Many of us, likely about this time of year as the snow flies and the days get shorter, dream about leaving it all behind and moving to a tropical island. That’s exactly what Nova Scotia native Stan Hartling did about 15 years ago.
Inspired by the tax planning book Take Your Money and Run, Hartling, a chartered accountant ultimately decided to sell his stake in a Halifax real estate business and try his hand building resort properties in the tax-free Turks & Caicos after a vacation-exploratory trip turned serious.
“It was a little tiny ad in The Globe and Mail about an offshore tax course in Turks & Caicos,” recalled Hartling, who still retains his Maritimes accent despite his years in the Caribbean. “I came down here to take the first vacation I had taken in 10 years and wound up working the whole time.”
Within a year of taking that course he had sold his stake in Halifax’s Barrian Group, a property development group which had focused on retail shopping malls and large-scale storage facilities and purchased 6 acres in the Turks & Caicos at $350,000 per acre. “I thought maybe the whole island was down at the bar celebrating that they had a new victim. It turned out that the land probably tripled in less than two years.”
Hartling was fortunate in his choice of tax-free locales. Land values in similar jurisdictions like the Cayman Islands were four to five times what land was going for on the pair of British Territory islands in the Caribbean.
The low land price and lack of development on the islands presented an opportunity to create a hotel-condo ownership company that today is comprised of three luxury resort properties. “We basically sell all of the room inventory as condo inventory and then we maintain all the amenities that make it a resort.”
Hartling designed his ownership model with the unique risks of the islands in mind. The price of power is directly related to the cost of oil and insurance costs go up and down with hurricane landfall. “To be able to spread that risk out and to put more value to a hotel room – my concern with a regular hotel room, it is only worth what it generates in cash flow, it has no so-called real estate value.”
Allowing foreign investors to buy, hold and sell resort properties with freehold title – unlike some other Caribbean destinations which limited property ownership – raised the profile of the Turks and Caicos. The islands also benefited by being overlooked in the first wave of development, Hartling said.
“It was almost the islands’ biggest fortune is that it missed the rush of the Seventies and Eighties and really didn’t come into its own until the late Nineties when there was really demand for luxury product,” he said. “The destination never got diluted early in the game and gave us a great platform to do the kinds of things that we wanted to do.”
The Hartling Group’s three ocean-front properties are comprised of The Sands of Grace Bay, a 116-suite, plantation style villa resort and its first resort; the 72-suite Regent Palms and a third villa and condo development buildings called The Shore Club on Long Bay Beach which is currently under development. Prices in the new Shore Club unit range from $1.4 million (all figures U.S.) to $5 million for condos while the villas sell in the $5.5 million range. The Sands development units range from $350,000 to $1.2 million and the Palms resort runs from $800,000 to $3.2 million.
Hartling Group’s buyers are well-heeled investors facing fewer choices than one might think. “I think the predominant markets are those higher-end markets,” said Hartling. “Those people are actually the ones that have the cash to go and look for what they want in that $5 million range and have the least amount of product to pick from.”