Lush and exotic, French Polynesia is made up of 118 islands scattered in the South Pacific. With crystal-clear waters, overwater bungalows, lush landscapes, and a vibrant Polynesian culture, it is without a doubt why this place has become a cup of tea for so many tourists and even investors today. But to those who plan on investing their hard-earned money in this haven of a tropical paradise, one very important question arises: Can foreigners buy property in French Polynesia?
In this paper, we will look at the legal framework governing property ownership in French Polynesia, the practicalities of investing in real estate in the region, and some answers to your most frequently asked questions that could help buyers make their way through this beautiful and unique market. Be it buying a vacation home or an investment property, or even buying some land, one needs to get the lay of the land by understanding what rules and regulations govern property ownership before diving into the mix.
Are foreigners allowed to buy property in French Polynesia?
The short answer is yes, foreigners can buy property in French Polynesia. But, the legal and regulatory considerations are quite significant. French Polynesia is a French overseas territory, so its laws concerning property differ to some degree from the rest of France. Foreigners can own property. However, there are certain restrictions, particularly with respect to land acquisition. Below are the key points.
Legal Framework for Foreigners Buying Property
1. Limitation on Land Ownership:
The legislation of Polynesia with regards to the ownership of property has its roots in French law but with some adaptations concerning this overseas territory. One of the major restrictions foreigners encounter in regard to land ownership is, well, when buying property in French Polynesia. Whereas in the metropolis, foreigners are allowed to buy houses without any problems, in the overseas territory of French Polynesia, the ownership of land by foreigners has been regulated.
In particular:
– Agricultural land can’t be owned by foreigners in French Polynesia, save if certain criteria are met. This is often the case with agricultural land, which for the most part may be reserved for the local residents to ensure that traditional practices and local communities benefit from the land.”.
– Real estate in built-up areas like residential and commercial properties are generally open to foreign ownership, though there may be some sort of zoning laws or other local regulations when buying property in certain areas.
2. Urban vs. Rural Property:
The restrictions with regard to land ownership are more crippling in the countryside than in towns, especially regarding agricultural land. Among city dwellers, including big cities like Papeete (capital) or Bora Bora, foreigners are allowed to purchase residential or commercial real estate, provided that they have to follow the rules and regulations set by the local people. As such, there are many foreigners who prefer to purchase houses in these towns or coastal areas which act as a hub of tourism and high-end resorts. 3. Leasehold vs. Freehold Property:
One of the options available to foreigners seeking to own land in French Polynesia is the long-term agreement.
These agreements ensure that foreigners have the right to lease land for a period of up to 99 years. Leases of this nature are common, especially in resort developments, hotels, and other commercial property, as foreigners can own the land without actually having outright ownership of it. These kinds of leasehold agreements are becoming a good option for foreign investors interested in long-term involvement in the market in French Polynesia but cannot purchase lands. 4. Special Areas of Interest: There are special rules and protections governing some portions of French Polynesia. For example, there may be additional restrictions in place on certain islands or protective environmental zones that prohibit or limit development with the purpose of preserving natural resources. It is in the best interest of the foreign buyer to be counseled in the research of specific zoning and environmental legislation which may apply to the property under consideration.
5. Role Played By a Notary
Just as on mainland France, any property transaction in French Polynesia must pass through a notary. It is his responsibility to ensure that the transaction conforms to all legalities: title to the property; tax payments; and that all documents are in order before completion of sale.
6. Taxation and Costs:
While French Polynesia enjoys certain tax advantages with its status as a French overseas territory, there indeed are taxes and fees of buying. For example:
– Taxes Notaires: These join property transactions and generally range between 7-8% of the value of the property.
– Property tax: There is an annual property tax on real estate in the country, but it is generally low as compared to other regions.
– Capital gains tax: The French Polynesia capital gains tax follows the same guideline for taxation just like mainland France. However, it’s always lower than in other parts of Europe.
### Financing a Property in French Polynesia
Another important factor to take into consideration is financing. Mortgages from local banks in French Polynesia do exist, but for a foreigner, obtaining financing is not as straightforward as compared to other countries. Most of the banks would require a bigger down payment, which often ranges between 20% and 40% of the value of the property, and can be more strict with their lending criteria when it comes to non-residents.
