The Government of St Kitts and Nevis, have introduced several changes into the Real Estate Investment Option of the Citizenship by Investment Programme. The following changes have been made under the supervision of the Prime Minister Dr Terrance Drew as well as the Citizenship by Investment Unit (CIU) Head, Michael Martin, making updates on the Regulations governing the CBI programmes of St Kitts and Nevis, aiming at tackling the problematic financing practices and ghost projects under the Programme’s Real Estate Option (REO).
It is to be noted that the Government has come up with the introduction of the new multi-faceted real estate development application and approval process to remove loopholes, as well as ensuring strict enforcement of escrow and project milestone requirements. The Government had also extended a desire to put focus on the purpose of these process improvements was to bring credibility and enhancing value to the Programme, and the development of St Kitts and Nevis by providing better prospects for the investors.
Moreover, the CIU has finalized the improved real estate development project approval requirements with care consultations for empowering the legislative and administrative framework of the Programme. The following improvement steps are considered important in retaining the integrity of St Kitts and Nevis, ensuring that it remains one of the most valuable, well-regulated, and transparent programmes of its kind.
In contrary to the several aspersions, the recently introduced regulations have not actually reduced the number of actual real estate development options that are available to the investors. Instead, it resulted in turning into more rigorous evaluation process, ensuring that every real estate project that has been selected for the programme aligns with the high standards of quality, sustainability and long-term value creations.
At the same time, the government of St Kitts and Nevis, added that, they are recognizing the significance of maintaining the confidence in CBI Programme of St Kitts and Nevis along with reassuring all the stakeholders that the 2023 rules are actually not meant for hindering the investment, but rather to foster an environment of trust, stability and prosperity for all the parties that are part of it.
According to the 2023 Regulations, the CBI Board of Governors have approved the real estate development projects and of these, a designated number of real estate units are made available to be sold to the qualifying Citizenship by Investment programme applicants. The government have also made an announcement that the real estate projects will be constructed and completed as per the pre-defined schedule and with the implementation of a designated escrow drawdown process.
The government in the statement also mentioned that, the CIU must also put emphasis on that the aim of the improved real estate project approval process is to exclude poor-quality real estate developments which only served for tarnishing the Programme and the entire nation as a whole. Whereas, the improvements to the real estate development project approval process were accordingly significant on ensuring that the SKN CBI Programme only approves legal real estate development projects which brings the actual investment in the nation and offer resale value for investors.
It is to be mentioned that these poor-quality real estate developments include those involving any deceitful, fraudulent or otherwise unacceptable financial conduct, along with stagnant and inactive real estate developments commonly referred to as “ghost” projects. The CIU have traced that many developers of these projects were illegally offering discounting by holding applicants’ investment funds offshore. This type of improper financial conduct undermined the ability of legitimate developers to engage in meaningful competition in the local real estate market, as stated by the Government of St Kitts and Nevis.
Whereas, there are multiple reasons for the downfall in Approved Developments. All current developments were needed under the 2023 Regulations for applying for re-designation as the Approved Developments per the new eligibility standards. Additionally, the rejection of the applications from poor-quality real estate projects which don’t bring any legitimate investment into St Kitts and Nevis, but only devalue local real estate, several previous developers have elected not to re-apply for Approved development status of their projects, as well as several applications remaining under consideration by the CBI Board of Governors.
According to the government of St Kitts and Nevis, “It has also been misleadingly asserted that the 2023 Regulations deprive real estate developers of their ability to pay commission and agent fees to their marketing agents and local agents, which in turn significantly lowers the attractiveness of the REO under the Programme. On a proper construction of sub-regulations 29(11) to 29(13), a developer of an Approved Development may pay commissions and fees to their agent out of any amount of the real estate investment fund in excess of US$200,000.”
The statement further reads that, “There is no bar on payment of commission provided the minimum investment threshold is received in the escrow account and the developer can deliver a property that can sustain its true market value. For the above reasons, the contention that payment of agent commissions and fees is prohibited under the Programme is unfounded.”
The Government of St. Kitts and Nevis and the CIU are committed to ensuring that all real estate investments under the St. Kitts and Nevis CBI Programme bring substantial value to both investors and the people of St. Kitts and Nevis. The improved real estate development project approval process introduced by the 2023 Regulations demonstrates our Government’s commitment to be a trailblazer in the CBI industry for taking proactive steps to maintain the Programme’s integrity and retaining its reputation as one of the world’s most valuable, well-regulated and transparent CBI Programmes of its kind.