|The Bahamas Investor Magazine
January 21, 2014
January 21, 2014
Real estate in The Bahamas presents a compelling buying opportunity to investors from abroad. It not only diversifies an investment portfolio and provides a bit of a shelter from economic storms, but also has the built-in bonus of permanent residency at one of the most beautiful and desirable addresses in the world. Within a matter of weeks, foreign buyers could have residency status, providing they spend at least $1.5 million net.
A former private banker with a law degree, Seaview Properties’ agent Jason McCarroll (pictured) made a career switch into real estate upon realizing its potential, particularly in the fast-moving condominium market. “Condos are a hot commodity for a multiplicity of reasons. One is that it is much easier to buy and sell a condo than a home. The shelf life of a condo on the market is around six months, as opposed to a home, which could be on the market for a couple years if it is not priced correctly.”McCarroll, who has been involved in the real estate market in The Bahamas for the last 20 years, believes that certain peculiarities in the local market enhance its attractiveness for investors.
“It’s not like Miami where you have years and years of inventory. There’s no glut in the luxury condo market, because it is so expensive to build these units. Another reason why condos are so much more attractive is that there’s no maintenance.”
Return on investment
Pied-à-terres exist throughout The Bahamas’ upscale condo market, with owners jetting in for a few weeks or sometimes only a few days a year to enjoy their own private slice of paradise.
However, it is hotel branded condo projects that offer perhaps the most compelling buying opportunity for foreign investors. Megaresort developments such as Atlantis Paradise Island and Baha Mar on Cable Beach, which is scheduled to be completed by the end of this year, come with a sense of stability that a global brand elicits, while also providing a steady return on investment through managed rentals.
Atlantis Paradise Island’s 497-unit condo complex, The Reef, is the prime residential beachfront ownership opportunity at the resort. By the end of last year, more than 80 per cent of the units had been sold. In a flurry of sales activity, 35 of them sold in just six months after opening.
Owners at the 22-storey complex get to call Atlantis “home” and receive all “perks and privileges available to guests in the finest hotels,” including turn down and maid service, concierge services, and bell staff as well as access to the water park, casino, nightclubs and dozens of restaurants. At press time, junior suites were starting from $425,000; one-bedroom suites were available from $800,000 and there was a $1.2 million entry price for two-bedroom suites.
Atlantis’s closest rival in terms of size will be Baha Mar. A project of immense scale and vision, when completed the development will have 307 private, freehold residences spread across four major hotel brands including Rosewood Hotels & Resorts, Mondrian, a Morgans Hotel Group property, Hyatt Hotels and Resorts, and The Baha Mar Casino & Hotel.
Condo prices here range from around $1 million for a fully furnished one-bedroom residence to $9.5 million for four-bedroom abodes. Baha Mar owners will receive privileged access to all Baha Mar amenities including the Jack Nicklaus Signature Golf Course (see pg 82), tennis and spa, as well as preferential access to restaurants, nightclubs, bars and concerts.
Philip Day, vice president of real estate at Baha Mar Ltd, believes several reasons are motivating buyers to sign on the dotted line. Among them are the commitment to quality by a dedicated, strong developer; an “unmatched” array of amenities; hotel brands with a proven ability to provide five-star service; the option to participate in Baha Mar’s rental programme; and ease of travel to The Bahamas.
“Each buyer is a bit different. We see buyers that purchase simply because they want to use their Baha Mar residence for themselves and their family and friends and their attraction to the Baha Mar lifestyle. We also see purchasers interested in participation in Baha Mar’s rental programme,” Day explains. “The thing they all seem to share is a love for The Bahamas–the people, the weather, the beautiful beaches, the sophisticated financial resources, the vibrant culture, the stable government and currency.”
Prime properties in paradise
On Paradise Island, existing condos are selling well, says McCarroll, who not only sells paradise, but bought a piece of the action himself and constructed a home here in this affluent community. “I know Paradise Island completely,” he adds. Some of the prime properties available on the famed island in the $2-million range are at the exclusive Ocean Club. “The condos in Ocean Club are an anomaly. They maintained their value through the whole property bust,” says McCarroll. “The condos here at Ocean Club started seven years ago with an entry level of $2 million and that’s pretty much what the entry level is now. There is very little depreciation in the condos.”
McCarroll says, prices are “ripe” for second-home owners in the condo market. “An interesting approach that a lot of people are using now is that they may buy a unit that’s already rented out. The rental income for the condos start around $9,000 and work up to $15,000 per month. So, they’ll enjoy that income.”
A guaranteed rental income in that dollar bracket is an attractive option for investors looking to diversify their portfolios, particularly if the tenancy is with a corporation or institution.
“Normally those rental agreements are with offshore banks,” he explains. “When the units do become available, the owner will use them periodically. They use it whenever the tenancy is over. It’s a soft, painless way to enter the real estate market in The Bahamas.”
Another choice spot for high-rise living is Caves Heights–a gated oceanfront condominium community set on seven acres of landscaped parkland overlooking a white, sandy beach. With 86 residences, this gated community offers two- and three-bedroom condominiums and four-bedroom grand penthouses.
Phase I of the development is nearly sold out and units are now available in Phase II, according to Gustaf Hernqvist, the development’s vice president of sales and marketing.
“Phase I, which was completed three years ago, has actually been successful in sales during a very tough economy, mainly because of the price. It’s very good for such a high-end product,” he says. “This last year has been incredibly successful in selling Phase II. We have actually sold 15 condos for the year. All of last year  we sold a total of seven condos.”
Caves Heights offers open floor plans, well-designed for indoor and outdoor living. High-end finishings including porcelain tiles, granite and marble countertops and top-of-the-line appliances. Pricing starts at $695,000 for a 1,900 sq ft two-bedroom condominium. Buyers can step up to 2,500 sq ft three-bedroom condominiums, which start at $795,000. Penthouses start at $1.95 million for a 4,600 sq ft four-bedroom unit, with 6.5 baths and two balconies offering spectacular views.
With more than half of the available units sold, the development’s buyer base is 40 per cent American, 25 per cent Canadian, 15 per cent European and about 20 per cent local. A great price point, varied amenities and the fact that it is a new construction provide just the impetus for potential buyers to snap them up, says Hernqvist.
Amenity rich, family oriented Hernqvist’s list of selling points mirrors that of Zack Bonczek, marketing director at Palm Cay–the 69-acre gated community with 1,500 ft of ocean frontage, in the eastern district of New Providence. It is also home to the island’s largest mid-sized boat marina.
A day after the $200-million mixed-use development announced The Anchorage–consisting of two-bedroom condos near the marina–with a starting price of $319,000, Palm Cay received its first reservation. Less than two weeks later, nearly half of the 12 units to be built during Phase I were reserved.
Up to press time, Phase I had been sold out through a reservation system, which allows potential owners to reserve their spot on a first come, first served basis with a fully refundable $5,000 payment.
“Investors see the amenities; they see the potential for the community. They know that early investors get the most benefit out of their investment. They get the most handsome rewards. That’s one of the things compelling our buyers today.”
Bonczek says that such investor activity is a sign that generally confidence is returning to the market. “The global economy appears to be rosier than it has been in the past four or five years. That’s compelling buyers to act now.”