Isle of Man Real Estates, Economy and Investments
The Isle of Man has a great deal more to offer the world than tailless cats and motorbike races. Normally, by the time a lot of people have discerned a great investment opportunity it is too late to get in profitably, but this is not the case with the Isle of Man.
The Isle of Man is larger than the other Crown Dependencies: ten times larger than Guernsey, and five times larger than Jersey. The 2010 census returned a result of 80,058 citizens, but actual population numbers are probably about 100,000 including immigrants and temporary or seasonal workers. Although the Isle is located in the northern part of the Northern hemisphere, the ocean’s currents keep the island’s climate quite mild, with subtropical plants growing easily and gentle winters. 93% of the Isle of Man’s population claims to be “very satisfied” with the quality of their lives, which is an extremely high percentage when compared to other nations. The Isle is very well connected by sea and by air, which allows the Isle to remain insular but not isolated or insulated from the outside world, and vice-versa.
The Isle of Man is a Crown Dependency, meaning that it is not a part of the United Kingdom or of the EU. It is governed locally by the Tynwald parliament, which has run the Isle since 979. Foreign affairs and military defence are handled by the UK, and the Queen is a mostly-symbolic figurehead, as the Isle establishes its own rates of taxation and laws. For example, there are no capital gains taxes or inheritance taxes; this has led to making the Isle of Man an attractive base for wealthy entrepreneurs and retired individuals.
The Isle of Man’s capital city is Douglas. Douglas had fallen into some disrepair in decades past, but has received careful restoration. Many of the old, shabby Victorian hotels along the local promenade have received much-needed refurbishment or been transformed into upscale shops and apartments. One landmark building, the Victorian Gaiety Theatre, has been renovated completely, and unsightly nightclubs have been supplanted by apartments. Change is happening quickly.
A Booming Economy
During the ‘80’s, the Isle of Man’s economy practically collapsed due to a radical switch in tourist habits. Airfare dropped sharply, and many British tourists decided to holiday in Spain instead because it was so affordably. This was devastating to the Isle’s economy, dropping the national income to 55% of the level of the UK, with 12% unemployment. Young people left the Isle in large numbers, depleting the society of a valuable, contributing segment. However, the island’s economy rebounded significantly, with the national income per capita at 113% of the United Kingdom’s and a 6.8% increase in the economy in the previous year. The trend seems to be continuing, especially as the Isle of Man weathered the global recession quite well.
The Isle of Man was recently re-affirmed by the external international ratings group, Standard and Poor’s, as having an ‘AAA’ rating, which is the highest rate that the group awards. The S&P report refers to the Isle’s “very strong credit standing” and that the “proactive Government policy of promoting high value-added industry” has encouraged on-going growth in certain very profitable economic sectors. It is significant that the Isle of Man actually performed better than other AAA-rated jurisdictions like Singapore, Luxembourg, Bermuda, and the United Kingdom in its economic growth in the previous five years. Allen Bell MHK, the Treasury Minister, stated, “It is always welcome to receive external confirmation that the Island’s economy is in good shape,” in reference to the S&P report. 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."
Low-Tax Economy
Other major contributions to the Isle of Man’s financial health are that it has an income tax maximum rate of 20%, has almost no crime, and has a complete lack of terrorist targets or history of threats. It has become a very attractive place to live, work and invested, as attested to by the more than 25,000 illegal migrants who have come to the Isle. The local unemployment rate is 2.3%, meaning it needs more workers, and the inflow of residents from other countries lowers the population’s median age every year.
The Isle’s leadership is keen to bring in even more business, and is makes that easy with specific, protected online gambling laws. The online gaming market is a growing one that has encountered legal difficulties in other jurisdictions, such as the United States. The Isle of Man is now the home for several major gaming enterprises, including the second-largest online poker firm. Online gaming companies enjoy a zero percentage income tax rate. This is a highly profitable industry with a large growth potential, and Man has provided a rare safe haven for the persecuted companies that offer gambling services on the internet.
The Manx government is required by law to set aside financial reserves and not run a budget deficit; its current cash reserves are around £500 million. They also seem determined to become an attractive place to conduct business and invest: corporate taxes are currently 0%, except on banks and a few exceptions. The government draws the majority of its revenues from value-added taxes (VAT), which puts the tax burden on the consumer, but VAT is scaled to the actual cost of the good or service being purchased.
Increasing Property Prices
Property prices on the Isle of Man have risen in the past several years, mainly due to in increases in local population due to immigration. Prices for property and rental lodging on the Isle are on average on par with those in England and parts of Wales. Demand for local housing is high, but there are properties to be had for commercial and residential purposes. Building is only permitted on 8% of the Isle of Man’s land, mostly because of the fact that the Isle boasts 20 protected areas and nature reserves. These factors dictate that prices for property will only increase, so one potential source for lucrative investment in the future is in purchasing property for future development. Securing a property and re-selling to a wealth immigrant could return a serious profit.
Major international corporations have already begun to notice the Isle of Man’s potential. Shell purchased a large building in Douglas to use as its local base of operations. Dozens of internationally renowned financial and banking companies have subsidiaries on the Isle. The local ferry service, the Isle of Man Steam Packet Company, was bought by Australian financial giant Macquarie in 2005. Macquarie has embarked on a vigorous campaign to renovate ferry routes and has re-fitted several of the Company’s vessels and ports, adding more modern amenities to both and increasing the numbers and destinations of trips. They have managed to realize their goal of doubling visitor traffic, which now exceeds 500,000 per year.
Douglas itself has major potential for economic growth. The promenade area has been renovated and is much more attractive to visitors and residents, and even boasts the Isle’s only casino at the Palace Hotel. More will likely follow. The old, previously run-down Victorian mansions and hotels are now prime real estate; the buildings that have not already been renovated can be turned into high-price executive housing or high-rent shops and other retail spaces.
Properties in the countryside are available in every price range, from humble cottages to estates to large parcels of land for commercial use. One serious incentive to buy a property in the Isle of Man is that UK and EU citizens and qualified foreigners can purchase properties without restriction, and owning property on Man brings residency privileges.
