Is Buying a Condo in Aruba a Good Investment?

Aruba is an appealing destination for real estate investment, especially for condos. The island’s consistent appeal as a tourist hotspot and stable economic environment offer a foundation for potential rental income and property value growth. Understanding this market is important for diversifying investment portfolios. This overview provides information for acquiring and managing a condo in Aruba.

Market Dynamics Affecting Condo Value

Aruba’s tourism industry drives condo values and rental potential. The island attracts many visitors annually, with North Americans comprising a large portion of these arrivals. By August 2024, the island had welcomed over 987,000 visitors. This consistent influx creates steady demand for accommodations, including short-term vacation rentals.

The Aruban economy is stable, with its currency linked to the US dollar, providing predictability for foreign investors. Government policies promote a “High Value-Low Impact” tourism model, attracting visitors who contribute economically and value Aruba’s culture. This approach supports sustained tourism, underpinning the rental market.

Condos range from resort-style units to residential properties. Beachfront locations or proximity to tourist zones command higher values and rental rates. Over 32% of visitors opted for short-term vacation rentals, indicating a strong market for investor-owned condos. The average occupancy rate for these accommodations increased to 54.7% in November 2024, up from 50.8% in November 2023.

Financial Commitments of Ownership

Purchasing a condo in Aruba involves financial considerations beyond the initial sale price. Closing costs range from 5% to 8% of the property’s sale price. This includes a transfer tax of 3% for properties under AWG 250,000 (approximately $138,889 USD) and 6% for higher values. Notary fees for the transfer deed range from 0.5% to 3% of the property value, with an additional 0.5% to 2% if a mortgage deed is involved.

Ongoing ownership costs include annual property taxes, assessed based on the property’s value. For non-residents, the yearly ground tax is 0.6% of the property’s value. Homeowners Association (HOA) fees are recurring expenses, covering security, common area maintenance, and sometimes utilities. HOA fees can vary, with monthly costs around $198 for a one-bedroom and $258 for a two-bedroom condo.

Utility costs, such as electricity and water, are additional monthly expenses. Water bills average around $82 per month. Property insurance protects against damages from explosion, fire, and natural events, costing approximately 0.37% of the reconstruction value annually. Local financing is available for foreign buyers, requiring a substantial down payment, often 40% to 50% of the purchase price. Mortgage interest rates in Aruba range from 5% to 7%.

The Condo Acquisition Process

The condo acquisition process in Aruba begins by engaging a local real estate agent. An agent assists with finding properties and navigating the market; their services are paid by the seller. Researching agents through referrals and online listings is recommended to ensure they have local market experience and a good reputation.

Once a property is identified, the agent prepares and submits a formal written offer. Negotiation is standard, with the agent providing guidance. After an offer is accepted, a purchase agreement (Koopovereenkomst) is drafted, outlining the sale terms.

Legal due diligence is performed by a civil law notary or lawyer to verify the property’s title, check for encumbrances, and ensure compliance with local laws. Aruba law mandates Know Your Customer (KYC) compliance checks for all real estate transactions. A security deposit, 10% of the purchase price, is required and held in the notary’s escrow account. The civil law notary prepares the deed of transfer (Akte van Levering) and oversees its registration. The entire legal process, from agreement to closing, can take two to three months.

Managing an Investment Condo

Managing an investment condo in Aruba, especially for rental purposes, involves utilizing property management services. These companies offer comprehensive support, including:
Guest services
Marketing the property on platforms like Airbnb and Booking.com
Coordinating maintenance
Providing financial reporting
Professional cleaning
Stocking amenities
Payment processing
24/7 guest support

Understanding local regulations is important for rental operations. The Aruban government is developing a regulatory framework for short-term rentals, requiring registration, licensing, and compliance with zoning and safety laws. Owners must also comply with tax obligations on rental income.

Maintenance and upkeep are ongoing responsibilities. Property management companies facilitate repairs and scheduled maintenance for systems like appliances and plumbing. This ensures the property remains in good condition, especially for remote owners. Regular property inspections are conducted, with issues promptly reported and addressed.

Rental income in Aruba is subject to personal income tax, with deductible costs including utility bills, repairs, insurance, and management fees. Short-term rentals are also subject to a $3 per night per occupied room tourist levy and a 12.5% tourist tax on the nightly rate. The government focuses on identifying and registering non-resident vacation home owners to enhance tax compliance.