St Kitts and Nevis aims to target ghost projects with new CBI regulations

Basseterre, St Kitts and Nevis: The Government of St Kitts and Nevis addressed the flawed claims about the Real Estate Investment Option of the Citizenship by Investment Programme.

Prime Minister Terrance Drew and the Head of the Citizenship by Investment Unit (CIU), Michael Martin, headed a series of revisions to the Regulations that govern the Citizenship by Investment (CBI) Programme of St Kitts and Nevis. These updates, known as the 2023 Regulations, were implemented to address concerns related to problematic financing practices and the presence of ghost projects within the Programme’s Real Estate Option (REO).

The Government introduced a new and improved process for applying for and approving real estate development projects. This process has multiple parts and aims to close any gaps or weaknesses that existed before. The Government has been working to enforce strict rules about holding money in escrow and meeting project milestones.

These changes are meant to make the Programme more trustworthy and valuable, creating better opportunities for investors and contributing to the development of the nation.

Important changes are made to the requirements for approving real estate development projects. These changes were carefully thought out, and opinions were taken to strengthen the legislative and administrative framework. The goal was to make the processes stronger and better, keeping the honesty and respect of the CBI Programme. These critical improvements were introduced to make this Programme one of the best and most trustworthy programmes out there, with clear rules that everyone can see and understand.

The Government has clarified that the new rules in the 2023 Regulations have not limited the choices investors have for real estate projects. The regulations actually make the evaluation process stricter. This means that only the best real estate projects that meet high standards of quality, sustainability, and long-term value will be chosen for the Programme.

“We understand how important it is to keep people’s trust in our CBI Programme. We want to assure everyone involved that the 2023 Regulations are not meant to stop investments. Instead, they are designed to create a safe and reliable environment where everyone can feel secure and successful,” the Government stated.

According to the 2023 Regulations, the CBI Board of Governors will review and approve real estate development projects. Some of these projects will have a certain number of units available for sale to qualifying CBI applicants. These projects will be built and completed following a set schedule, and a specific process will be followed to release funds from a secure account.

The CIU wants to stress that the goal of the improved approval process for real estate projects is to prevent low-quality developments that could harm the reputation of the Programme and the country. It was necessary to make these improvements to ensure that the SKN CBI Programme only approves real estate projects that are legitimate, bring actual investment to the country, and provide good resale value for investors.

Poor-quality real estate developments include those that involve dishonest or fraudulent financial behaviour and projects that are not making any progress and are often called “ghost” projects. The CIU found out that some developers of these projects were breaking the rules by keeping investors’ money outside the country and offering unauthorized discounts. This unfair behaviour made it hard for legitimate developers to compete in the local real estate market.

There are a few reasons why the number of Approved Developments has decreased. The 2023 Regulations required all existing developments to apply again and meet the new standards to be designated as Approved Developments. Some applications from poor-quality projects that don’t bring real investment into the country were rejected because they would devalue the local real estate market. Additionally, some developers chose not to reapply for Approved Development status, and there are still a few applications being reviewed by the CBI Board of Governors.

As per the misinformation spreading about the 2023 Regulations, claiming that they prevent real estate developers from paying commissions and fees to their marketing and local agents. This has led to concerns about the attractiveness of the real estate option (REO) under the Programme.

However, if we carefully interpret sub-regulations 29(11) to 29(13), we can see that developers of Approved Developments can actually pay commissions and fees to their agents. This can be done using any amount of money from the real estate investment fund that is over US$200,000. So, there are provisions in place to allow for these payments to agents.

The Government of St Kitts and Nevis, along with the CIU, wants to make sure that real estate investments through the CBI Programme benefit both investors and the people of St Kitts and Nevis. The new and improved approval process for real estate projects, introduced through the 2023 Regulations, shows our Government’s determination to lead the way in the CBI industry. We are taking proactive measures to preserve the integrity of the Programme and keep its reputation as one of the best and most trustworthy CBI Programmes in the world.