Financial Preparation

• Determine your total investment budget (property + development costs + reserves)
• Establish a currency exchange strategy (SBD is not widely traded internationally)
• Research historical SBD/USD or SBD/CAD exchange rates to identify stability patterns
• Set up international wire transfer capabilities with intermediary banks
• Consider opening an Australian dollar account as an intermediate currency
• Evaluate tax implications in both Solomon Islands and your home country
• Prepare proof of funds documentation for foreign investment applications

Market Research

• Identify target regions based on investment goals (tourism, commercial, residential)
• Research provincial development plans and infrastructure projects
• Connect with expatriate communities and business networks (LinkedIn, SI Chamber of Commerce)
• Subscribe to Solomon Islands government gazette notices for policy updates
• Analyze tourism trends and visitor statistics from major source markets
• Research utility availability and reliability in target areas
• Plan a preliminary market visit to evaluate areas firsthand (essential before commitment)

Professional Network Development

• Connect with Solomon Islands-qualified lawyers specializing in property and foreign investment
• Identify real estate agents or land consultants with experience in foreign transactions
• Research construction and development companies with proven track records
• Establish contact with banking partners (ANZ, Bank South Pacific)
• Find a tax accountant familiar with Solomon Islands tax code
• Connect with surveying and valuation professionals
• Consider engaging a local business facilitator for cultural and bureaucratic navigation

Expert Tip: The Solomon Islands property market operates on relationships and local knowledge more than formal systems. Investing in relationship-building with local business leaders, government officials, and community members before committing to investments is not just advisable but essential. Allocate at least 2-3 weeks for an initial visit with multiple meetings scheduled through a respected local introduction, rather than cold-contacting. The dry season (May to November) is generally the most practical time for property evaluation visits.

Recent Regulatory Change: The Companies Act was updated in 2018 to streamline business registration processes, including the introduction of online registration capability. While this has improved processing times in theory, practical implementation remains uneven. Investors should still budget 3-4 weeks for company formation and registration with the Foreign Investment Division. The Investment Corporation of Solomon Islands (ICSI) now offers facilitation services that can expedite the process for qualified investments.

Banking Setup

• Banking Options:
  • Commercial banks: ANZ and Bank South Pacific (BSP) are the main options
  • Development Bank of Solomon Islands: Limited services for specific development projects
  • Credit Corporation: Financial services for established businesses
  • Digital/mobile banking: Limited but gradually expanding
• Typical Requirements:
  • Passport/identification
  • Foreign Investment Registration Certificate
  • Business registration documents
  • Local address verification
  • Reference letters from existing banks
  • In-person account opening (remote options extremely limited)
• Alternative Approach: Many foreign investors maintain Australian banking relationships and periodically transfer funds to Solomon Islands for operations. Consider establishing an Australian dollar account as an intermediary, as the Solomon Islands dollar (SBD) is not widely traded internationally.

Financing Options

Financing options in the Solomon Islands are significantly more limited than in developed markets:

1. Local Bank Financing:
   • Availability: Very limited for foreign investors without established track record
   • Deposit Requirements: Typically 40-60% for foreign investors
   • Interest Rates: 10-15% (significantly higher than developed markets)
   • Term Length: Generally shorter terms (5-15 years) than international standards
   • Documentation: Extensive, including business plans and feasibility studies
2. International Financing:
   • Development banks and international financial institutions for larger projects
   • Export financing from home country for development involving imported materials
   • Private equity partnerships with experience in Pacific markets
   • May require sovereign or bank guarantees for significant projects
3. Home Country Financing:
   • Refinancing existing properties in North America
   • Home equity lines of credit (HELOCs)
   • Portfolio loans against investment accounts
   • Generally more accessible and affordable than local options

Currency Management

The Solomon Islands Dollar (SBD) requires careful currency management:

• Exchange Rate Considerations:
  • SBD has historically been relatively stable against USD but with limited convertibility
  • Currency exchange services are limited to commercial banks and authorized dealers
  • Spread between buy/sell rates can be significant (3-5%)
• Currency Services:
  • Limited international transfer services compared to developed markets
  • ANZ and BSP offer the most reliable international transfer capabilities
  • Currency hedging products are generally unavailable in the local market
• Income Repatriation:
  • Foreign exchange controls may apply to large capital transfers
  • Withholding taxes apply to dividends and interest payments to non-residents
  • Regular smaller transfers often more practical than occasional large ones

Most successful foreign investors in the Solomon Islands maintain banking relationships in multiple jurisdictions, typically including Australia as a stepping stone for fund transfers. The Central Bank of Solomon Islands (CBSI) occasionally implements foreign exchange measures that can affect capital movement, making it important to stay informed about current regulations.

