Aruba Building Stop: True or False

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.

Defunct Atlantis Hotel & Villas
New condo in Westpunt: Tuscany Residences

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.

Future

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.

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Gabriel

Former Aruba tour guide, trying to provide value to Aruba travelers.

2 thoughts on “Aruba Building Stop: True or False”

  1. Blue Residence Club is a new condo complex that will soon start on a long lease land ( 60 years ). Although you mention that the lease is renewed automatically ( please confirm ), but the Developper has signed an Agreement with the Ministry of Education, Social Affairs and Infrastructure titled: Agreement of Relinquishment and Granting of a Lease Hold stating that the Developper will relinquish the lease hold to Land Aruba at the end of the lease. Therefore I am not clear what happens at the end of the lease when it is relinquished to Land Aruba and how does this affect the potential buyer of the condo. On the same topic of the Long Lease Agreement, if the Developper does not complete the project within 36 months, then the authorities will force him to demolish the building and restore the land to its original state, which does not happen if the Developper owns the land outright, like Acqua. And also it does not make sense.
    Your comments will be very helpful. Thnx

    1. Hi there Roland, thanks for commenting. Indeed Blue Residence Club started recently and I see people working there everyday. This project is being developed by Perring Ingenieros (the same developer as Oceania Condominium at Eagle Beach). Perring originally planned another condo there, The Cliff Aruba, but this project never materialized. Long leases are for a period of sixty years and are automatically renewed when they expire.

      A term that the government set for all investors is that they agree to relinquish the land if the project stops midway. This is done to prevent abandonment in case of financial woes of the developers/investors. This happened to Aruba in the 90s when a couple of hotel projects failed. The ruins remained an eyes-soar for many years, also posted a thread for public safety.

      The reason for the government to set time limits is because some project are so poorly financed that they take years on years (sometimes over 10 years) to complete which at the end they put a building not according to building standards. Again these rules where put in place because of issues in the past.

      Acqua is build on private land thus don’t need to follow these rules, however, the price that Acqua had to pay is way higher than what a developer pays for that piece of long lease land. By the way, Acqua still has to follow plenty of rules in terms of construction.

      These rules to tear down half build projects are relatively new and I don’t believe that the government has ever razed any project just yet, so it would be a first.

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