I must apologize to my readers, I have been too busy over the past 6 months to sit down and write as often as I should. Since January, I have only had time to write once. I shouldn’t really be taking the time now to write this but I have put it off for too long. There have been some significant changes in the real estate market in the Bahamas lately.
If you talk to seasoned real estate brokers in the Bahamas how have been in the profession for 20 years or more, they will tell you that historically in the US election year the market in the Bahamas dips. Suggested reasons include pre-occupation of the US buyers, or uncertainty for the US economy based upon who wins the presidency, or simply that would be buyers are putting money into the campaigns of their chosen candidate. Who knows the real reason – there is only opinion and anecdotal evidence. And until 2008 there really was little empirical evidence to prove that the market was up or down. As I’ve written in this blog before, the presence of our Bahamas MLS is a great improvement and tool for the real estate business in the Bahamas. We now have 8 years of good data with the possibility to tease out some real trends based upon real numbers. It’s night and day compared to the end of the 20th century when the internet was still unfolding.
We still have little real access to data from the Government. But perhaps in the future that will change. There is a silver lining to the implementation of VAT – a brand new division of government was established to collect and keep track of Value Added Tax. It is called the Department of Inland Revenue (i know, very original right?) This division is staffed in large part by trained accountants, who will hopefully keep good records. Through the collection of VAT, there may be a beneficial result in the provision of detailed accurate data on the performance of the economy and perhaps even real estate.
The Bahamas still needs to clean up its act in terms of the ease of doing business in real estate transactions. Ask any real estate professional and they will tell you the current system is not sustainable. Excessive costs, taxes, inadequate recording, and insufficient tenure of title are a few of the downfalls in the business. Add to it he need to provide an appraisal for every real estate transaction and the speed with which a sale can occur gets slower and slower every year. It is still possible to close a sale in 2 months, but it is the exception.
Now for some hard numbers: Last year January –June 2015 saw 248 real estate transaction recorded on the Bahamas MLS, the same period this year is posting 291 sales. A 17% increase in sales activity is stellar. Equally positive is the increase from 209 transaction during the 6 month period of 2014, showing a year over year increase of 19%. (Side note: There are 25 properties still pending from 2013 on the MLS)
The table shows a strong growth in sales volume in the Bahamas. I expect this trend to continue steadily. Given this is a US election year which is supposed to be a slow period for sales in the Bahamas and given the data shows a strong market leading into this election, it is reasonable to assume that the real estate market in the Bahamas will see a bumper year. Dare I say bubble? Or is that too early?
If the 17% growth continues, we can expect to see 340 transactions in the first half of 2017.
One interesting point for sellers to note, is that over the past 4 years, there has been a steady 3000 listings on the Bahamas MLS. (this year is 3,010, last year was 3,008). This would tend to support the idea that there are a large number of sellers around the Bahamas who are fishing with prices which are unrealistic. And these sellers continue year in and year out just hoping the movie star or lottery winner comes along to buy their home because it is so much better than the neighbors. While at the same time there is a large segment of the market who are likely listening to their Realtor or broker and being serious about getting their home or land sold. Point is, listen to the real estate professionals, and get second and third opinions on pricing and values. Don’t list with a company or agent just because they say they can sell it for the highest price. Work with the realtor who is giving you the real picture.
There are a few really good opportunities around to take advantage of this growth in the Real Estate Market. One of them is a package of 16 beachfront condominiums in Marsh Harbour. The possible returns could be substantial with the right person at the wheel. Take a look at the details here:
PS: the construction incentive, called the Out Island Encouragement Act, was extended for another year so building materials are still import duty free until June 2017. VAT is still payable though. This is a good reason to start building that dream home now. Call or email if you have any questions about this.