Property Search Resources

• Limited Online Resources:
  • Solomon Properties – Small selection of commercial and residential listings
  • Pacific Islands Property – Regional listing service with occasional Solomon Islands properties
  • Facebook groups and social media listings (informal but sometimes effective)
  • Chamber of Commerce bulletins and newsletters
• Local Agents and Consultants:
  • Honiara-based real estate agents (limited formal industry presence)
  • Land consultants with local market knowledge
  • Legal firms with property transaction experience
  • Note: Traditional “buyer’s agent” roles are uncommon
• Government Resources:
  • Ministry of Lands, Housing and Survey for registered land information
  • Investment Corporation of Solomon Islands (ICSI) property listings
  • Provincial government offices for regional opportunities
  • Government gazette notices for public land offerings
• Network-Based Approaches:
  • Business introduction services with local connections
  • Expatriate community networks in Honiara
  • Industry associations related to your development sector
  • Direct community engagement for customary land opportunities

Property Viewing Trip Planning

For overseas investors, a well-planned property viewing trip is essential:

1. Pre-Trip Research:
   • Identify target areas and property types based on preliminary research
   • Schedule meetings with lawyers, agents, and government officials
   • Research logistics carefully (internal flights are limited and frequently change)
   • Arrange proper business visas and documentation
2. Trip Logistics:
   • Plan at least 2-3 weeks for a comprehensive visit
   • Allow extra days for flight delays and schedule changes
   • Schedule appointments with significant buffer time
   • Arrange reliable transportation for property viewings
3. During Viewings:
   • Document everything with photos, videos, and detailed notes
   • Ask about utilities, accessibility during wet season, and historical land use
   • Meet with neighboring property owners when possible
   • Collect contact information for all stakeholders involved
   • Note potential challenges for development and construction
4. Consider using a local facilitator who can:
   • Arrange meetings with relevant stakeholders
   • Provide cultural context and translation if needed
   • Navigate local protocols, especially in provincial areas
   • Help assess realistic timelines and logistical constraints

Property Evaluation Criteria

Assess potential investments using these Solomon Islands-specific criteria:

• Location Factors:
  • Accessibility during both dry and wet seasons
  • Distance to power and water infrastructure
  • Telecommunications connectivity (variable throughout country)
  • Proximity to shipping ports or airstrips for materials and visitors
  • Flooding risk during rainy season (November to April)
  • Community relationships and local business environment
• Land Tenure Security:
  • Registration status and documentation completeness
  • Historical disputes or competing claims
  • Clarity of boundaries and survey documentation
  • Community consensus for customary land arrangements
  • Lease terms and renewal provisions
  • Rights of access and easements
• Development Potential:
  • Topography and land clearing requirements
  • Environmental considerations and protected areas
  • Construction material availability and transport costs
  • Local labor skills and availability
  • Alignment with provincial development plans
  • Cultural or historical significance of the site
• Financial Considerations:
  • Price relative to comparable properties (limited but important)
  • Development costs including infrastructure requirements
  • Ongoing fee obligations to landowners or communities
  • Realistic operating cost estimates in remote locations
  • Potential for phased development to manage cash flow
  • Exit strategy feasibility given market limitations

Expert Tip: When evaluating land in the Solomon Islands, water access and quality are critical considerations often overlooked by foreign investors. During the dry season (May to October), what appears to be adequate water supply may be severely diminished. Visit properties during both wet and dry seasons if possible, and speak with neighboring properties about water reliability. For coastal properties, understand tide patterns and seasonal ocean conditions, as these can dramatically affect site accessibility and useability. Local knowledge is invaluable here—what seems like an inconvenience to a visitor may be a well-known major obstacle to locals.

