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Whether you’re looking for a getaway, looking to test the waters in a new destination before making a purchase, or searching for your next real estate investment opportunity – learn why the world of luxury rentals might be for you.
We recently sat down with St. Martin Sotheby’s International Realty COO, Harrison Reed to discover more about the Caribbean gem’s luxury rental market.
Sotheby’s International Realty (SIR): What sets rental properties in your country apart from the rest of the world?
Harrison Reed (HR): What sets rental properties in St. Martin apart from the rest of the world is their location! The island is very accessible with direct flights from Europe, the US/Canada, and South America. The island is known as the culinary capital of the Caribbean due to the extraordinary restaurants located on both the French (St. Martin) and Dutch (St. Maarten) side. For a small island of 87 square kilometers divided in two countries we have 37 beaches and plenty of activities like watersports, hiking, diving, fishing, and shopping. What also makes St. Martin unique is that the US dollar is an accepted currency on both sides of the island as well as euros and guilders. The island is known as the “friendly island” due to its culture inclusiveness and its history of unity. That history was made famous on March 23, 1648, when the French and the Dutch settled the matter of the ownership of the island when they signed the Treaty of Concordia. France and the Netherlands divided the island into two parts, France occupying the north and the Dutch the south. The Treaty recognised both the dual nationality and the unity of the island: there would be no physical border between the two nations and people and goods would move freely between the two zones. St. Martin was one of the first touristic islands of the caribbean and has a long history of tourism dating back to the early 50’s. Today the island has a major international airport along with several large deep water ports that can accomodate large yachts and yachting services which adds to the destination well rounded services.
SIR: What are the benefits of owning a rental property in your country?
HR: Owning a vacation rental in St. Martin means owning a property in France but with the added advantage of being in the Caribbean. There is no import tax and it is a duty free destination which makes operating a property very viable as opposed to other caribbean destinations. St. Martin has a unique taxation structure which is more favorable than owning property in France. On St. Maarten much of the same is true but there is no property tax or capital gains. Taxation on vacation rental revenue in St. Martin is 4% and 5% for St. Maarten – which is relatively low. Due to the island’s connection to France and the Netherlands, we have a lot of qualified labor from both countries.
SIR: What trends are you seeing in your rental market?
HR: Clients are looking for recognized brands when choosing their vacation rentals more than ever given the circumstances around Covid-19. They want to make sure that the properties are properly managed and that internationally accepted cleaning protocols are being followed. Service has become a major focus in our market as clients expect more of a hotel experience when renting properties. The villa experience is more and more being associated with service along with the experience component of the vacation. We recognize that clients rent a property in St. Martin and they choose to come to St. Martin before they decide to rent a given property. Clients are primarily focused on the experience they will have on the island and service is a major factor in that experience. Lastly, we are also seeing the rise of more tech savvy clients. Five years ago we would have never believed that someone would book and pay for a high end property instantly with a credit card without speaking with an agent. The rise of technology in our industry has changed the way we do business very rapidly. Over the next months we believe there will be an increased demand for virtual technologies and video content as clients look to make their vacation decisions.
SIR: How does the rental market drive business for your company?
HR: The rental business plays a major role in our homeownership life cycle. Many of our homeowners purchase their property through us and we provide them with our vacation rental and or management services. Once the owners are ready to sell their property we list the property for them. Investors who purchase in St. Martin look at the viability of owning and operating a business in the caribbean. They look at two aspects of ownership, can they cover the cost of operating the property and is there a management solution to operate the property. When we have property for sale that has been a part of our rental business we can show rental history and our proven management solution. Potential investors who want to own a property in St. Martin need to be provided with the solutions that make ownership realistic and manageable. Our vacation rental and property management service make investing in St. Martin possible for an international investor who otherwise would feel uncomfortable investing.