An interesting article on one of our islands' main developers.
Ten years ago, the Calgary landlord bought a partly submerged, 3,000-acre island in Belize. Today he’s leading a friendly Canadian invasion of this tiny Central American country
by Fabrice Taylor
No one drops names like Bob Dhillon. Over there, he says, pointing to a gorgeous mahogany bungalow on a small island surrounded by clear blue water, is where Tiger Woods stays. And over there, he says, trying to keep his balance in the speeding motor boat touring us around his 3,000-acre parcel of paradise off the coast of Belize, is where Leonardo DiCaprio is building an eco-friendly Four Seasons hotel. It’s only noon but already we’ve seen Jarome Iginla’s land, Madonna’s house and Francis Ford Coppola’s resort.
And we’ve heard all the stories – about how Dhillon, whose day job is running Calgary-based Mainstreet Equity Corporation, a publicly listed real estate concern – ended up buying his land from a bunch of feuding Louisiana lawyers; about how he got a high-end hotelier to develop a property on the island, tripling the land’s value; about how Don King, the boxing promoter, called Dhillon’s bluff and walked away during their negotiations; about crocodiles, cash crunches, wine, women and song.
Yes, Bob Dhillon is the consummate storyteller. The only thing he does better is to promote, which explains how he’s leading something of an Albertan invasion in this tiny, neglected country. Dhillon made a lot of money for himself and his investors in Mainstreet, and there’s probably more to come. But his real coup, if he succeeds down here, will be turning a once sleepy fishing village on an island off Belize into an international tourist destination. And it will make him a very rich man.
“Ask me why,” Dhillon says. It’s his favourite question, one he usually asks after making a point or observation he hopes will intrigue whomever he’s talking to. In this case, he wants to be asked why he calls Belize “the last virgin.”
“Because it’s the last beautiful place in the Caribbean that hasn’t been developed yet,” he says matter of factly.
It’s July, it’s hot, it’s a little muggy, but there’s a breeze blowing through the restaurant where we are gathered for dinner. In attendance: the mayor of San Pedro, which lies on Ambergris Cay, where Dhillon’s land is; several Belizean cabinet ministers, a Canadian cabinet minister and her Member of Parliament fiancé; the owner of a high-end Toronto women’s apparel boutique and his society-columnist boyfriend; a couple of potential real estate buyers from Saskatoon; myself, Dhillon and one of his publicists.
Dhillon is explaining how he came to buy his parcel, which he calls Costa del Sol – the sunshine coast – a decade earlier. First, though, he drops another name. The restaurant we’re eating in, he says, is where they filmed the hit TV show Temptation Island.
Back to the history of his land: he’d been flipping Calgary real estate for several years – since age 19 – when he decided to test the Caribbean. He went to Costa Rica, bought a parcel and built a hotel. It wasn’t a huge success. Costa Rica has an antiquated land title system and few people speak English. It was a grind. But Costa Rica also opened Dhillon’s eyes to the truth about real estate: if you are any good at it, the real money is in land banking – buying raw land early, sitting on it and then selling it to developers rather than developing it yourself.
Dhillon used to take short trips to neighbouring countries when he was active in Costa Rica. Someone he met on a plane once encouraged him to visit Belize. Most of Dhillon’s fateful encounters, you learn after spending a little time with him, happen through a combination of chance and his irrepressible urge to talk to anyone around him.
He ended up on Ambergris, in San Pedro. Back then it was still largely a fishing village. Inevitably, Dhillon inquired of local real estate agents if there was any land for sale. One of them showed him what was to become Costa del Sol, a 3,000-acre island. It hardly looked like paradise; the land was covered in shrubs, infested with critters like crocodiles and, most notably, parts of it were submerged. It looked like a swamp.
But not to Dhillon. He saw the potential right away. Slight problem though: the land wasn’t actually for sale. That didn’t stop him. He tracked down an investor who represented 40% of the owners, a New Orleans lawyer named Del Barnes.
“He said to me, ‘I’m going to help you get the rest,’” Dhillon recalls. “He said, ‘The twinkle I see in your eyes was the same twinkle I had when I bought it 30 years ago.’”
“That was the bullshit New Orleans line,” Dhillon laughs now. Barnes would end up doing quite nicely off the deal, thank you very much, financing the transaction with a 12% vendor takeback mortgage, meaning he would lend Dhillon the money. Trouble was, Dhillon was earning his money in Canada and the Canadian dollar was at about 65 cents US. That 12% was more like 20% with the exchange rate worked into the equation. He did the deal anyway, and slaved away in Calgary for years to make the mortgage payments every month. It wasn’t easy, but Dhillon held fast to his vision that eventually those 3,000 acres would be worth a lot more than what he paid (about $10 million, if you believe the rumours). “There was no furniture in my house for many years,” he recalls.