Legal Due Diligence

• ✓
  Title Verification: Confirm legal status of land (registered vs. customary)
• ✓
  Land Registry Search: Verify registered ownership and encumbrances
• ✓
  Lease Terms Review: Analyze duration, renewal options, and conditions
• ✓
  Provincial Authority Check: Verify compliance with local regulations
• ✓
  Environmental Compliance: Check for protected area designations or restrictions
• ✓
  Customary Rights Investigation: For customary land, document tribal leadership consensus
• ✓
  Development Permission: Verify zoning and development approval requirements
• ✓
  Historical Dispute Records: Research any past conflicts over the land

Physical Due Diligence

• ✓
  Land Survey: Professional boundary and topographical survey
• ✓
  Soil Testing: Assess stability, drainage, and agricultural viability if relevant
• ✓
  Water Sources: Evaluate availability, quality, and reliability year-round
• ✓
  Power Infrastructure: Assess distance to grid or requirements for off-grid solutions
• ✓
  Accessibility Assessment: Evaluate road conditions, seasonal access limitations
• ✓
  Flooding/Erosion Risk: Local knowledge of seasonal impacts and historical events
• ✓
  Environmental Hazards: Check for contamination from previous land uses
• ✓
  Building Assessment: For existing structures, evaluate condition and compliance

Financial & Community Due Diligence

• ✓
  Comparable Value Analysis: Review similar properties and transactions (limited data)
• ✓
  Development Cost Assessment: Obtain construction and material cost estimates
• ✓
  Infrastructure Cost Analysis: Calculate investment needed for utilities and access
• ✓
  Tax Calculation: Determine applicable taxes, import duties, and other government fees
• ✓
  Operating Cost Forecast: Develop realistic maintenance and operational budgets
• ✓
  Community Consultation: Engage with neighboring communities to assess relationships
• ✓
  Local Employment Potential: Evaluate workforce availability and skill levels
• ✓
  Market Demand Analysis: Assess realistic customer/tenant base for the project

Expert Tip: In the Solomon Islands, community due diligence is as essential as legal and physical assessments. Even with perfect legal documentation, failing to understand and respect community expectations can create insurmountable obstacles. When conducting community consultation, work with a respected local facilitator who understands traditional protocols. Document community meetings properly, ideally with recordings (with permission) and written summaries agreed upon by all parties. Community expectations for employment, resource access, and ongoing benefits should be clearly understood and factored into financial projections.

Offer and Negotiation

1. Initial Expression of Interest: Often a formal letter outlining basic terms
2. Relationship Development: Meetings with owners/communities to build trust
3. Negotiation: Extended discussion on price, terms, and mutual expectations
4. Agreement in Principle: Written preliminary agreement on key terms

Unlike Western real estate markets, transactions in the Solomon Islands typically involve longer relationship-building phases and may include ceremonial aspects, particularly with customary land. Verbal commitments and handshake agreements hold significant cultural importance but must be formalized through proper legal documentation. The negotiation process may include discussion of community benefits beyond the direct financial terms.

Legal Process

1. Instruct Legal Representative: Engage Solomon Islands-qualified lawyer
2. Drafting Legal Documents:
   • Lease agreements for registered land
   • Trustee arrangements for customary land
   • Joint venture agreements if applicable
3. Foreign Investment Approval:
   • Submit application to Foreign Investment Division
   • Provide business plan and investment details
   • Obtain Foreign Investment Registration Certificate
4. Government Approvals:
   • Ministry of Lands registration
   • Provincial government approvals
   • Environmental permits if required
5. Document Finalization:
   • Final review of all agreement terms
   • Verification of approvals and permits
   • Finalization of payment mechanisms
6. Execution of Documents:
   • Formal signing ceremony (often culturally significant)
   • Payment of agreed deposits
   • Transfer of possession arrangements
7. Registration:
   • Registration of lease or transfer with Land Registry
   • Filing of tax documents
   • Recording of any encumbrances or conditions

The timeframe from initial agreement to completion typically ranges from 3-9 months for registered land and potentially longer for customary land arrangements. Government processing times are variable and can be affected by staffing, political changes, and other administrative factors. Building relationships with relevant officials can help navigate the process more effectively.

