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“Top Real Estate Trends Impacting You & Your Business”

My name is Dwayne Wallas, 12 years working in the real estate business with HG Christie Real Estate.  I moved to Abaco in 2007.

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I’ve been asked to come here today and present some insight in the real estate market in Abaco.  As you all know Abaco is a unique part of the Bahamas and a unique part of the world.  In my view it is the people that make it unique.

But also and perhaps more importantly it is the geography – it is the only island in the Bahamas which has a relatively large land mass of 650 square miles similar to Grand Bahama or Andros while also having the 120 mile long chain of barrier cays.

This combination is not found anywhere else in the Bahamas or the Caribbean for the most part.  The ‘mainland’ of Abaco offers the ability for farming, logging, and more light industry or the option to have an estate or many acres with waterfront.  The tourism potential of Great Abaco Island is also very much untapped.

The barrier cays offer unique boating experiences together with wonderful communities.  Put the two together and the potential is tremendous.

I believe Elbow Cay is a perfect example of a thriving development model for the Bahamas.  It offers several small scale hotels together with restaurants and most importantly ATMOSPHERE.

The data I will be showing is derived from the Bahamas MLS.  Therefore it only takes into account sales transactions that have had a broker involved.

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What is selling in Abaco?

Hope Town is booming.  The rest of the Abacos have had a banner year but it all trails way behind Hope Town.  The community has managed to strike a balance between authenticity and capacity.  This year you could not rent a golf cart on the cay unless you booked it well in advance.  The real estate market on the cay is similarly very strong.

Treasure Cay is the close second for driving the economy of the Abacos.  The area sees a strong tourism market as well as posting a strong year for the real estate market.  The condominium market in Treasure Cay was in terrible shape, but the past 2 years have finally seen the inventory reduced and the market is beginning to normalize.

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The Marsh Harbour market is a tough nut to crack.  The market for Bahamians is starting to normalize as the banks are starting to ease lending requirements, but the property values are still depressed.  On the other hand the luxury or foreign investor market in Marsh Harbour (MH) is still very much stagnant.  I see lots of growth potential for the centre of Abaco, but it is suffering as a tourism destination.

Marsh Harbour is generally just a transit point and a shipping/business centre.  There is an opportunity to grow the tourism market here and by extension improve the foreign second home owner market.  From what I see MH seems to lack the charm and “islandy feel” visitors expect when they arrive at the airport.

Baker’s Bay is in full steam construction mode and providing tons of employment but not affecting the real estate market of Abaco at all.  It is its own microcosm and has little direct effect on the Abaco economy apart from the jobs.

Similarly the Abaco Club at Winding Bay is in slow growth mode and provides good employment but has little to no effect on the real estate market anywhere else in the Abacos.  The new developer, Southworth, is slowly rebuilding the prestige and demand.

My last point on this topic, as you can see from the chart, the strongest areas of Abaco are Elbow Cay and Treasure Cay.  The remote parts of Abaco have limited demand.

There are some good opportunities in the remote areas, but be aware that you will be in for a long haul.

Similarly the vacation rental market is only really functioning in Treasure Cay or Hope Town.

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So What about Abaco Compared to the Rest of The Bahamas?  

It is often said that Abaco is a more vibrant economy than Grand Bahama and this chart certainly shows that, although it is given that Grand Bahama is more than just real estate sales.  There is industry in Freeport which we lack here in Abaco.  Maybe for the better, maybe not?

Point is, Abaco is a strong real estate investment market, high sales volume and a high average price point.  Prices in Abaco are not too far off Nassau and second in the country.

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It is, I believe, an economic model to be learned from and encouraged to blossom.  The current test case of locally operated property tax collection on Elbow Cay is interesting and I’m keen to see how it works out.

Chart of Sales Growth Abaco

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Over the past 7 years the data shows growth of sales volume of 18% per year.  Despite the growth in the market and strong activity levels, I’m seeing property values are still dropping somewhere around 5% per year.

I anticipate this trend to turn around in the next 12 months.  As inventory is absorbed, we should see prices start to stabilize and begin to push up a little.

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Government Stimulus to Real Estate

Current incentives of 1st time buyers and Family Island Encouragement Act are having positive impacts.  I believe they should continue.

