 |
| |
 |
| |
|
|
|
| |
|
Offshore Low Tax and Financing Index
The Isle of Man as an investment opportunity
Mention the Isle of Man and people mostly think of motorbikes or cats with no tails! They shouldn’t – there’s a lot more to the island than this. But the fact that people still do think of The Island is no bad thing.
by Graham Hamer
In general, if a large number of people have already woken up to an opportunity, the best time to get in has passed. That’s clearly not the case here. Roughly 572 square kilometres in size, the Isle of Man is ten times the size of Guernsey and five times the size of Jersey. The official headcount is 79,000, but the actual population is probably around 100,000.
The island lies far north when viewed on a map, but sea currents create a surprisingly mild climate. Subtropical plants flourish and winters are mild. A stunning 93% of the island’s population say that they’re very satisfied with their quality of life.
Excellent sea and air links keep The Isle of Man insular but not insulated.
A priceless special status
The Isle of Man is governed by its own parliament (Tynwald) and has largely managed its own affairs since 979. As a Crown Dependency, it’s neither part of the UK, nor the EU. Foreign relations and defence are taken care of by Westminster, and the Queen serves as a largely symbolic head of state, but it sets its own tax laws (there’s no capital gains tax or inheritance tax) and as a result has long attracted wealthy entrepreneurs and retirees.
Douglas, the Island's capital, has changed hugely in recent years. Many of the run-down Victorian hotels that littered the promenade have been refurbished or turned into apartments or upmarket shops. The Victorian Gaiety Theatre has been restored to its former glory and unattractive nightclubs have been replaced by new apartments. Things are moving fast.
A booming economy
Back in the 1980s, the island’s economy had virtually collapsed following the exodus of tourists. Cheap air travel lured British tourists off to Spain, leaving the island’s economy devastated. National income collapsed to 55% of the UK’s level, unemployment stood at 12% and young people were leaving in droves.
Yet today, national income per head stands at 106% of the UK’s, and with the economy last year growing by a big 6.8%, the wealth gap between the Isle of Man and the UK is set to widen further. Standard and Poors, the external ratings agency, have again confirmed that the Isle of Man has retained its ‘AAA’ rating, the highest rating that it awards.
In its report, Standard and Poors refer to the Islands “very strong credit standing” and the “proactive Government policy of promoting high value added industry”. It also noted that the Isle of Man has outperformed other ‘AAA’ jurisdictions such as Singapore, Bermuda, Luxembourg and the United Kingdom in respect of its growth during the last five years.
The Treasury Minister, Allan Bell MHK, reacted to the announcement by stating “It is always welcome to receive external confirmation that the Island’s economy is in good shape. The Isle of Man represents a great place to do business. We expect that confirmation of the rating will continue to attract potential investors to the Island and give further boost to our dynamic economy.”
Throw in a maximum income tax of 18%, nearly zero crime and the absence of terrorist threats, and the attractions become clearer still – certainly for the estimated 25,000 illegal immigrants who have flocked to the island. With a 1.3% unemployment rate, the island desperately needs more manpower. Thanks to the influx of new residents, the population is growing younger every year.
Not all is perfect, but there’s a wind of change in the air, underlined by a drive to attract more business. The island offers special online-gambling legislation, which is why the world’s second-largest online-poker firm has moved its headquarters there from Costa Rica (other big online-casino firms are believed to be considering following suit). The government also allows a favourable regime for registering ships. Shell has bought an entire building in a central square of Castletown to hold its in-house ship registry. Registers for private aircraft and satellites are to follow soon. The government has net financial reserves of about £500m. This miniature nation is hell-bent on becoming a good place to do business.
Corporation tax slashed to ZERO!
Some 70% of the local government’s tax revenue now stems from VAT, and it can afford to slash corporation tax to 0% for everyone bar banks and a few other exceptions. It is this environment that will, with all likelihood, lead to fast-rising property prices. In Monaco nowadays you easily pay €20,000 per square metre of living space, while on the Isle of Man you’d be hard pressed to spend €3,000.
Moreover, only 8% of the island’s land mass is open to building, not least because of its 20 protected nature parks. Hence the number of properties suitable for rich tax exiles is limited. So what do you do if you want to make money in the years to come? Invest in the kind of property that wealthy immigrants will snap up. With a corporate tax rate of nil, demand for executive houses has only one way to go. Consider, too, prime locations in Douglas. What was once a gorgeous Victorian promenade is likely to be relaunched as a major location for visitors and residents alike.
Investors are starting to take notice
The world’s foremost investor in infrastructure plays, Australian-based investment bank, Macquarie, has already bought out the local ferry operator, the Isle of Man Steam Packet Company. Macquarie is well aware that there is potential for reviving unused ferry routes, and the government plans to double visitor numbers to 500,000 per year by 2008 – not least because the first casino is likely eventually to be followed by others.
The promenade will profit from all this, and although it is a good three kilometres in length, there will only ever be so much space for erecting first-class apartments with direct promenade-access and unrestricted views of the sea. In five years, these properties will be able to command a real scarcity premium.
Set-jetters spark property boom
What would all this be worth if no one was ever going to notice it? Recently, the FT ran a six-page supplement on the Isle of Man – “the greatest economic success story that the world has never heard of”.
While that’s true now, it’s likely to change. It used to be jet-setters that made places popular, but nowadays it’s the ‘set-jetting’ filmmakers – of films such as The Lord of the Rings in New Zealand – who send visitor numbers soaring.
Films produced in the Isle of Man tend to depict the island in the best of ways – not least because the island’s government has a habit of buying an equity stake in the production company!.
What to do now
The Isle of Man is possible now in the final throes of a property market that, so far, has largely been unnoticed by the international community. There is a huge array of properties to be had on the Isle of Man, ranging from harbour-side cottages to stately countryside homes. British and EU citizens can buy without restrictions. For a list of quality local property, visit: http://www.manx-property.com
Graham Hamer is co-owner of Hometown-Property.com,
where entrepreneurs learn to use the global real estate market, and
Property-Seekers.com, your One-Stop-Property Shop
for online Real Estate sales and rentals.
You may reproduce this article but must not alter it in any way, and must include this resource box
International...
List of International Zip Codes... Zip Codes
List of International Post Offices... Post Offices
Great Information on Offshore Investment Havens... Tax-Free
Banks in The Caribbean... Caribbean Banking
List of Country Profiles... Country Profiles
|
|
|
|
