|The Bahamas Investor Magazine
September 1, 2019
September 1, 2019
To the casual visitor, Abaco is comprised of sleepy island communities where nothing much happens. But beneath its relaxed demeanour, this is a destination that is discovering its potential and looking to the future.
Abaco’s economy is on the rise. A booming tourism sector, movement in the local construction industry and a strong real estate market are creating opportunities for entrepreneurs and attracting investment, according to president of the Abaco Chamber of Commerce Ken Hutton, who says: “Abaco is where it is happening. There is a lot of economic activity here. I am extremely optimistic about its future.”
Last year, Abaco celebrated a milestone as it surpassed the 300,000 visitors mark, making it the second most visited destination in The Bahamas after New Providence. And there are no signs of a slowdown in the tourist trade. Stopover arrivals for Abaco rose by 17.6 per cent in the first few months of 2019, according to the Ministry of Tourism and Aviation.
This success is due in part to the Ministry of Tourism’s new focus on marketing the islands of The Bahamas as stand-alone destinations. It is also aided by the launch of American Airlines’s non-stop route from Charlotte, North Carolina to Marsh Harbour in December last year. The flight runs weekly throughout the year, further boosting Abaco’s popularity with the US market.
The secret to Abaco’s attraction has always been its waters. Beloved by boaters, swimmers and fishermen, the islands and cays that make up the Abaco archipelago have hosted some of the world’s best fishing tournaments and regattas. But there are other ways that Abaco is realizing its potential. The islands’ golf courses are also proving a hit, with The Bahamas Great Abaco Classic bringing 132 players from around the world to Winding Bay in January this year, driving business for hotels, restaurants, shops and taxi drivers on Great Abaco.
But the islands are not resting on their laurels. Late last year, the Tourism Development Corp (TDC) held a workshop in Marsh Harbour to identify potential areas of growth within Abaco’s tourism sector. Stakeholders highlighted gaps in the market such as vehicle rental tours, farm-to-table businesses, ecotours, farm tours, souvenir shops and more dining options. TDC is calling on local entrepreneurs, operators and suppliers to make the most of these opportunities, increasing capacity in the tourism sector and enhancing the visitor experience.
Hutton says the diverse and unique ecosystems found throughout the Abaco islands and cays mean that the destination has great potential for more nature-based activities. “Abaco lends itself to ecotourism. There is so much that could be done in terms of water and shore excursions– nature tours, blue hole tours, island getaways, snorkelling.”
Real estate revival
As tourism grows in the Abacos, so too does the real estate sector, which is experiencing movement thanks to vacationers looking for second homes in paradise and Bahamians scooping up rental properties. “Tourism always feeds into the real estate market. A lot of people come on vacation before they decide to own something,” says Colin Lightbourn, broker with real estate firm Engel & Völkers. “The vacation rental market is very strong and that pushes investment.”
Elbow Cay, home to the iconic Hope Town Lighthouse and Treasure Cay on Great Abaco Island, saw the most activity in 2018, with Engel & Völkers reporting a 110 per cent increase in residential sales in those areas over the past five years.
The average sales price for a home in Treasure Cay is around $343,000, making it a solid middle-of-the-market investment for Bahamians looking for a lucrative rental property. “Treasure Cay is a price point,” says Lightbourn. “You have the beach, the marina, the amenities. It was developed in the 1960s so some of the buildings are older, meaning that they are a good price for someone who wants to come in and fix them up. More Bahamians should be looking at this type of investment.”
Hope Town on Elbow Cay is the largest settlement in the Abacos. Its welcoming small town feel, picturesque colonial architecture and proximity to the Marsh Harbour airport have made Hope Town a popular spot with visitors, locals and home hunters. Lightbourn says the secret to its appeal is the sense of community. “When an investor wants to put money in a place, they look for communities that look after themselves,” he says. “The community on Elbow Cay looks after its environment, its public places and its infrastructure. They take very good care of their island.”
Amenities and activities are also a draw for buyers, and Elbow Cay delivers on both. Lightbourn predicts that the market will continue to prosper through 2019 and beyond because it has long-lasting appeal. “The Bahamas is influenced greatly by what is happening in the world but, even in a weak economy, somewhere that has a strong community, amenities and airlift will do well. The Abacos have that boutique hospitality product, people will always want to come back for that.”
Hutton agrees and says Abaco has directly benefitted from the recent travel trend towards more authentic, unique and local experiences. “Abaco is not a mega-resort kind of place. We have these small, quaint island villages and the locals are very focused on keeping Hope Town as it is, and not turning it into Las Vegas. Boutique hotels and vacation rentals are the future of Abaco. High-end places do extremely well here. People are choosing a more intimate vacation experience and we have options available to visitors who don’t want to stay in the big resorts or the hotel complexes.”
Barriers to growth
However, these boutique options are under threat. With the government looking to collect tax from the vacation rental sector, Hutton says this will dampen the market just as it takes off in Abaco and adds: “These homeowners already pay property tax, they do not get any of the benefits of the hotels and they pay duty and VAT on everything. This is a burgeoning market, why would you want to kill that?”
In addition, Abaco, in common with other islands, is grappling with high energy costs and burdensome bureaucracy. Hutton would like to see a more devolved system in place to reduce the bottleneck as business decisions are channelled through Nassau, which is time-consuming and off-putting for both local and foreign investors.
Despite the obstacles, there is entrepreneurial growth in Abaco as the next generation shows its business acumen. The Chamber of Commerce, which currently has around 120 members, most of which have less than 20 employees, is working to help these young professionals develop their skills and exploit opportunities.
“We are very encouraged by the young businesspeople in Abaco,” says Hutton. “They are starting businesses and running them successfully.”
The chamber is working with the US-based National Center for Construction Education and Research to establish a training centre in Abaco that would offer internationally-accredited courses in trades such as carpentry, plumbing, and electrical services. It is also engaging with Nassau’s Small Business Development Centre to offer specialized programmes to Abaco’s
small and medium-sized enterprises.
In his national address at the start of the year, Prime Minister Dr Hubert Minnis pledged to put Family Islands first, as he seeks to spur development and growth throughout the entire Bahamian archipelago.
This is welcome news to Hutton, who says: “I am very encouraged by the Prime Minister’s focus on the Family Islands and we look forward to working with him to bring in more development and tourism dollars.”
However, Hutton warns that a cautious approach is needed. In early 2019, the prime minister announced an upcoming $580 million investment in South Abaco for the development of a five-star resort and marina, upgrade and expansion of the Sandy Point airstrip, development of Sandy Point ferry dock as a cargo transshipment port and construction area, and extension of Queen’s Highway in South Abaco.
Hutton says this kind of development must be properly vetted and planned to have any chance of success, and suggests that the future of the Abacos lies in small-scale investments to give small business owners, and the community, input into their economic future.
“Sustainable growth is only going to be accomplished with detailed planning,” he says. “If it is planned properly, Abaco can go from strength to strength. Abaco can definitely be the template for future development of the entire country if it is done in a very measured way. It takes a lot of community involvement and Abaco has that. It has a sense of independence. Abaconians know what is best for Abaco.”