I believe the taxes on the purchase and sale of real estate is too high.

Stimulating the real estate market and providing incentives to buy here will further stimulate the wider economy.  It is said that a new home owner will further spend an additional 10-20% of the purchase price on furniture or remodeling etc.  That adds up to a significant amount of money being circulated around the economy.

I would urge the government of the Bahamas to further incentivize the real estate market and encourage home buyers, both local and foreign.

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The Acreage and Development Market is completely dead…

There has not been a single transaction of a tract of acreage in Abaco in 10 years.  There are many factors at play but the 2 key reasons I believe to be

  1. Restrictions on foreigners purchasing tracts of land via Foreign Investment Board
    • I believe this market should be liberalized.
    • Keeping it restricted does not benefit the Bahamas.
    • The tax revenue on the sale of large tracts of land is a good reason to encourage the market not restrict it.
    • The vast tracts of raw land are not benefiting anyone by sitting dormant.
    • It is all too common to have a large tract of land owned by 10 or 20 people who inherited it and they will never reach a decision on what to do with it.
  1. The cost of developing land in the Bahamas for sales of lots has risen beyond the ability to realize a profit. The cost of utilities, road paving and legal expenses, plus marketing costs are significantly higher than the price one could sell a residential building lot for right now.
    • A Non-waterfront residential lot on the main island of Abaco sells for an average of $30,000
    • Cost to develop a subdivision of lots for sale in Abaco is around $30,000
    • Therefore No incentive to develop.

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The Tribune has recently published 2 articles on land registration reform, one from the president of the Bahamas Bar Assocation, the other form the president of the Bahamas Real Estate Association.  To quote Mr. Elsworth Johnson

“A registered land system would divulge the number of frauds that cause people to be dispossessed of their land. It would also reduce the amount attorneys are able to charge [for real estate transactions]”

Thank you all very much for the opportunity to share some of my thoughts today.

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Have a wonderful day.

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Ever dreamt of having your own private island complete with deep water marina and 2 beautiful beaches all within an 15 minute ride to amenities?  And at a reasonable price?

Here is a sneak peek at an upcoming Private Island Listing, and this one has it all:

Cove panorama

HG Christie has finally launched a new website portal that allows you to view listings by area and see their exact location and pricing.  It is kind of interesting and somewhat eye opening, if for instance one zooms into Marsh Harbour or Treasure Cay and views how many properties are currently for sale in a specific area.  There are few little kinks to work out but overall a great tool.  Check it out here:

http://hgchristiebahamasrealestate.bs

 

All I can say it is has been an extremely busy 2014 so far in the real estate business. I have not been able to make myself sit down and write up an update to this blog. Every week, Every day has been non-stop trying to keep up with the demand. Demand for appraisal work and for sales work and often juggling both can be tricky. Both disciplines have specific time frames to work with. Buyers and sellers want immediate responses and while clients looking for appraisals are always on a limited time budget.

ABACO - WINDING BAY PLUS 49

Above: Incredible New Price on a harbour front 1.8 acre parcel in Little Harbour.  $200k for a beautiful piece of paradise.  It has beach, deep water for a dock, and 40′ elevations, it has it all except that pesky electricity supply.

Speaking of Appraisal work – there has definitely been an uptick in appraisals services volume which indicates that a) credit is become more available and mortgages are become easier to obtain and b) consumers of real estate and loans are expressing more confidence in the economy. Typically you would not borrow money if your financial future was looking poor right? I will mention that the commercial banks in the Bahamas have severely clamped down on appraisal standards and lending requirements here.   In the past a simple cost/replacement calculation would have sufficed to justify a value estimate however now every local bank is requiring that at least 2 comparable sales are included in the analysis and used to justify the final number reported. In some ways this is a good thing for our market, it is a maturation of the lending and mortgage business here partly as a result of the implementation of the Bahamas MLS. On the other hand it means value estimates are generally lower than they were in the past and less subject to the ‘interpretation’ of the appraiser. In any event higher reporting standards will benefit everyone in the long run.

How is the Abaco Real Estate market doing these days?

