Investing in Land

Land and developed property is almost always at the center of a business investment.  Successful land investment is critical for the growth and development of the business environment.  Vanuatu has a bad reputation regarding land investment and this reputation is somewhat true but mostly it has been created by the failings of investors that did not understand the system.

Vanuatu was founded in 1980 when the South Pacific island group known as the New Hebrides was granted its independence from the condominium government overseen by the English and the French.

When the native Vanuatu people (known as the Ni-Vanuatu) gained self rule they felt strongly that they should be able to recover their traditional family land from the foreigners that had taken it over the previous hundreds of years.  The government recognized that this would cause a great deal of displacement and they implemented a land lease system that allowed the property dwellers to lease the land from the newly declared landowners for a reasonable rate for up to 75 years.

Land in the cities of Port Vila and Luganville is owned by the government but is still leased to individuals.  Land outside the cities is owned by "custom" landowners that may be individuals or small communities and they may then agree to lease the land.

This system is highly effective because it ensures that the local people will not become homeless in their own land and they will always enjoy an income from developments that occur on their land.  For the investor is ensures more harmony with the local people and establishes a clear agreement for the intended use and the rental cost of the land.

Existing leases are very safe and may be purchased with confidence after ensuring that they are in good standing and free of encumbrances.  Things get tricky when you try to purchase land directly from the custom owner where no lease currently exists or when purchasing land for a use not specified on an existing lease.

When purchasing land that is not currently leased you must first apply to the land department for a certificate to negotiate with the landowner.  The landowner must clearly demonstrate that they own the land and that no one else has claims to the land.  After this the land must be surveyed.  An approved survey plan then allows for the lease to be drawn up.  The lease is then signed and must be approved.  Upon approval the lease is registered and the land is available for development.  This process is slow and there are considerable risks along the way.  It is not recommended for the newly arrived foreign investor.

Another common mistake is purchasing a lease for agriculture with the intention of using it for another business like a school or resort.  Changing a lease is much like writing a new lease.  It requires the approval of the landowner and considerable government intervention.  It is common for a landowner to expect compensation for the change in status.  If you put yourself in their shoes you can understand why.  They will also expect an increase in the rent paid.  Residential and commercial ground rents are often 10 to 100 times higher than the very low agricultural rents.

The bottom line is that a new investor should purchase an existing lease with the intention of using it for the purpose spelled out on the lease.  If you wish to purchase a parcel of land and use it for some other enterprise and you are paying a premium because of your intention then you should insist that the seller get the lease changed as a condition of sale as they will have more influence with the land owner and the local government. 

Now that you know the facts, here are some very interesting property investment opportunities in Northern Vanuatu.