Basseterre, Saint Kitts and Nevis, June 5, 2023 [CIU] – The Government of St Kitts and Nevis wish to address several unfounded claims about the Real Estate Investment Option of the Citizenship by Investment Programme (the Programme). Under the leadership of Prime Minister Terrance Drew and Citizenship by Investment Unit (CIU) Head, Michael Martin, several updates were made to the Regulations governing the CBI Programme of St Kitts and Nevis (the 2023 Regulations) aiming to tackle problematic financing practices and ghost projects under the Programme’s Real Estate Option (REO).
The Government introduced the new multi-faceted real estate development application and approval process to remove loopholes, as well as ensure stricter enforcement of escrow and project milestone requirements. The Government wishes to emphasise that the purpose of these process improvements was to bring credibility and enhance value to the Programme, and the development of our nation by providing excellent prospects for our investors.
The improved real estate development project approval requirements were designed with careful consideration and consultation to strengthen the legislative and administrative framework of the Programme. These improvement measures were crucial for retaining the integrity of our esteemed CBI Programme, ensuring that it remains one of the most valuable, well-regulated, and transparent programmes of its kind.
Contrary to the various aspersions, the 2023 Regulations have not reduced the number of genuine real estate development options available to investors. Instead, they have ushered in a more rigorous evaluation process, guaranteeing that every real estate project selected for the Programme aligns with the high standards of quality, sustainability, and long-term value creation.
We recognise the importance of maintaining confidence in our CBI Programme and reassure all stakeholders that the 2023 Regulations are not meant to hinder investment, but rather to foster an environment of trust, stability, and prosperity for all parties involved.
In accordance with the 2023 Regulations, the CBI Board of Governors approves real estate development projects and of these, a designated number of real estate units are made available to be sold to qualifying CBI applicants. Real estate projects will be constructed and completed according to a pre-defined schedule and with the implementation of a designated escrow drawdown process.
The CIU must emphasise that the aim of the improved real estate project approval process is to exclude poor-quality real estate developments which only served to tarnish the Programme and the country as a whole. Improvements to the real estate development project approval process were accordingly vital to ensure that the SKN CBI Programme only approves legitimate real estate development projects which bring actual investment in the country and offer resale value for investors.
These poor-quality real estate developments include those involving any deceitful, fraudulent or otherwise unacceptable financial conduct, as well as stagnant and inactive real estate developments commonly referred to as “ghost” projects. The CIU discovered 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.
There are several reasons for the decrease in Approved Developments. All existing developments were required under the 2023 Regulations to apply for re-designation as Approved Developments per the new eligibility standards. In addition to the rejection of applications from poor-quality real estate projects which do not bring any legitimate investment into the country, 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.
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.
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.