Well I’ve pulled up some sales activity numbers from the MLS which give a pretty good snap shot of the past year. Everyone is aware that the South Florida real estate market saw a strong bounce back and return to positive appreciation about 2 years back (2012). We expected it to happen in the Bahamas last year however while 2013 saw a little improvement, appreciation was stagnant. 2014 appears to be seeing a similar flat line in property values but that is a good thing, certainly better than a declining market. Steady markets are good, they are reliable, predictable and safe. Excessive appreciation is often a bad thing leading to a correction as we have all seen about 5 years back.

The past year of Abaco Real estate sales volume shows a huge uptick this year:

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You can see at the end of 2013 there was a steady transaction rate of 2-6 which is reflective of the whole of 2013 and typical or 2012 also. You will notice that as of February, there was a marked improvement in sales volume. You will also note the modest increase in sales of properties over $1M.

Interesting to note – In a previous post I wrote about the busiest month of the year for sales activity, and April is typically one of the best for real estate both in the Bahamas and in the United States. But for some reason this past year, April saw a huge drop. I will have to look into what happened in April this year.

Additionally, August is typically one of the slowest months of the year for sales, but this year is looks like it is one of best of the year.

All in all, I have strong confidence that the market in Abaco is back on track and we will see some good but steady growth this coming year.

That confidence is supported by several factors at play that will return Abaco and the Cays back to a strong yet sustainable growth level.

Treasure Cay is supposed to have a new managing partner coming on to take over and rejuvenate the community. The area sorely needs some new energy to revitalize and upgrade. It is a shame because the community has such tremendous potential but is being held back in my opinion.

Winding Bay, The Abaco Club is set to have new management and ownership coming October. The Abaco Club has been struggling to realize its full potential for the past couple of years and property owners have seen the value of their investment erode away substantially. With the pending take over by Southworth, out of New England the area should see a substantial upgrade and corresponding improvement in property value. I have confidence they will be the right fit and benefit all of Abaco.

The new Marsh Harbour International Airport (MHH) has been operational for some time now and is an immense benefit to the island and offers a clean, efficient and air conditioned space for travelling to and fro. Now we just need direct service from Atlanta by Delta or even perhaps direct service to New York. It is a beautiful building and gone of the days of sloshing through mud to get to your car or taxi.

The Hope Town Inn & Marina has been open for over a year and they have seen tremendous approval by the market. The marina is always very busy, and the rooms are on constant turnover. The property is attractive, convenient and becoming a staple of the Hope Town scene.

Great Guana Cay maybe seeing some big things coming on stream soon, but more to come on that later.

Unfortunately Green Turtle Cay is still struggling a little in terms of visitors, but this is proving to be a positive aspect for the second home owner market. Folks are finding the quiet and peace away from the busy tourist action the ideal spot for a quaint second home. The old New Plymouth Inn is ready for new life and would be a wonderful retirement project for the right person. It has lots of history and character and would be a ton of fun to return to it’s glory days.

Lastly, my 2 cents – A house painted white seems to have serious trouble selling in the Bahamas. I suppose it is the only colour to paint a house in certain parts of Greece but it does not seem to work here. Anecdotally, there are several bargain homes on the market in Abaco that have been sitting for a good long while and I attribute it to the colour of the house – white. Similarly unpainted cedar siding seems to be equally difficult to sell.

Happy back to school and International Literacy Month, And Coastal Cleanup Month!

Well, It is the end of June/Beginning of July already.  6 months till Christmas and the other busy time of year.  Here in Abaco it is pretty much non-stop activity every weekend for me.  Next week the Abaco sailing regatta starts on Wednesday 3rd with the famed Fiddle Cay “Cheese Burger In Paradise” Party which marks the Skippers Meeting and beginning of the races.  The Party serves up free Cheesburgers at one of the most idyllic spots in Abaco, a beautiful beach on an uninhabited cay next to Green Turtle Cay.  The burgers are given away free which is made possible by very generous donations made every year by business owners and second home owners on the cay and one very cool guy that puts it all together and seeks no recognition for it all. If you know who I’m talking about give him a pat on the back.

