Property Investment Case Study: Martinique (TPI-MB-001)
Introduction:
Nowhere in the Caribbean is the crossroads between preserved European sophistication and a three hundred year evolving distillation of AmerIndian, East Indian and African cultures so apparent, as in the French West Indies and especially in Martinique. It has created a unique and recognisable social and economic energy.
The first time I saw Martinique was sailing northwards up through the eastern Caribbean islands, stopping at our leisure (those were the days!) at each island and learning all we could like enthusiastic sponges. That first time we anchored below the old walls of the town of St. Pierre, was the start of my fascination with all things French Caribbean. St. Pierre was a spacious town once, but is now most famous for its total obliteration in 1902 beneath a cloud of superheated steam which wiped out its total population of forty thousand souls, and tens of merchant and naval ships at anchor in the harbour.
The market on the St. Pierre waterfront opens at dawn along with the boulangeries and patisseries. Tying the dinghy to an old iron ring on the jetty, our thirty yard walk to the open fruit and vegetable market first entertained our ears, with mix of french and creole, zouk rhythms and beats, and then our noses were treated to the same joyous barrage; the sweet and yeasty smell of the breads being delivered to the tiny bakeries along the main street, and the confusion of fresh scents from the market foods, the pungent spices, the rich herbs, the thin cool smell of a fresh water melon sliced open, the earthy smell of tannia and eddoe and sweet potato, tomatoes, pineapples, mangoes, plantains, bluggoes, mammy and custard apples….you get the picture. And why is that fruit always tastes better in French? Doesn’t le corrosol sounds so much better than ‘soursop’? or melon d’eau has a cool sangfroid about it whereas ‘water melon’ sounds like a puddle. And so we filled our two baskets with the best and largest choice of fruit and vegetables we had found since leaving the island of Madeira six months earlier and two and a half thousand miles away.
Prior to Martinique we had fully explored the south eastern Caribbean islands, of Grenada, Barbados, Tobago, St. Vincent, St. Lucia and since then we have extensively travelled most of the other islands. For sheer richness and diversity of peoples, geography and culture, including music, dance, foods, wines, language, history, modern infrastructure, geology, oceanography, and so on.. Martinique just wins hands down. Guadeloupe comes a close second, but Martinique is certainly the more sophisticated of the French Caribbean islands and it is from here that the rest of the French West Indies are governed. Including Guadelope, Marie Galante, Isles des Saintes, St. Barts, St. Martin and a few small outlying islands. The whole group constitutes a Departement of France and is governed as such from Paris in Metropolitan France, just like the Ardeche or Dordogne.
Consequently Martinique does move at a faster pace than the rest of the eastern Caribbean. Much of the infrastructure and style of mainland France is apparent in daily life, utilities, roads, gendarmerie, the international airport, and deeply woven throughout is the unique Caribbean character. Just watch a local fisherman working at dusk on the bay of Anse d’Arlet, or (if you have the courage!) ride a local bus thrashing along at high speeds bursting with zouk at top volume and the staccato of French Creole. A language which paradoxically bridges and separates the European French from their Caribbean compatriots. In Martinique it is said in Creole, “la vi a ka mache”. Life is going just fine! At least for the Martiniquais it really is.
On an island of fifty miles in length and twenty two miles at its widest, just 8 hours from Paris and direct flights to Canada, New York and Puerto Rico, there is a new Science Museum, an annual Semi Marathon, university, many theatres, a golf course, casinos, an active volcano, walking, hiking, waterfalls and protected eco-areas for the keenest environmentalist, miles and miles of golden sand, and a warm ocean for swimmers and divers. They really do have ‘life going just fine’.
Investment Opportunities
Around the english speaking world, Martinique is little known. Not many North Americans or Britons visit the island. Most visitors arrive from metropolitan France on charter or Air France flights, holidaying throughout the year. Air Canada and American Eagle run limited schedules. Many Martinique business people would like to see this change to a more international vacation getaway, and there have been some active projects promoting these changes. Club Med has recently invested 60 million US dollars into a new resort on Martinique. This just opened in December 2005 and is deliberately aimed at attracting visitors from the US, facilitated through a new weekly non-stop charter flight from New York City's JFK International Airport to Martinique. The Martinique Chamber of Commerce offers French Language Immersion Programmes, which combines a resort holiday and some pretty intensive language teaching. (Then when you return to work you can announce with strong French accent Je parle francais! Nobody will understand you, but don’t worry about that, it has a lot more cachet than the ubiquitous suntan)
Over the last few years Martinique has welcomed expatriates buying both homes and businesses, especially French Real Estate Agents, some of whom do speak good English.
Martinique real estate compares favourably in price with the other well developed islands in the region, and without any of the implicit risk that is inherent in investing in the smaller autonomous countries in the eastern Caribbean. As an investment, its possibly the safest there is in the Caribbean, close or better even than the Dutch and US Caribbean islands, which have greater local governance.
For example an absolutely stunning, very private 5 bedroomed villa, with private access to the Atlantic ocean and beaches, large swimming pool, bordering the Martinique Regional Park, and fantastic views across the bay is selling for just a little more than $1,000,000 US.
For those looking to run a small tourist operation and provide a very comfortable income, a three bedroomed Creole style home and four gingerbread holiday villas, set in tropical gardens and just 200 metres from the beach, will set you back $886,000 US. This really is an excellent commercial and investment opportunity, if you are looking for something and somewhere different.
