A booming business

Construction activities on Curaçao clearly indicate the real estate market is performing well. A rapid growth in the number of real estate agents reconfi rms this assumption. In ten years time, the real state market has fully recovered from a sudden drop in demand.

First homes – second homes - and offi ce buildings. Geert Bijlstra confi rms that the real estate business is booming on Curaçao. He is a real estate agent for Landmark Real Estate and the spokesman for the Real Estate Association of Curaçao (see column: Curaçaose Vastgoed Vereniging). The current situation is a complete opposite of the situation of this business ten years ago, according to the CVV.

In 1998 the real estate market wasn’t booming at all, due to a couple of developments which occurred within a short period of time. ‘To give you an idea, we go back to 1992’, says Bijlstra. In that year, the government of Curaçao introduced the so-called ‘Penshonado-regeling’, a scheme for retired Dutch
citizens with a desire and enough money to buy a house in a warmer climate. The government offered them tax-advantages if they moved to Curaçao, aiming to attract some expertise from respected Captains of Industry at the same time. The scheme was very popular and the demand from European
Dutchmen more or less dominated the real estate market for half a decade, the CVV-spokesman says. But in 1996 the government considered to adjust or even abolish this scheme.

During the same period, the economy of Curaçao performed less than expected, jobs were cut in the public and private sector and many educated people left to seek employment in the Netherlands.
‘The consequence was that there was a lot of uncertainty in the real estate market and a surplus of houses. Furthermore, mortgages had high interests and people were not able pay of their debt. Many houses were auctioned’.

The year 2001 was a turning point, according to the CVV, probably due to a change in the mortgage market. A Dutch bank offered mortgages with lower interest rates, percentages that were common in Europe. Shortly thereafter, local banks also cut their rates. As a new player in the market, the Royal Bank of Trinidad and Tobago, which at the time had recently acquired the retail banking activities of ABN AMRO, was probably the fi rst. ‘Because of this, there was a whole new target group: people who until then were not able to buy a house because of the high mortgage rates, the local people’, Bijlstra says. In 2005, another development turned out positive for the real estate market. Due to the strong euro versus the U.S. dollar and the Antillean guilder, Europeans could afford a second home in the Caribbean.

European and local people still are the two main target groups for the real estate business on Curaçao. Whether they want a house for 60.000 euro’s or can afford one of 1.3 million guilders. Even the ‘Pensionado-arrangement’ still exists, though it has been adjusted to serve its purpose better.

However, developments need to be monitored, this being one of the tasks of the Real Estate Association of Curaçao. For example the fi nancial crisis. ‘It is impossible to predict if the crisis will impact the real estate market and if so, to what extent. If Europe turns into a recession or the euro becomes weaker, this will impact tourism and ultimately also the real estate market. Luxury goods are sold the fi rst. But in the long term, real estate always keeps its value.’ The CVV-spokesman adds: ‘We often sell real estate to people who traveled the world and saw a lot of wonderful places. In the end they come back to Curaçao. There is something about this island that people love’.