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Photo of RTIA 2008, Hope Town Race Courtesy Robert Dunkley, http://dunks.smugmug.com/SAILING

The Regatta Time in Abaco, check out the website at www.regattatimeinabaco.com has been going on for almost 40 years and my Grandfather has raced in just about every one of them.  I’ve been racing in it since I was 15, having missed about 4 of the years for various reasons.  It is a great time, great racing and wonderful way to see the beauty of Abaco’s Cays and Seas.  There are five races held in different parts, the first starting in Green Turtle Cay.  The last one this year is held in Hope Town.  The format, or order, of the races and locations has changed over the years.  Until recently the final race and party was held in Marsh Harbour at the Jib Room and Marsh Harbour marina.  I still remember the first time I raced the regatta and snuck an alcoholic drink or two with the friends I was sailing with (we were a little underage then).  Needless to say we did get into a little bit of mischief but nothing too unruly.  The final party was in the old Jib Room (aka Marsh Harbour Marina) which had a bar area up stairs which is now just storage.  It was a great spot with wonderful view across the harbour.  The current owners Tom & Linda have made several changes over the years but it is better than ever and great place for lunch or dinner (they only serve dinner on Wednesday and Saturday).

This year there is a new race being held starting in Great Guana Cay and finishing in Marsh Harbour, which should be an interesting race, typically it is an upwind beat the whole way.  I’m interested to see how the race committee plans the new course.  One race that has remained pretty much the same throughout the past 30+ years is the Marsh Harbour to Hope Town race.  It is a great course which starts right outside the entrance to Marsh Harbour, usually has a short beat up to the Crossing Ferry  Dock area, followed by a long beam reach to the southern tip of Scotland Cay.  After rounding the bout at Scotland Cay, the course turns back upwind to take you through the narrow channel between Man O War and Garden & Sandy Cays.  This beat from Scotland to round the bouy near MOW often makes or breaks the race.  It all depends on how well the navigator can plan the tacks through the tide currents that rush in or out of the cuts to the Atlantic Ocean (your sailing inside the barrier reef and cays) and playing the wind shifts that occur at a various points.  There is always a significant shift in the wind shadow of Garden Cay and if executed right it can really pay off.  The final test is to get through the cut with as few tacks as possible.  The ideal course would cost the boat only 3 tacks to turn the mark at Sandy Cay (incidentally, its for sale at $10.9M) and head on down to Boat Harbour.

The next stage of the course takes you along the dramatic “Sugar Lumps” (purported to have bat caves and Lucayan cave paintings) and the beautifully developed Matt Lowes Cay, and the beautiful shoreline of Sugar Loaf Cay.  (The home called Sugar Loaf Pointe, is for sale and you can see it as you sail by in the race).  The final turning mark is just outside of the Abaco Beach Resort and Boat Harbour Marina where many an epic bill fishing tournament is held every year.  The pool bar there has seen plenty of ‘tall tales’ told.

The final leg of the race put the Iconic Elbow Reef Light House on the starboard bow and the finish just outside Hope Town Harbour.  This MH-HT race has pretty much stayed the same for almost 30 years as it is a great race, both challenging and very enjoyable, taking you along many scenic areas of the cays.

The regatta has not always been the way it is now.  In days gone by, there races started in Hope Town and ended in Green Turtle Cay.  Other progressions over the years are the disappearance of a round the bouys race just outside of Treasure Cay; A race from Treasure Cay to Marsh Harbour which was basically one long spinnaker run before the wind and my grandfather says he used to really enjoy that one.  It started with a short beat to weather and ended with a short beat, but the majority of the race had the Sea of Abaco lit up with colourful sails dotting the horizon for the 13 nautical miles.  I’ve seen a couple of photos that have survived from those days and it liked a fantastic sight to see.   There is a story about he dolphins being released from pens at Bakers Bay while everyone was partying in Treasure Cay.  There are many stories about the long gone but not forgotten “Roosters Rest of Green Turtle Cay”.  The anecdotes and episodes over the years are numerous and it is a wonderful event for sailors.

The organisers of RTIA are to be commended for tirelessly putting it on every year.  The original founders of the RTIA are to be thanked in particular – the Late but Legendary Lindsey Scott, started up the regatta many moons past, later skillfully run by Dave and Kathy Ralph, and now ably heralded by Ruth Saunders.  Give them all a congratulatory pat for the good time you’ll have while, racing, cruising and partying.

And last but not least, never forget the thankless job of race committees across the world.  As usually run by Carol & John Ewing, who do a fine job of handling a very complex regatta.

See you on the course 🙂

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