Property market full of zest on Caribbean spice island

The euro goes a long way on the island of Grenada where British developer Peter de Savary is building swish new resorts with tax breaks, writes Property Editor Orna Mulcahy

With a lap dog in one hand and a huge Cuban cigar in the other, British entrepreneur Peter de Savary could have strayed off the set of a Bond movie. And there's a whiff of world domination in the way he throws out figures in the billions when discussing his latest obsession - the tiny island of Grenada in the eastern Caribbean.

De Savary, who has built and sold a string of five-star resorts around the world from Scotland - where his Skibo Castle was the venue for Madonna's wedding - to Antigua where he set up the phenomenally successful St James's Club chain - is convinced that Grenada which boasts sandy beaches and tropical rainforests can become the "the Switzerland of the Caribbean".

The flamboyant 62-year-old, who likes to be called Pd S, is ploughing his own considerable fortune into building a swish new marina, two hotels, villas and apartments as well as a five-star eco spa in the rainforest. He is pitching his developments at wealthy buyers from Europe and America seeking a place in the sun, and good prospects for capital appreciation.

The island, which is above Tobago and below St Vincent in the Caribbean sea, was fought over by the French and the British in the 17th and 18th centuries, before being granted independence in 1974. A Marxist coup in 1983 was quashed by the Americans - a period now known as "The Intervention". Grenada's prime minister, Maurice Bishop, was killed in the coup along with many members of his cabinet. Their names are inscribed on a plaque in Fort St George, an ancient fortress above the city with stunning views and a sombre atmosphere. Peace was quickly restored but there was fresh turmoil in 2004 when Hurricane Ivan ripped through the island, destroying 85 per cent of homes and decimating the nutmeg plantations which, until then, had met one-third of the world's demand.

Typically upbeat, Grenadians say that Ivan was a good thing, forcing them to build their homes better for the future. Land prices have been growing steadily since then, though at around $35 per sq ft are still just a fraction of prices on the larger Caribbean islands.

De Savary landed on Grenada less than two years ago but already he has galvanised the somewhat sleepy island into action. Having committed to spending over $200 million of his own money building a major marina, villa and hotel scheme called Port Louis, and a second holiday complex called Mount Cinnamon, he has negotiated valuable tax concessions from the government that will allow purchasers to buy and sell his properties virtually tax-free.

As it stands, buyers from overseas pay a whopping 10 per cent buyers' tax, as well as stamp duty of 1 per cent. They also have to pay 15 per cent tax on selling. De Savary's buyers can sell on at just 2.5 per cent tax.

The Mount Cinnamon project is a small resort overlooking stunning two-mile Grand Anse beach where over 100 units will be built to add to the existing cluster of 21 houses, 17 of which are already sold. The bigger project is Port Louis, a $300 million marina, retail, hotel and housing development on the waterfront in St George, the island's capital. Site preparation here involved clearing scrap metal that had reached three storeys high, dredging a marina and relocating 80 families to new homes.

Prices are pitched to attract wealthy buyers who have a bit of money to play with. Apartments in Mount Cinnamon have been selling for around $500,000 apiece, with villas selling for between $650,000 and $800,000. Prices will have risen by about 10 per cent in the new phase of Mount Cinnamon development which is due to be launched in the new year.

By 2010 Port Louis will have duty-free designer shops, a champagne bar, a spa and gym and 300 one-, two- and three-bedroom flats and villas. Prices will range from $500,000 for a one-bed to $3 million for a villa. The 350-berth marina will cater for the kind of super yachts that until now have not been able to berth on the island. De Savary, a contender in the 1983 Americas Cup, is determined to put Grenada back on the map with rich yachties. When Port Louis is finished, even Roman Abramovich will be able to dock there. It will become "the St Tropez of the Caribbean" according to de Savary who is keen to offer other developers a chance to get in on the action.

"I'm inviting all kinds of people to come down here and see what is going on. If there are Irish builders or developers out there who want to take part of the site - say building this block of apartments or that hotel - then I want to hear from them."

With both developments still at the planning stage, prices look cheap compared to nearby Barbados, where villas in and around the Irish-owned Sandy Lane Hotel change hands for millions of dollars.

Unlike Barbados, Grenada has not attracted high-end tourism, and the island has a real shortage of quality hotel beds. The island attracts up to 250,000 cruise ship visitors a year, but well-heeled tourists don't have a lot of choice in accommodation. However, with Four Seasons about to start work on a 120-bed golf resort, and several other fledgling villa developments around the coast, things are beginning to happen. De Savary aims to add hundreds to the hotel and villa beds since buyers in his schemes will have to enter a rental pool to take advantage of the tax breaks.

Owners can rent their homes out year-round, paying 40 per cent of rent to the management company. So far investors have been mainly British. Rents are fairly strong on the island with year-round lettings helped by the presence of around 4,000 students at the American University which has medical and veterinary schools.

De Savary himself has settled in a Moroccan-style palace though he spends more time in his Bentley which ferries him between his other properties which include Mount Edgecombe, a dreamy 225-year- old plantation house high above the sea, where a staff of 17 tend to the cocoa, nutmeg and banana trees. When not supervising the landfill works at Port Louis he is breakfasting at Mount Cinnamon where he urges the restaurant staff to ensure the toast is brown and crispy.

De Savary, who reputedly left school with a single O level, made his first fortune in the import-export business in Nigeria. He was a millionaire by 30, before moving into hotels and launching the St James's Club chain, which he sold in the 1980s for $100m. At one time he owned Lands End and John O Groats, as well as a string of private clubs. However, his empire collapsed in the 1990s.

With sterling and the euro at all-time highs against the dollar, second-hand property on Grenada seems ridiculously cheap. Pretty villas in the countryside can be had for €100,000 or less - but de Savary's properties are in prime locations, within a 10-minute drive of the airport and directly on the water. One thing you don't want to do on Grenada is commute. The drivers are crazy.

All prices are in US dollars. For more information log onto: www.desavary. com