Eventually, through a confluence of events, notably a global bull market in real estate, he brought his first potential investors down to Belize in 2003. He managed to sell 119 semi-submerged lots and paid Barnes off. Dhillon, you might say, had just sold swampland. Only the buyers were going to make a lot of money off their investment. By selling those lots he had also put a rough value on his holdings in Belize. If just 2% of his land was worth about $10 million, well, you didn’t have to be a rocket scientist to figure out what the rest might fetch.
If you’re from Calgary, and to a lesser degree from Edmonton, Winnipeg or Saskatoon, you might feel right at home in San Pedro. The place is crawling with Prairie expats. There’s Bill, who used to run a small oil and gas drilling company in Calgary. He went to Belize on Dhillon’s invitation to do some dredging work, fell in love with the place, went home, sold his business, gave his wife and kids a nest egg and bolted back to Belize. There’s Larry, who came down for a vacation and never went back, opening a golf cart rental shop. (The main mode of transportation on Ambergris is the golf cart.) There’s Psychic Ruby, also from Calgary, who with her partner, Sunny, bought some land from Dhillon and is developing Brahma Blue, a spiritually themed resort, and perhaps the finest Indian restaurant in this hemisphere.
There’s Zuzsee, whom I meet on the plane. She’s from Edmonton and flies down to Ambergris to decompress every couple of years or so, two cats in tow. Why Ambergris? Because there’s lots of Canadians around, by which she also seems to mean fewer Yanks. There’s Neil Sullivan, a Winnipeg lawyer who ditched his practice to build high-end homes on Costa del Sol and open a cool outdoor bar called Playa on the beach in San Pedro.
And there’s Gerry Mendyk, a Calgary real estate developer Dhillon brought to Belize two years ago after a chance encounter. Mendyk runs Arcus Developments Inc., which is building a luxury apartment building with a $10-million penthouse in Calgary’s Beltline neighbourhood. Mendyk, though, talks more about his Belize property, a complex that will eventually include 500 dwellings, ranging from single-family homes to townhouses to condos. He’s one of many Alberta developers on the Cay and one of hundreds who plan to move there permanently. Mendyk first came to Belize in May of 2006. By July, he had closed a deal to buy 30 acres from Dhillon – the first big sale of land on Costa del Sol.
What did Mendyk see in the place? Keep in mind that at that time most of the real estate would have to be dredged in order to be developed.
“We had no interest in moving outside Alberta,” Mendyk says of his company. “But it was one of those ‘too good to be true’ stories and we had to be part of it.” In particular, what he saw was “one of the most beautiful places on Earth,” home to the second biggest barrier reef in the Western Hemisphere, a ground-floor opportunity in an emerging market, English as the official language (Belize was a British colony until 1981), a small, healthy and educated population (just 300,000), a British land title system, a stable democracy and no income or capital gains taxes.
Everything else, according to Mendyk, who has travelled the Caribbean extensively, is already well developed. Belize? A virgin. The last one, maybe.
Arcus and its investors have done well so far. After they bought, more direct flights started coming to Belize City from Toronto, New York, Calgary and other cities.
Another big boost was the arrival of a company planning on developing a boutique hotel about a kilometre from Arcus’s property. Mendyk says the Arcus land was recently appraised at $10 million. He paid $3 million. But it’s not only about money for Mendyk. He wants Ambergris to be a Canadian destination and home-away-from-home. “I don’t want to target U.S. buyers for personal reasons,” he says diplomatically. “We want to keep the quaint, British feel to it. We don’t want another Cancun. And that’s why Canadians like the place. We can relate.”
Another Albertan expat in Belize is Daryl Carlson. Carlson’s father, Gil, a retired real estate agent, sold Dhillon his first Calgary building 20 years ago. Gil Carlson introduced his son to Dhillon a few years ago, and Dhillon took Daryl down to Ambergris to show off his island. Carlson Junior was looking to buy Caribbean real estate at the time and was so smitten that, along with partner Murray Lee, he bought several lots from Dhillon. He was one of the first.
Daryl Carlson, a master diver, was so enamoured with Belize, and so convinced of its potential, that he applied for and won a Re/Max franchise, and since then he’s been taking Canadians, especially Albertans, down to Belize to buy real estate. Carlson believes in Belize for a number of reasons. Besides the language, political stability, proximity and a land title system that’s almost identical to Alberta’s, he points to the tax considerations: there are no capital gains taxes for foreigners in Belize and essentially no property taxes, making the cost of carrying property much lower. There are also secrecy laws that make it easy to keep money offshore, perfectly legally.
There are drawbacks, he concedes. The banking system is not mature, and it’s difficult to get local financing. First, banks will only lend on about half of what they consider to be appraised value. Second, they charge 10% or more. “You can’t make the economics work with that kind of financing,” Carlson says. So buyers need access to Canadian credit, such as a home equity line of credit. And although there are no capital gains taxes, there is a land transfer tax payable by the buyer of 5% and legal fees that tend to run around 1%. Closing, in other words, costs 6%.