Transaction Costs

Budget for these typical transaction expenses:

• Registration Fees:
  • Lease registration: 1-2% of the lease value
  • Land Registry filing fees: SBD 500-2,000 depending on transaction
  • Document stamp duty: Approximately 1% of transaction value
• Legal Fees: SBD 10,000-50,000 depending on complexity
• Survey Costs: SBD 5,000-20,000 depending on size and location
• Foreign Investment Registration: SBD 5,000-10,000
• Business License Fees: Varies by business type (SBD 1,000-10,000)
• Environmental Permit Fees: If applicable (SBD 5,000-20,000)
• Foreign Exchange Costs: 3-5% in conversion spreads and fees
• Community Goodwill: Customary ceremonies and gifts (variable)

Total transaction costs for foreign investors typically range from 5-15% of the property value, with higher percentages for smaller transactions and customary land arrangements. These costs should be factored into your overall investment calculations. Additionally, informal “facilitation payments” may be requested during various processes, but engaging in such practices carries legal and reputational risks and is not recommended.

Expert Tip: For foreign buyers unable to be present throughout the transaction process, a carefully structured Power of Attorney is essential. The document should be highly specific about the powers granted and include clear limitations. Have it notarized in your home country and then authenticated for use in the Solomon Islands through the appropriate diplomatic channels (typically requiring attestation by the Solomon Islands embassy or consulate). Choose your attorney-in-fact carefully, preferably someone with both legal qualifications and cultural understanding of the Solomon Islands business environment.

Administrative Tasks

• ✓
  Property Taxes: Register with Ministry of Finance for annual property tax payments
• ✓
  Business Licensing: Obtain and renew relevant business licenses annually
• ✓
  Utility Setup: Arrange electricity, water, and telecommunications connections
• ✓
  Insurance Coverage: Arrange appropriate property and liability insurance
• ✓
  Foreign Investment Reporting: Comply with annual reporting requirements
• ✓
  Land Lease Compliance: Meet all conditions specified in lease agreements
• ✓
  Community Agreements: Honor any commitments made to local communities

Regulatory Compliance

Property and business operations in the Solomon Islands must comply with various regulations:

• Environmental Regulations:
  • Adherence to Environmental Act requirements
  • Monitoring and reporting for operations with environmental impacts
  • Compliance with protected area restrictions if applicable
• Labor Regulations:
  • Registration with Labor Division for employers
  • Compliance with work permit requirements for foreign workers
  • Adherence to employment regulations for local staff
• Building and Safety Standards:
  • Compliance with building codes and regulations
  • Public health and safety requirements for commercial facilities
  • Fire safety provisions for higher-capacity buildings
• Tourism Operations:
  • Tourism Authority registration and compliance
  • Safety standards for tourism activities
  • Required permits for specialized operations
• Immigration Requirements:
  • Visa and work permit renewals for foreign management
  • Visitor registration requirements for accommodation providers
  • Compliance with entry and exit reporting

Regulatory requirements in the Solomon Islands can change with limited notice. Maintaining relationships with relevant government departments and industry associations helps ensure awareness of emerging compliance issues. Regular legal reviews are recommended to ensure ongoing compliance with evolving requirements.

Record Keeping

Maintain comprehensive records for tax, legal, and business purposes:

• Property Documents:
  • Original lease agreements and amendments
  • Land registration certificates and survey documents
  • Government permits and approvals
  • Community agreements and memoranda of understanding
  • Property insurance policies and claims
• Financial Records:
  • All property-related expenses with receipts
  • Tax payment receipts and filings
  • License fee payments and renewals
  • Capital expenditures and improvements
  • Revenue and income statements
  • Currency exchange transactions
• Business Documentation:
  • Company registration documents
  • Foreign investment approvals and reporting
  • Business licenses and specialized permits
  • Staff employment records and contracts
  • Meeting minutes with stakeholders and officials
• Operational Records:
  • Environmental monitoring data if applicable
  • Safety inspection reports and certifications
  • Maintenance logs and improvement records
  • Community engagement activities and contributions
  • Correspondence with government authorities

Solomon Islands tax authorities require records to be kept for at least 7 years. Due to climate conditions and occasional government record-keeping challenges, maintaining duplicate records in both physical and digital formats is strongly recommended, with secure off-site storage for critical documents.

