Pirates banished from Caribbean

Thursday, March 06, 2008

The ultimate luxury second home destination simply has to be the Caribbean. It boasts the sort of turquoise blue seas, white powder sands, palm trees and lush foliage that most people think of when they use the phrase 'tropical island'. And you almost start selecting your eight records and chosen book at the sound of the Dominican Republic, one of the most interesting and historic islands of the Caribbean archipelago.

Christopher Columbus, later the country's governor, discovered the fertile island, and its gold, in 1492. It became the first Spanish New World dominion and the country has retained a Catholic heritage, with some superb old churches and a magnificent cathedral.

But what makes people buy so far from home? And how do they manage a villa or apartment at a distance of over 3,000 miles?

David Ames, of Harlequin, which is building the Two Rivers development on the Dominican Republic, has part of the answer. "We have a five star hotel in the complex, and we manage the rental arrangements, with a guaranteed 10% return for the first two years."

Two Rivers has already proved very successful.

"We launched in November and within three weeks, were completely sold out but as always happens, some people found they couldn't raise the money after all, and so some 20 units have come back onto the market. That isn't bad in the current climate," he explained.

As Mr Ames says, these flats and villas aren't houses to live in, they are investments.

"You gain 30 days' free use a year, and the hotel runs your investment, in fact you're making money from day one."

It almost sounds too good to be true, a comment often made, according to David Ames, but the product is based on a sound financial model.

"If I sell one of my flats to you today for £100,000, you have to raise 30% of the price, that is £30,000. If you went to Abbey and got that sum, you might be paying £300 a month for the mortgage, but we pay you back that money. Too good to be true?

Looking at the bigger picture, I'm building a hotel, I'm not one of those developers who take your money and disappear."

As Mr Ames puts it, you and he become investment partners in the complex. He is selling the property off-plan at below market value, which means that when the apartments are ready, they should be worth £150,000.

"And the rental income will pay back your mortgage..."

Last year, Harlequin had a turnover of £217m sterling.

"We're established and when you understand the business model, you can see how I'm making the Caribbean affordable".

In the past this part of the world was thought to be beyond most people's means and exclusively inhabited by the rich.

"If you offered people a choice between Spain and the Caribbean, most people would opt for the Caribbean if they thought they could afford it. Well, now they can."

Another plus point is the fact that the hotel looks after your apartment, so that it is kept "100% clean and you don't have to worry about washing the sheets or anything".

It's not surprising that people in the UK are looking at buying in the Caribbean as a part of their pension provision.

"Because of the capital growth of around 50% in a year, people are regarding it as their pension."

Proving the attraction of the deal, David Ames adds that nearly all of his staff have bought in to the Caribbean, as well as his sister and other family members.

Garry Hines, who is in construction in Essex, is one satisfied customer. But it was almost by accident that he ended up buying a two-bed apartment in the Dominican Republic.

"I was looking at investing in Bulgaria and took the normal route, looking at the websites and getting scared. I went there, talked to a local estate agent who showed me two or three things. Then he said, Have you thought about the Caribbean? I thought it was out of my league, but he mentioned Harlequin."

From there, it was plain sailing, according to Mr Hines, who aims to get good capital growth.

"My investment, with a 70% mortgage and interest paid by the firm, is for return. It's too far away to go for a week, although we get 30 days and my 14-year-old daughter is very keen. I went to see the Harlequin people, who are prepared to talk to you, and that was the clincher."

Harlequin, tel 0485 888 4422, www.harlequinproperty.co.uk