But compared to what he sees as the future, that’s nothing. “Pretty soon the expansion of the airport in Belize City will be finished and big jumbo jets will start coming in from Europe. That’s the real upside for investors in condos or hotels.”
It’s a view shared by Beth Clifford, who represents the group planning on building a boutique hotel rumoured to be a Ritz on 60 acres of land purchased from Dhillon (for almost as much as he paid for the entire parcel). “We tend to look three to five years out for our projects, and what we see is really exciting,” she says. Belize, and Ambergris, isn’t a beach paradise, like other places in the Caribbean, she concedes. “They’re B beaches, but the reef, diving, fishing, eco-tourism is exceptional, and the prices can’t be beat. There just aren’t that many nice places to develop in the Caribbean anymore.”
The last virgin, indeed.
The driving force behind this peaceful invasion is Bob Dhillon.
Dhillon’s real first name is Navjeet. He chose Bob, he says, because he was so good at guitar. This sounds like a classic Dhillon tall tale, the kind of story that makes him a great raconteur and, for that matter, an ace promoter. He was born in Japan 43 years or so ago, where his father lived and worked for the family trading business, which was centred in Liberia. After a coup there, the family lost everything. They relocated to Vancouver, then to Calgary.
The Dhillon legend is that he started flipping real estate out of the trunk of his car when he was 19, buying a couple of houses. What isn’t contestable is that he’s made tens of millions of dollars for himself and others during his career, buying, repositioning, sometimes flipping real estate.
Dhillon took his apartment landholding business, Mainstreet Equity, public in 1999, and that is still his day job. But Belize is his passion, a labour of love to which he devotes tireless energy. It was Dhillon who persuaded a bunch of feuding lawyers who couldn’t do anything with the land to sell it to him; who paid off the vigorish for years until he sold his first lots to Calgarians; who convinced Clifford to buy a big piece of what he calls “the Platinum Coast,” a sale that doubled the value of the land; who invites everyone out to dinner and picks up the tab, which typically runs in the thousands (it’s not always clear if this is business or pleasure; Dhillon loves an entourage).
It’s Dhillon who sees to it that the island gets power, who makes sure the dredges, which suck sand off the sea floor and dump it on land to build it up and create beaches, can operate without government interruption, and who makes generous charitable gifts to the community, helping ensure that the relatively poor locals don’t rebel against the “invaders.” And it’s Dhillon who will make or break the place.
When I first visited the place in November of 2007, it didn’t look like much. Brahma Blue’s high-end condominium building was almost finished and the restaurant, which sits at the end of a pier, was under construction. Two of Sullivan’s homes, which look like they came out of Architectural Digest, were finished. But otherwise, the part of the island being developed looked, well, like a swamp. It’s not really swamp; although parts of it were under a few inches of water, the island is limestone, highly suited to construction once drained and dredged. But back then it looked rough.
I was skeptical, and it made me wonder how Dhillon could have ever wanted to pay anything for it almost a decade earlier. He claims he’d never even heard of a dredge when he decided, in a blink, that he wanted to buy the land. So where did the vision come from?
Call it the X factor, the same instinct he used to build Mainstreet from a loose collection of low-end apartment buildings to the best performing real estate company on the Toronto Stock Exchange. Dhillon says the land was “cheap.” Most of us can’t equate a price tag in the millions with cheap. But “it was 3,000 acres of organic beauty. It was a no-brainer,” he says.
It started to make more sense to me in June of this year, on my second trip. Brahma Blue’s condo project looked stunning, with landscaping and a pier on the lagoon. There were a couple more gorgeous homes and Arcus was in the ground. Canals and lagoons had been dredged, and you could picture residents motoring up to their homes on boats after a day of visiting Mayan ruins or a world-class spa on the mainland or fishing or swimming with sharks (real ones, not the real-estate variety) on the nearby reef.
“It takes someone like Dhillon to make this happen,” Carlson says. “Without his energy and vision, none of this would happen.”
Dhillon keeps close tabs on the people Carlson is showing around, and if he doesn’t approve, he won’t sell. It’s about control.
What makes Dhillon a success, apart from that X factor, is philosophy. The real estate world is full of guys with very sharp elbows and blunt ethics. Dhillon has, to be sure, stepped on toes. “You don’t get to where he is, at the top of the pyramid, by making everyone happy,” says an old acquaintance. “It’s impossible.”
But “try to find someone I’ve dealt with who hasn’t made money,” Dhillon challenges. It is indeed very hard to find these people, should they exist. Says Mendyk, of Arcus Developments: “We did our deal on a handshake, and it took us a long time to get our documents after we handed the funds over. But we just trusted Bob, and it’s all worked out.”
As Dhillon puts it, you have to leave something on the table for everyone. It doesn’t make you a saint; it’s good business. That’s how you get ahead in real estate.
“The balance sheet of life,” he says, “is friends.”