A question I receive frequently is about the so-called moratorium on construction of hotels and/or condos in Aruba. How is this really and should you (tourist/investor/stake holder) really care? Yes, you should care.
Long lease land vs Private property land
First of all I need to explain the two principal type of lands in Aruba, which are long lease land and private property land. Long lease is a land given out to by the government and the lease is for a time span of 60 years which renews automatically. Private property land is owned by the title holder. On both type of land tax is owed to the island government.
Generally clean – not build upon – long lease land carries additional restrictions in terms of construction, destination and transfers, in comparison to private property. When there’s construction on the land both type of lands are virtually equal, thus selling or transfer of the property are allowed without restrictions. And, yes, foreigners can purchase property in Aruba.
The government hasn’t given out any private property land in a few decades and isn’t going to give out any private land for the time being. A lot of private property land has gone from generation to generation. Not that it matters anymore, but I still question on how these private land ownerships came about in the first place.
Is there or isn’t there a moratorium
Yes, there is. Sort of. The building stop is in place by decision of the Minister Infrastructure. This decision carries the same weight as a law, however, the rules can be bypassed by the same Minister. This is what’s been going on the last few years. The new condos you see appearing everywhere are all build on long lease land, except problematic Acqua Condo, which was the last piece of private property land in Palm Beach.
I don’t believe condo sales representatives should use this “moratorium” as an angle to sell condos. In lesser extend this is also valid for timeshare units. There are no guarantees that this building stop is going to last and whether it’s going to influence the value of your property in the long term.
As of last year October Aruba has a different government, which campaigned hard against the over-building and promised to limit new project. Instead they said they would like to focus the development to San Nicolas. In three more months or so this government will be a year in office and to my knowledge they haven’t given out any major piece of land near the hotels. All development currently ongoing was inherited by previous administration.