There are very strict Planning Laws in France, and this is another good reason for investing in property in Martinique since land put aside for environmental and farming purposes remains reserved in perpetuity. There are set rules for the size of a property you may build on a given piece of land, and these change between the city and the countryside. Rigid implementation of these regulations ensures that neighbours cannot spoil your view or encroach onto your land.
For example, a very valuable piece of land for sale in a much sought after country area close to the National Park in Morne Valentin, with great views, is on the market for $177,00 for a half acre. Permission has already been granted for a property of up to 330 square metres.
Non-EU Buyers
The following is a generalised purchasing procedure for buying a property in Martinique.
In addition to these, for non-French and non-EU buyers there are further processes, principally applying for permission and clearance to reside in France. This process normally drags on for about three months but can run concurrently with the purchasing procedures. It includes full background, economic and citizenship checks, registration with the Government, health checks and proof of income if you are planning to live and retire to French territory.
General Purchasing Procedure
The procedures for the purchase of a private home of less than 2.47 acres (1 hectare) are broadly set out below. For property larger than this, in rare cases, The Société d'Amenagément Foncier et d'Establissement Rural (SAFER) might wish to review the sale in line with its remit to preserve special or agriculture land.
It rarely exercises this right , but the Notaire (roughly the equivalent of a Solicitor/Lawyer) is under an obligation to notify the SAFER. IF the SAFER should decide to change the rules of the sale of the land, then any agreement is null and void and you have a right to recover the deposit.
An agreement is negotiated between buyer and seller, and the initial contract which is called a Sous-seing Privé, is drawn up by a French Estate Agent, or a Compromis de Vente, if prepared by the Notaire, and is signed by both parties. This is a legal document, binding on both parties. At this stage the buyer pays a deposit of a minimum of 10% of the purchase price which is retained in a special account, like an escrow account, by the Notaires office until completion takes place or the sale falls through. Additionally at this stage the property is taken off the market.
It is possible to form contracts such as the Promesse de Vente which is not binding on both parties to the same extent as the Compromis. By signing it the vendors still commit themselves to selling the property to the purchasers, but this commitment takes the form of promising not to sell it to anyone else within a stated period, usually 3 months. A deposit of between 5% and 10% is again paid and again the purchaser will usually forfeit the deposit if they do not go ahead.
Surveys of the property you would like to buy by professional surveyors are rare in France. It is more usual to request local artisans to give an opinion as to the condition of say the roof, or the walls and for them to give quotations for the work. French buyers would be more likely to approach an architect or 'expert', but even then it is unusual for them to be asked to prepare a detailed report as has become the practice in a few European countries.
Before signing the Compromis, it is worth having any inspections that you require done, as once this agreement has been reached, it is binding on both parties. Once the Compromis or Sous-Seing Privé has been signed there follows a period of generally 6 - 8 weeks in which the searches are carried out to ensure that the property is not subject to any imminent environmental changes and during which time the purchaser will be required to assure the financing of the purchase.
These searches and the other contractual matters are carried out by the Notaire. The Notaire is unlike most European/North American Solicitors/Lawyers, as he is not appointed to act for either party in the transaction but as a public official whose duty is to represent the French Government. His/her function is to ensure that the transaction is carried out legally and accurately and in accordance with due process and to give the transaction absolute validity that cannot be contested. It is, therefore, unnecessary to appoint a second Notaire to act for the buyer, although many non-French buyers like to have a local Lawyer explain some of the procudures that arise which may be unclear to the uninitiated.
At the same time, advice should be sought in order to understand fully the complexities of French succession law which does not allow you to leave your share of the property to whom you wish - even if you have an existing Will. It is possible to work around these laws, but this needs to be completed before the final signing.
If a mortgage is to be raised, then it is necessary for this to be declared at the time of the agreement and a clause is added to the Compromis which protects the purchaser's interests in the event that a loan is not made available. If the mortgage is not granted and the sale does not proceed, the deposit is returned. In the event of the discovery of something not revealed by the seller through the searches, the buyer can withdraw and the deposit is returned. Should, however, the buyer break the contract for any other reason, the deposit is paid to the vendor. Should the vendor break the contract, the deposit is returned to the purchaser.
At the end of the initial period which can be extended by the agreement of both parties, the Acte de Vente is signed at the Notaire's office and the property passes to the buyer.
During or prior to the signing of the final contract the following must be completed:
• the balance of the purchase price must be paid to the Notaire who then pays the vendor. It should be noted that the balance must be in the Notaire's possession before the contract is signed.
• full payment for Legal Fees and Registration Taxes are due at this time
• provide the Notaire with a copy of your birth certificate translated into French
• also, if applicable, provide a copy of a Marriage Certificate also in French.
• Provide proof of insurance, since from the signing of the Contract the purchaser is responsible for the insurance of all the buildings on the property.
The buyer pays the legal fees and registration taxes which amount to approximately 7.5% of the purchase price, including any surveyor’s costs that might have been incurred such as establishing boundaries, repositioning boundaries and preparing plans for the Acte de Vente.
Normally the vendor pays the Agency's commission, but under certain exceptional circumstances these are paid by the purchaser.
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Report ref: TPI-MB-001
Date created: 09-04-2006