I, like many of you work hard for my money and look to forums such as this for unbiased and informed advise (which I am going to share) with you about Margarita Island (M.I.)
So I hope the moderator doesnt delete or edit.
I actually lived on MI for 7 yrs FULL TIME and left almost a year ago now.....so I like to think I know what I am talking about.
I owned a property which I purchased some 5 yrs ago (which was the best time to invest by the way.....not now)
My reason for posting this is to pass on my extensive knowledge...thats all.
M.I. Is indeed a charming Island, but it is a country in dire economical straits. Inflation is at 29.3% YTD (officially) but is nearer 40% in reality.
check out www dot veneconomy dot com
The currency is the Boilvar Fuerte or (Bfs),which was adopted on the 1st Jan 2008, replacing the plain old Bolivar. The only difference is they knocked off 3 zeros.
Eg. 1000 Bolivars is now 1 bf
There are 2 currency rates that exist, official and blackmarket.
Official is $1 usd equals 2 bf, blackmarket $1 / 3bf...........this is NOW
The blackmarket rate was almost $1 to 5.8 bf only 6 months ago !
This is when M.I was a cheap destination to live or holiday at..........Imagaine, you could change $1000 and get almost 6000 bf.................more than enough to live on for 2 months like a king on M.I.................now with hyper inflation and blackmarket rate way down, alot of things are now cheaper in Europe (not property) cost of living.
Pharoh
In the interests of unbiased information, let's explain the whole story. You lived on Margarita Island, and I still live here.
First, you would have bought property here in 2002, if your story is correct. In other words, you bought property here year of the oil strike in 2002, which followed the attempted coup against Chavez in 2002. Massive political unrest, violence, fear, and people were selling for a song.
Yep, you bought when there was "blood in the streets" and you can pat yourself on the back for that. Most people don't do that, however. Most people wait until things stabilize a bit before buying property in a country that's had problems. Currently, the property prices on Margarita have recently reached the (inflation adjusted) levels they were at in 1997, prior to Chavez being elected.
Given the economic issues involved, property values here have a long way to go.
During the time you claim to have lived on Margarita, the free-market rate for Bolivares was between 2.5 and 2.7 for most of that time. The rate didn't start rising rapidly until late 2006, and it was in 2007 that it went up to 6000 or more per dollar. It's now gone back down to where it probably should be, keeping in track with the historical trend. Back up and look at the big picture, and yes, you were living like a king for a period of about 1 year because of the exchange rate. What about the rest of the time?
Even at an exchange rate of 3.4 to the Dollar (Friday's rate),the cost of living is still cheap compared to Europe, Canada or the US. Property costs are one thing, but the cost of living is what you have to pay day in and day out, year after year.
Calling this a country in dire economic straights is ludicrous. With oil WELL over $100 per barrel, this country has enormous financial resources. We don't have hyper-inflation, we have Latin-American style inflation, brought on by GROWTH. Zimbabwe has hyper-inflation, look it up. Venezuela is averaging 10% GDP growth year over year for the past 5 years. All that growth and oil money tends to have an effect, and it's called inflation.
Now property.............what the agents and developers DONT tell you is that when you want to sell (which is hard enough anyway),that the sale has to be done in Bf. This is the law.
The Notarias are much more controlled now, so insist on seeing evidence of the transaction being carried out in Bf.
When you buy a property from the many UK or Irish developers now touting M.I. They accept your sterling or Euro payment..........BECAUSE they can and are not breaking the law, as their accounts are either UK based or Euro based.
But you try and sell and get your money back into sterling or Euros is very very hard........plus you are breaking Venezuelan law (punishable by imprisonment if detected)
The only people who are investing in the many buildings sprouting up everywhere are the locals........why ?
They can get loans from banks at 23% (crazy),but better than the 50% it was and invest it in property as they see this as better than having money in the banks as inflation outstrips intertest !
Yes, the law requires sale in Bolivares, but this is easy to deal with, legally and effectively:
Anyone who wants to buy property here and sell it for Sterling, Dollars or Euro only has to create a simple holding company (US, Canadian, Panamanian, etc.) and put the property in the name of the company. When one wants to sell the property, transfer the shares of stock to the new owner and accept whatever form of payment is desired. The registered ownership of the property doesn't change in Venezuela because the same company still owns it, but the owners of the company have changed.
Doing it this way keeps all the tax issues, accounting issues, and "official" language issues in English. Selling the property this way avoids the transfer taxes, Venezuelan income taxes, and 90% of the legal fees. Really, there isn't any good reason not to own the property like this. Put the property in a Panamanian company and avoid all capital gains taxes.
As far as selling property, the market is almost completely Venezuelan. If you have a property that a Venezuelan would want at a reasonable price, it sells very quickly. In other words, the closer it is to Sambil Mall, the better. With all the money the government is pumping into the lower economic classes, the businessmen in this country are getting rich. They're buying property, and Margarita Island is always considered a good investment location.
Claims of Formula One and golfing projetcs are at best “Pie in the sky”. I actually called the Formula One headquaters in Paris (F.I.A) and they knew nothing of it.
As for golf, there are 2 courses at present on M.I. One has been in legal wranglings for 7 yrs and has nevr been played on (oppossite Hilton Hotel),the other is located at the North of the Island and is at best “parched”
Water is a precious commodity on M.I. And it is common place in high season for buildings (especially in Porlamar) to ration water daily. Turning on for an hour in the mornings, afternoons and nights..............so new golf courses being built.......?????
Mostly true. There are F1 people here in Venezuela who say the project is going in, along with a Formula 1 driving school. That may have a lot to do with the price of gasoline in this country. Maybe you have great connections with the Formula 1 people in Paris and speak fluent French, so they told you the real scoop. I don't, so I didn't call them. OTOH, you may have talked to a clerk who gave you the easy answer to get rid of you: "NO" Vamos avez.
Nobody plays golf here. Why they have the courses is beyond me.
Water issues are much better than when you lived here. They doubled the water pressure coming to the Island last year (about the time you left?),which means they doubled the output, and there is another undersea pipeline currently being put in that will quadruple the amount of water coming to the Island.
M.I. Is also a “long haul” destination, so rentals are very very hard to sustain long enough to make it a performer in your portfolio.
If after reading this, you are still intent on buying there, ask for documentary eveidence from developers or agents making such claims. At best you be sent a link to a glossy mag or newspaper article.....nothing concrete.
Long haul???
Margarita island is only 25 miles from the mainland. That's not much of a long haul.
80% of the tourism on this island is Venezuelan. If someone want to make rental income, the big market is the Venezuelan market. If one wants to rent to Venezuelans one has to have a property that's in the area where they want to stay. They come to the Island to party, relax, drink, shop, drink, go dancing, drink, go out to eat, and maybe spend some time with friends and family... drinking. All the bars, restaurants, discos, shops and (most important) their friends, are in the Pampatar and Costa Azul areas. During high season it can take an hour to drive from El Agua down to the Pampatar area, so most Venezuelans don't want to stay there. Only the kids stay up there, because they're more into the beach and bedroom scene. The adults, they want the city.
I have several friends here who maintain about a 60%-65% occupancy rate on their rental properties, year-round, which is pretty good when one considers the vacation rental rate. Their properties are in the Pampatar and Costa Azul... that is, within 10 minutes driving time of the Sambil Mall. For them, it's a business, and they work at it.
There are several developments in the El Agua area that have worked out deals with the large All Inclusive hotels, and instead of expanding the hotels are managing and renting the apartments. That's the only deal I know of in the El Agua area. As for rentals in places like Juan Griego and La Guardia, forget it. Nobody rents there.