Expert Tip: The physical conditions in the Solomon Islands can quickly damage paper documents due to humidity, insects, and mold. For critical legal documents, consider lamination after making certified copies, and store originals in waterproof, sealed containers with silica gel packets. Digital storage should include triple redundancy: local computer, protected cloud storage, and offline backup drives stored in a different location. Additionally, building relationships with key government officials is invaluable, as personal connections can help locate misplaced official documents if needed.

Solomon Islands Tax Obligations

• Land Tax:
  • Annual property tax based on assessed value
  • Rates vary from 0.35-0.6% of assessed value
  • Higher rates may apply to undeveloped property
  • Payable to Ministry of Finance
• Income Tax on Rental Income:
  • Corporate rate of 30% for companies
  • Progressive personal rates of 11-40% for individuals
  • Allowable deductions include property expenses, maintenance, and depreciation
  • Annual tax returns due by March 31 for the previous year
• Goods Tax:
  • 15% on imported goods and certain services
  • Impacts construction costs and business operations
  • Exemptions available for certain development projects
• Withholding Tax:
  • 15% on dividends paid to non-residents
  • 15% on interest payments to non-residents
  • 15% on royalties and management fees to non-residents
  • Tax treaty provisions may reduce rates for certain countries
• Stamp Duty:
  • Applicable to legal documents including leases and transfers
  • Rates vary from 1-4% depending on transaction type
  • Payable at time of document registration
• Provincial Business Licenses:
  • Annual fees based on business type and scale
  • Rates vary by province (SBD 500-5,000 typically)
  • Renewable annually

Home Country Tax Obligations

The Solomon Islands has limited tax treaties with other countries, which can complicate international tax planning. Professional tax advice from specialists familiar with both Solomon Islands and home country tax systems is essential to ensure compliance and optimize tax efficiency.

Tax Planning Strategies

• Entity Structure: Evaluate whether personal ownership, Solomon Islands company, or offshore holding structure optimizes tax position
• Development Incentives: Investigate tax holidays and exemptions available for qualifying investments
• Expense Tracking: Maintain meticulous records of all allowable expenses to maximize deductions
• Reinvestment Planning: Structure development phases to align with available tax incentives
• Capital Improvements: Document all capital expenditures which may reduce future tax liability
• Timing of Income: Consider fiscal year planning for recognition of revenue
• Transfer Pricing: Ensure arm’s length transactions between related entities to avoid tax complications
• Double Taxation Mitigation: Carefully structure international payments to minimize withholding impacts

Tax rules in the Solomon Islands are subject to change and inconsistent application. Regular consultation with tax professionals who monitor legislative developments is advisable. The Inland Revenue Division has been gradually modernizing its systems, but significant administrative challenges remain. Building relationships with tax officials can help navigate these challenges more effectively.

Expert Tip: Foreign investors in the Solomon Islands should consider applying for formal tax rulings on their specific investment structures before completing major transactions. While this process takes time, it provides valuable certainty in an environment where tax laws may be subject to varying interpretations. For development projects, investigate whether your investment qualifies for tax incentives under the Foreign Investment Act, which can include exemptions from goods tax on construction materials and equipment imports. Applications for these incentives should be made during the initial Foreign Investment Registration process, as retrospective approval is rarely granted.

Selecting a Management Approach

Evaluate potential management models using these criteria:

• Local Knowledge Requirements:
  • Cultural understanding and community relationships
  • Knowledge of local business practices and regulations
  • Language capabilities for provincial areas
• Operational Capabilities:
  • Technical skills for specific property types
  • Staff management experience
  • Financial management and reporting systems
• Communication Systems:
  • Reliable reporting mechanisms
  • Technology adoption and usage
  • Transparency and accountability measures
• Risk Management:
  • Security procedures and protocols
  • Disaster preparedness (cyclones, earthquakes)
  • Conflict resolution capabilities
• Performance Metrics:
  • Clear key performance indicators
  • Financial control mechanisms
  • Incentive structures aligned with owner goals

Management Agreement Essentials

Ensure your property management contract includes these key elements:

