Why Belize Could Be Ripe for Hotel Investment
By Joe Pike, Special Contributor
Caribbean Journal Invest (CJI) recently spoke with some top Belize real estate experts to find out why the Central American destination could be prime territory for hotel investment once the coronavirus (COVID-19) crisis is over.
Here’s what we found.
“Belize as a market is building on an organic buzz, which is the direct result of travelers coming into the country [pre-coronavirus] and having unique, enjoyable and memorable experiences, as well as sharing those experiences both anecdotally and on social media channels,” said Robi Das, managing director for Newmark Knight Frank, a popular real estate advisory firm in Miami.
“Prior to the pandemic,” he said, “Belize was one of the fastest growing countries in the region and eclipsing more established markets in terms of arrivals and guest satisfaction.”
Das also said Belize’s advantage with making the American traveler comfortable, especially post coronavirus, will give the popular romance and adventure destination an edge.
“All destinations are not created equal and there are different demand drivers for each set of travelers,” he said. “Belize is an ideal destination for the experiential traveler due to its world-class diving, archaeology, wildlife and service aspects. The country is primarily English speaking, all transactions are pegged to the U.S. dollar, and the legal jurisdiction is familiar for most investors.”
But Das doesn’t limit the possibility for a hotel investment boom to Belize alone.
“Due to the current environment, you could make an argument that all real estate markets in the Caribbean are opportunistic, but only for a point and time,” he said. “Working capital debt facilities for existing hospitality assets and off-set debt facilities or preferred equity for construction projects, which rely more heavily on progress payments from unit sales, are opportunities for liquid investors looking for either an entry point into the region or to add to their current position.”
Andrew Ashcroft, developer and managing principal of Alaia Belize, told CJI the evidence of Belize’s pre-coronavirus success could be found in its airlift service before the pandemic struck.
“In the past few years, we had over five major airlines service the country and received over eight new routes,” said Ashcroft. “Tourists have begun to look at Belize as a new, alluring destination, as they all wanted something new and had already visited most of the other Caribbean islands.”
But Ashcroft remains optimistic about Belize’s hotel investment future because the destination has certain advantages other getaways do not.
“As the tourism market continued to grow, it fueled our real estate market,” he said. “Belize follows the Queens Land Registry System, which allows owners to get free home titles and minimal property taxes. We also have no language barrier as it’s an English-speaking country and our currency is permanently pegged to the U.S. dollar at two to one.”
So, who is investing in Belize and the Caribbean in general?
Das broke it down for CJI by category.
For the Local Category
Das said the “local category” pertains typically to an owner or developer who “either resides in a given country or has close ties to that country.”
“They can move quickly due to their history and understanding of pricing with an expedited due diligence process,” he said. “Additionally, they would be the beneficiary of government relationships and a strong track record in that country, which creates a level of trust among the parties. The true benefit of local investors is that in many cases they have more reputational risk than economic risk, which gives both government and end-user purchasers of individual units a level of comfort that the project will be completed.”
For the Opportunistic / Institutional Category
The “opportunistic/institutional category,” Das said, pertainstypically to “much more of an academic exercise and fits within the alternative investment or high-yield bucket within a much larger portfolio strategy, both in real estate and other asset classes.”
“They are generally seeking a local partner for the reasons listed above and given the perceived risks of the jurisdiction even in a non-COVID-19 environment, i.e. hurricane, development risk,” he said. “They are typically seeking above average returns in both the equity and debt tranches of the capital stack.”
For the All-Inclusive Category
Das said the all-inclusive segment has shown “relative strength due to the predictability and demand for the product.”
“In the environment we face today, there will have to be specific focus on common area behavior, check-in protocol, and social distancing,” he said. “Sandals Resorts [International] has been a leader in creating solutions for this new normal and hopefully other strong participants in the all-inclusive sector either follow their lead or continue to innovate further.”
Belize’s Most Anticipated Hotels
Belize will soon be getting its first Marriott Hotels & Resorts property in the form of Alaia Belize, which will be part of Marriott’s high-end brand, the Autograph Collection.
Belize went years without any branded developments. Now, they are getting their first bunch. Aside from Marriott, other known brands that will soon have a presence in Belize include Hilton Hotels and Resorts, Four Seasons Hotels & Resorts, Margaritaville (in the form of the Margaritaville Resort Belize) and Wyndham Hotels and Resorts.
“The two largest projects in [Belize], which are both world-class from the perspective of the development teams and the product which will be delivered,” said Das, “are the Alaia Marriott Autograph on San Pedro, Belize, located primary tourist destination in the country, and the Four Seasons Caye Chapel, [which] resides on a private island in close proximity.”
The two projects, Das said, have limited crossover, “but are both the beneficiary of specific demand drivers and excellent sponsorship.” Das said the Alaia Belize will be a 155-unit community resort and the Four Seasons Caye Chapel will have 100 rooms, including 36 over-the-water bungalows.
“Belize has remained a hidden gem for many years, and now it is quickly rising to the top of everyone’s bucket list,” said Ashcroft. “In 2009, we started to experience a growing interest from tourists, from 250,000 overnight tourist arrivals to over 500,000 overnight tourist arrivals in 2018.”
So, where are the buyers coming from?
“From our buyers at Alaia Belize,” said Ashcroft, “we are seeing so many expats from Texas, Colorado, Minnesota and California, who tell us that they love Belize because it’s a short flight away, where they can unwind and discover this quirky place.”
And Ashcroft has a few reasons to remain optimistic about the buying potential following the ongoing crisis.
“My team and I have partnered with Marriott International to debut the first ever Autograph Collection hotel [in Belize] with the December 2020 opening of Alaia Belize,” he said. “Our beachfront property is offering international buyers the high-quality standards of the Marriott brand, along with modern amenities, such as the country’s first suspended rooftop pool, live art gallery, wine club, etc.”