Foreign buyers in need of financing options may also want to check with international banks, which from time to time give mortgages to foreign investors if the purpose of the investment is for a second home or an investment property. This is something to be weighed very carefully when evaluating your options for financing a purchase and the costs involved with buying property in French Polynesia.
Investment Opportunities in French Polynesia
Despite the complexities regarding land ownership, French Polynesia has remained a place of interest for foreign investors, especially with regards to investments in tourism. The following presents an overview of a few popular investment options available to foreigners:
1. Luxury Resorts and Hotels:
French Polynesia is equally known for five-star resorts, most especially in islands like Bora Bora, Tahiti, and Moorea. As such, many investors are interested in the hospitality industry, like buying existing ventures or even building new resorts and vacation houses based on increased tourism demand.
2. Residential Properties:
For a more traditional investment, residential real estate in urban areas, such as Papeete, is also available to foreign buyers. As French Polynesia increasingly draws tourists, residential properties are in general demand for short-term rentals and second homes by upscale international clients.
3. Eco-Tourism and Sustainability Projects:
With the natural beauty of these islands and a growing interest in sustainable travel, many foreigners invest in eco-tourism projects, such as developing boutique hotels, eco-lodges, or rental properties that create an environmentally sensitive stay and experience.
4. Commercial Real Estate:
Commercial real estate, including office buildings, shops, and restaurants, increasingly lures investors, as the middle class rapidly grows and tourism is on its way up.
Frequently Asked Questions
1. Can foreigners buy land in French Polynesia?
Foreigners have the right to buy real estate in French Polynesia, with some land ownership restrictions. It is forbidden for foreigners to purchase agricultural lands or lands included in environmentally protected zones. Still, they can buy property in cities and towns or rent land for long-term use in both urban and rural areas for a period of up to 99 years.
2. How much does property cost in French Polynesia?
Property prices vary a lot according to location, size, and type of property. Property prices may be relatively high for urban areas like Papeete compared to more remote islands, but they are still relatively lower when compared to the mainland of France or other popular Pacific destinations such as Hawaii. Properties in the luxury range, along with resorts in Bora Bora or Moorea, will usually be the most expensive.
3. Is it possible for foreigners to finance buying a property in French Polynesia?
Foreigners have equal access to financing to purchase property in French Polynesia. However, the terms won’t be as attractive compared to a local buyer. The majority of banks will require higher deposit requirements-usually 20-40% and apply more stringent lending criteria on non-residents. Some investors may opt for international banks for their financing needs.
4. How much is the tax on property in French Polynesia?
The property taxes are quite low in French Polynesia. There is a notary fee of approximately 7-8% for the transaction of the property, and the owners are liable to pay annual property taxes. There is also capital gains tax applicable on the sale of properties, which is under French law, but the rates are relatively low as compared to other countries.
5. Are there any environmental restrictions on buying property in French Polynesia?
These are exclusions but only in very specific areas within French Polynesia, particularly the protected environmental zone areas. The idea behind such zoning is to contribute to the preservation of natural resources and beauty within the region. It is always recommended to check on the zoning laws and other environmental regulations when buying property in such areas.
Conclusion
Indeed, foreigners can purchase property in French Polynesia; however, it is crucial to understand the legal framework with regard to land ownership.
While agricultural land is pretty much taboo, foreigners can purchase residential or commercial real estate in urban areas or land with long-term leasehold agreements.
That is beautiful, and it has a fast-growing tourism industry with a number of possibilities for investment. If you, too, want to invest in real estate, French Polynesia will be the right choice. The only thing needed is that one understands the local market and is able to imagine going through all the legalities of such an investment. Therefore, it is highly recommended that any property purchase in French Polynesia, for the most satisfactory experience, first be consulted with local professionals in real estate and legal fields that will assist in accomplishing all necessary regulations. With a little foresight and due diligence, French Polynesia can prove to be a very rewarding place to own property and for exploration of its unique tropical charm.
