|The Bahamas Investor Magazine
June 26, 2018
June 26, 2018
Given The Bahamas’ tropical climate, island living lifestyle and low tax regime, it’s hardly surprising that many investors choose to follow their money to the archipelago. One of the most popular routes to residency is through real estate and many foreign buyers are picking up property alongside their residency permits–either to use as a second home, for short-term rental or simply as a project for their retirement.
While residency is never guaranteed, investors who spend a minimum of $500,000 on Bahamian real estate are almost certain to be granted the right to reside, provided the rest of their paperwork is in order of course.
At press time, the government was considering raising this threshold to $750,000 and has committed to introducing a fast-track service for those spending $1.5 million or more, with their applications processed within 21 days.
According to Christine Wallace-Whitfield, president of the Bahamas Real Estate Association (BREA), investors have been taking advantage of this route to residency for decades and the market continues to grow. “Residency [by real estate investment] has always been popular,” she says. “We are a very attractive country for investors. We are very unique because we have all these different islands. Where else in the world can you find that? We also have a warm climate year-round and we are so close to the US, that is a huge attraction. We have such a great product in The Bahamas.”
Wallace-Whitfield, also a broker at Island Living Real Estate, says foreign investors, including second homeowners, were responsible for around 60 per cent of her firm’s business in 2016 and adds that this type of investment is hugely important to the industry, and the country as a whole. “We rely on foreign investment. It is a big market. The real estate industry is the one which attracts investors. We are the ones with websites selling the country. We know firsthand what investors are thinking and feeling.”
But, of course, not all residency-hunters are alike. Wallace-Whitfield says her clients are a mixture. Many want to buy to rent, others are looking for a second home and some are adding to their growing property portfolio.
In her experience, there is one thing these buyers do have in common–they have done their homework. “I’ve been in this business for over 20 years and our business used to be mostly walk-in clients. Now it is all done on the internet and foreign buyers have done their research,” she says. “These clients know exactly what they are looking for. They know where to go and what they want to do.”
Steps in the process
However, while buyers can browse the world wide web for amenities and attractions, it’s not always easy to learn online about the process. Investing in real estate to gain residency can be complicated and carry unforeseen costs such as a 2.5 per cent stamp tax, 7.5 per cent VAT and legal fees.
Buyers must negotiate the purchase of the property, as well as applying separately to the Department of Immigration. The two applications can occur concurrently, but go through different systems.
“Some buyers are more relaxed than others. Some want to know everything about the process, they need to know the details of every stage, while others just sit back and let us do it,” says Wallace-Whitfield, who puts buyers in touch with a reputable attorney who can handle their residency application.
From the buyer’s first phone call to their realtor through to their residency being granted can take between six months to a year, according to Wallace- Whitfield, who adds that it varies greatly from client to client.
Either way a good realtor is there for every step of the process. “Investors are coming over and trusting you to walk them through the steps,” she says. “They are bringing their money into this country and it is my job to protect them and help them as much as I can. Once they have purchased the property, there is a certain amount of contentment. They can rent it out or just enjoy it until their residency comes through. It’s a waiting game.”
Areas of opportunity
For Bahamian realtors, many opportunities arise from the residency market. Foreign buyers often require specialized services that go far beyond merely purchasing property.
Island Living offers property management services for those homeowners who may be out of town and unable to oversee the day-to-day upkeep of the property. The service is also popular with buyers who have multiple properties and do not have the time to maintain all of them. Wallace- Whitfield says: “It is not just about buying a house, we are selling a service. It is important to find out as much as you can about the client and what they want, to give them options.”
Among BREA’s members, there are a number of realtors who are expanding into concierge services to help guide investors through all stages of their relocation.
“I think the market for these kinds of services is growing,” says Wallace-Whitfield. “Companies are branching out and I’m sure it will continue to grow as this is a service industry. It is all about making sure your clients are well looked after.”
To some extent, a client’s needs are dependent on the type of property they are purchasing.
There is a huge inventory in The Bahamas from gated communities to ocean view condos. Often, investors are bringing their families and need to think about proximity to schools, amenities and the area’s safety. In the Family Islands, Wallace- Whitfield says the most popular areas are the Exumas and Abaco, while in New Providence the western side of the island and Paradise Island are hotspots. New developments such as One Cable Beach are attracting business, as well as old stalwarts in the market such as Lyford Cay, Old Fort Bay, Sandyport and Delaporte Pointe.
Wherever they end up, these new residents quickly become part of the community. Wallace-Whitfield says that falling out of touch with her client is a sign of success. “The majority of the time, they blend right in and we never hear from them.”