and allowances.
Buying cost in Aruba is low
The cost of a round-trip business is about 9% to 12% of the value of the property, with the largest cost being the agent’s commission, which is about 5% of the value of the property. Other costs are transfer tax (3% – 6%) and notary fee (1%), usually paid by the buyer.
Landlord and Tenant
Rental law is pro-tenant in Aruba
Rent: An increase in rent and rent can be freely agreed upon, although in law, the Rent Appraisal Advisory Committee is responsible for determining rent, approving rent increase, evicting tenant, and termination of the contract.
Tenant Security: Tenants can be ’embedded’ in properties. The landlord requires permission from the committee to terminate the tenancy contract leases indefinitely. If the tenant wishes to extend then the fixed-term tenancy contract cannot be terminated even after the expiration date.
Aruba is well-known for its pleasant and very dry weather. Its flattened landscape of aloe and cactus is unique in the Caribbean.
The south and west shores have miles of natural white beaches and many picturesque hidden coves. Aruba is outside the storm belt and is constantly cooled by trade winds.
In 2001–2003, migration trips declined due to the terrorist attacks of 9/11. The island’s economy shrunk by 3% in 2001 and by 3.3% in 2002. Then there was a revival in 2007, in which the total number of visitors from 2003 to 2007 was 13.6%.
The total number of visitors staying from 2007 to 2003 increased by about 13.6%.
The island has faced unfavorable publicity over the past decade in the Nathalie Holloway case, including the disappearance of a 19-year-old attractive Alabamian on May 30, 2005, during a high school graduation celebration trip. Several suspects were arrested, interrogated, and later released, but none were charged. Natalie’s disappearance and arrests received an extraordinary amount of popular coverage on Fox News, CBS, and other TV networks, which reinforced American sentiment against the island. This affected Aruba’s tourism trade and residential property.
Tourism made a strong comeback in the late 2000s. According to the Aruba Tourism Authority, in 2013, the total number of international visitors to Aruba increased by 8.3% to 979,256.
How do you buy a condo in Aruba?
Buying a property in Aruba is a relatively simple process. Below we have outlined the specific process about buying condo in Aruba and it is very important to know the information about Aruba Real estate market reforms.
First, once a preferred unit is selected and accepted by the seller, it is customary for the buyer to select a notary to prepare a sale/purchase agreement, at which both the buyer and seller Must be signed
Upon signing the agreement, the buyer is required to pay a security deposit on the notary which is typically 10%.
Over a period of 6 to 8 weeks, the notary will handle other aspects of the property transfer process such as ensuring clear title and handling the final payment and transfer fees.
Know Government and Administration and information about Aruba Real estate market reforms at https://www.government.aw/