Saipan Realty and CNMI real estate issues with pictures of the fabulous Northern Marianas Islands. Ron Hodges is broker agent for A1 Real Estate in Saipan and offers professional assistance in property sales, home purchases, land issues, rentals, leases, and all areas of commercial and residential transactions. Welcome to Saipan, Tinian, and Rota, the most beautiful tropical islands and beaches on earth.
Saipan Real Estate economic report 2010
State of the Commonwealth
Saipan Real Estate economic report for spring 2010
Beginning with short takes on the NMI economy, restaurants and bars are suffering from high utilities, poor water, and rising minimum wages. Russian, Chinese, and Korean investors are funding small construction, chiefly personal homes, generally cash customers due to difficult financing. .A bill to legalize marijuana has been offered by a lawmaker that could have economic merit if properly administered, unlikely for a Legislature unable to manage a lemonade stand without federal funding. Being displayed in the cases of Amsterdam would provide more advertisement, economic development, and enhancement of tourism than MVA has ever accomplished though and could add an export product currently lacking in the economy! Casino talk for the outer islands has waned even though the island of Rota pays a casino commission. Tinian’s casino looks like a ghost town with a curtain closing half the gaming floor to reduce utilities. The only economic opportunity for young people on either of those islands is welfare or a ticket east. The House speaker has proposed Saipan casinos again even though two straight referendums were soundly defeated. The long term trajectory of U.S. intervention could unite Guam and the CNMI into the Marianas province. A united MP could potentially become the 51st state and have two voting senators in Congress. The CNMI Legislature will not support this because it would jeopardize the gravy train they themselves are riding. The NMI landed the Marianas Marine Monument, but the visitor’s Center for that wonder of the world may land in Guam. NW’s split with Continental has opened European and Asian ports offered by Delta, United, and all their partners, opening Saipan to vast new markets. Japan’s minority party has endorsed a Marine move to Tinian instead of Guam, but CNMI involvement in the Marine relocation remains unclear. Increased federal funding and personnel has been an economic boast to the beleaguered NMI.
In November, 2009, CNMI labor and immigration was federalized by the United States, and immediately addressed the reputation of labour abuses and human exploitation in the CNMI. Federal officials have confirmed that workers are no longer tied to their jobs, and federalization proponents can thank the U.S. Congress for ensuring that the democratic ideals of the US apply to the CNMI. Only months into U.S. intervention and Saipan has virtually no labour abuse, and not much is expected.
Saipan has catastrophic unemployment among aliens and citizens alike, the remnants of an economy driven by the textile industry. The CNMI is the most impoverished American region of the last half century. There may have been over 10k illegal aliens as well, but an umbrella permit was honoured by the U.S., effectively stalling some aspects of federalization for two years.
The CNMI stalled U.S. intervention by blanketing maids, dancers, illegal business operators, their employees, freelancers, and every immigration fraudsters who lined up with an umbrella permit, so they have a legal right to remain in the CNMI until November 2011.
Foreign owned businesses operating here must exit when their two year permit expires. CNMI investor visa holders have until 2014 to meet U.S. investor visa requirements or restructure their business and move.
The status of guest workers is controversial. The regulations governing guest workers are not final, but if they mirror the original version, the unique CW transitional guest workers program used in conjunction with the CNMI transitional investor’s visa program will make right what was long wrong in the CNMI.
Guam needs 20k workers for the U.S. military build-up, and some think NMI workers should be allowed to travel to Guam for work. The CNMI hopes the Guam build-up will employ citizens earning prevailing wages, which will stimulate the region and spill into the commonwealth.
Austerity and reality demand CNMI constitutional changes. The CNMI spends an extraordinary amount for governance and has unnecessary bureaucratic waste. A small government would prove affordable, flexible, and able to adapt to a rapidity changing world. The land alienation law continues to prohibit growth and development, but impoverished residents have little confidence in the Legislature’s ability to enact reform.
CNMI residents face four serious economic problems. First, about 50 percent of NMI residents send earnings abroad as remittances, undoubtedly the highest percentage on the planet. While the Philippines survive by receiving money, the CNMI has an extraordinarily high percentage of people remitting their income abroad. Second, our banks send our depositors money to other shores to stimulate their economies, chiefly Guam and Hawaii, instead of investing where the wealth originated. Third, foreign workers are willing to accept jobs below prevailing wage, making local citizens unable to compete for jobs that they should be performing. This increases our numbers receiving U.S. aid. The recent austerity measure reduced government workers hours by 10 hours a pay period, or 12.5 percent of NMI government employees yearly economic wealth is lost. Lastly, illegal foreign businesses operate here without a U.S. investor visa and send their profits off island as well, strengthening their East Asian homelands but paralyzing the CNMI. These businesses will close before 11-2011.
The post-textile industry CNMI is a welfare territory evidenced by statistics. The CNMI has roughly three households receiving federal aid for every voter, an astonishing admission of fraud.
Real estate sales are slow and leases realize record lows, upscale housing is limited, and there is a glut in substandard structures. Financing commercial or residential property is difficult and the cost of money is pricey. Accurate appraisals are tough to find, and many Saipan properties have expiring leaseholds from the boom time of the early 90’s. CDA loan default rates are nearly 90 percent, and title issues with unresolved probates are routine. A NMI Senate initiative seeks to change the Article XII land alienation law (restricts land ownership to persons of Northern Marianas Descent and all others can’t exceed a 55-year lease term) to allow 99-year leases. If passed, it would create real estate activity because FDIC banks consider a 99-year lease equal to a fee simple for financing purposes. Land value is based on supply and demand, and demand is largely based on the availability and cost of money. When people can easily qualify for a low interest loan, prices skyrocket, but high interest and difficult borrowing requirements create the stagnant mess that now exists. The advantage to the 99 years is that locals could get an extra bite at the apple, but the disadvantage is that it will lose in court the first time a U.S. citizen, NMD or not, challenges the law after 11-4-11.
Perhaps the brightest recent news for the CNMI is visa waivers for Russians and Chinese tourists, the only U.S. soil with that distinction. Russian and Chinese arrivals are on the rise and have incredible potential considering that there are thousands of millionaires within short flight range. The market possibilities for winter residences are enormous. Korean tourism continues to improve, helping to offset a collapse in Japanese arrivals. There is a spark of investor confidence attributed to the stabilizing effects of federalization and the visa waivers.
Politics and economics aside, Saipan, the capital of the Northern Mariana Islands, is an enchantingly tranquil tropical delight of unimaginable beauty; highlighted by turquoise crystal water, fire red sunsets, panoramic views, and unparalleled weather. Saipan’s has hosted 3/4 million tourists in a single year, entirely from East Asian, making Saipan a playground of seaside golf, scuba diving, sport fishing, snorkelling, parasailing, wind surfing, kayaking, biking, beach volleyball, and barbecuing on the remote pristine beaches. The friendly laid back nature of the inhabitants is as legendary as the tropical breezes.
Saipan’s economic strength is smallness and geographic location. With Saipan’s tiny number of citizens, a little improvement in the regional economy, a minute amount of U.S. investment, or developing a second economic leg could have a dramatic positive effect on the economy.