• Scope of Services: Detailed description of management responsibilities and limits of authority
• Fee Structure: Clear explanation of base fees, performance incentives, and expense reimbursements
• Term and Termination: Contract duration, renewal conditions, and termination provisions
• Reporting Requirements: Frequency, format, and content of operational and financial reports
• Financial Controls: Banking arrangements, expenditure approval limits, and audit provisions
• Staffing Responsibilities: Hiring authority, supervision arrangements, and training responsibilities
• Dispute Resolution: Clear process for addressing disagreements and performance issues
• Insurance Requirements: Coverage types and limits required for operations
• Community Relations: Responsibilities for maintaining local relationships
• Force Majeure Provisions: Arrangements for natural disasters and political disruptions

Given the relative scarcity of professional property management firms in the Solomon Islands, many investors create hybrid structures, combining experienced expatriate oversight with local operational teams. This approach balances international standards with essential local knowledge but requires careful structuring of responsibilities and authority.

Expert Tip: Management relationships in the Solomon Islands are heavily influenced by traditional cultural values that emphasize social harmony and relationship maintenance. Western-style performance management approaches focused on direct feedback and strict accountability metrics may create tension. Consider instituting a dual reporting system where quantitative metrics are balanced with qualitative relationship assessments. Additionally, invest in regular face-to-face presence, even for remotely managed properties. Video calls and digital communication cannot fully substitute for the relationship-building value of periodic in-person visits, which significantly enhance staff loyalty and performance.

Exit Options

Sale Process

When selling your Solomon Islands property:

1. Pre-Sale Preparation:
   • Ensure all documentation is current and complete
   • Resolve any outstanding compliance issues
   • Compile operational history and financial performance
   • Address any community relations concerns
2. Valuation and Pricing:
   • Obtain professional valuation if possible
   • Research comparable sales (limited data)
   • Consider replacement cost as alternative metric
   • Prepare realistic cash flow projections
3. Marketing Strategy:
   • Identify target buyer segments (international vs. local)
   • Prepare comprehensive information memorandum
   • Utilize specialized networks and industry contacts
   • Consider regional marketing in Australia and New Zealand
4. Transaction Structuring:
   • Develop term sheet for negotiations
   • Address tax implications for both parties
   • Structure payment terms and security arrangements
   • Consider earn-out provisions for business sales
5. Due Diligence Support:
   • Prepare data room with essential documentation
   • Facilitate site visits and operational reviews
   • Provide access to key staff and stakeholders
   • Address community relationship transition
6. Closing Process:
   • Secure government approvals for transfer
   • Prepare transfer/lease assignment documents
   • Arrange payment and escrow mechanisms
   • Plan for operational transition

The selling process in the Solomon Islands typically takes significantly longer than in developed markets, often 12-18 months from initial marketing to completion. Finding qualified buyers may require creative approaches and networking through regional investment channels. Patience and flexibility with terms are often necessary for successful exits.

Market Exit Timing Considerations

Several factors should influence your exit timing decision:

• Tourism Development Cycle: Exit opportunities may align with major tourism infrastructure improvements or international hotel chain entry
• Currency Exchange Rates: Monitor SBD/USD or SBD/CAD trends to optimize conversion values when repatriating proceeds
• Regional Economic Conditions: Economic conditions in Australia and New Zealand significantly impact buyer availability
• Political Stability Periods: Transaction completion is easier during periods of political stability, typically mid-term between elections
• Infrastructure Improvements: Property values often increase following completion of major infrastructure projects
• Seasonal Considerations: Marketing properties during dry season (May-October) when accessibility and aesthetics are optimal
• Regulatory Changes: Monitor potential changes to foreign investment regulations that could impact buyer pool
• Regional Investment Trends: Pacific property investment tends to move in regional waves that can be anticipated

The exit market for Solomon Islands properties is inherently thin compared to developed markets. Successful investors typically develop exit planning from the initial investment stage, creating properties with specific future buyer profiles in mind and building relationships with potential exit partners throughout the investment lifecycle rather than only at the point of intended sale.

Expert Tip: When planning your exit from a Solomon Islands investment, consider the strategic value of succession planning with local staff or partners. Developing leadership capabilities within your organization or community relationships can create natural buyers for your interest over time. This approach not only improves operational performance but potentially creates a viable exit pathway that maintains the property’s value and legacy. For tourism properties specifically, developing relationships with regional operators from Australia, New Zealand, or Fiji during operations can cultivate potential acquirers who already understand the unique challenges and opportunities of Pacific island hospitality ventures.