New York times, March 16, 2016.
By ROXANA POPESCU
Real estate agents in Puerto Rico said the island’s economic crisis has led people to move away, creating bargains for buyers willing to make compromises on location. For prime properties near the water, however, where demand is enhanced by tax incentives created for wealthy foreign buyers, prices are stable or even rising.
The fact that many professionals are leaving the island looking for better jobs in the U.S. and some of the local wealthiest people have been impacted negatively by losses in local investments in bonds creates some interesting opportunities to purchase luxury properties.
Prices across the island have fallen by as much as 50 percent for the nonluxury market, as well as for high-end properties that are not on the beach.
“In actuality, it is the best time to buy here”, quotes a local broker.
Beachfront luxury homes have been spared from the fall, agents said. The supply of top-quality properties is limited, but demand is strong because of the tax incentives initiated in 2012. A law named Act 22, designed to entice investors and high-net-worth individuals to move to Puerto Rico, with incentives including tax exemptions, has resulted in almost 600 people moving to the island since 2012, said José Joaquín Villamil, an economist and chairman and chief executive of Estudios Técnicos, an economic consulting firm in San Juan, citing government figures.
“The real estate market is in shock,” Mr. Villamil said. “Obviously, one would expect it. What’s kept the high end of the market going is the Law 22.”
Prices of luxury homes near the water have remained stable, or in some cases increased, since 2012. Prices per square foot range from $400 to $600, and with few exceptions, properties tend to close at about 15 percent below asking, she said.
WHO BUYS IN PUERTO RICO
Most luxury home buyers come from the United States mainland, agents said.
United States citizens can buy property without restriction in Puerto Rico, which is a United States commonwealth. Transactions are handled by notaries, who are also licensed lawyers in Puerto Rico. That notary is typically chosen by the buyer, and the seller pays a notarial tariff.
Puerto Rico’s closing fees, including a stamp duty and the notarial tariff, are on a sliding scale. As an example, for a $1 million home costs would total around $10,600. Of that, the buyer would pay around $6,000.