|The Bahamas Investor Magazine
January 21, 2014
January 21, 2014
Los Angeles has its Beverly Hills. London has Knightsbridge. In New York, it is Fifth Avenue and in The Bahamas it’s Paradise Island–one of the most upscale “neighbourhoods” in the nation.
Paradise Island is a destination famed for two things–tremendous wealth and tremendous beauty. Two bridges separate the city of Nassau from this small, but perfectly formed, tropical island. With miles of powdery beaches and endless sea and sky vistas, it is little wonder that this 826-acre slice of paradise has attracted celebrities, tourists and second-home buyers from around the world for decades.
For more than half a century, a succession of wealthy foreign investors have fallen in love with Paradise Island. They have bought substantial tracts of land, developed a harbour, constructed luxurious getaways and beautified parts of the island.
Edmund Lynch, co-founder of the Merrill Lynch & Co brokerage firm, was one of several wealthy Americans who owned property on Paradise Island in the early 20th century. He built a new home, which he then sold to Swedish industrialist Dr Axel Wenner-Gren–one of the wealthiest men in the world in the 1930s.
Owner of Electrolux, a leader in vacuum cleaner and refrigeration technology, Wenner-Gren sold his home on Paradise Island and extensive property to George Huntington Hartford II, heir to the vast A&P (Atlantic & Pacific Tea Co) grocery fortune. The Swede suggested that Hartford change the island’s name from the unromantic Hog Island to Paradise Island.
That was the first step in a major rebranding of the island by Hartford, who turned the newly named Paradise Island into a playground for the rich and famous in the late 1950s. At this time Hartford’s family owned one of the world’s largest supermarket businesses, which meant he had the financial resources to realize his vision of developing a high class, tropical resort.0
Hartford constructed the lavish 52-room Ocean Club overlooking a terraced garden modelled on Versailles. He imported a 12th-century French cloister, built a golf course and renovated Wenner-Gren’s former boathouse into Café Martinique–a five-star restaurant complete with gold-plated bathroom fixtures.
Following the investment in luxury accommodation and facilities, Hartford welcomed a string of celebrities and world leaders to the island including Jackie Onassis, Sir Winston Churchill, Salvador Dali, Elizabeth Taylor, Marlon Brando and The Beatles.
However, the good times were not to last and when Hartford fell into financial difficulties, he sold his interest in the island to the Mary Carter Paint Co (later known as Resorts International), which opened the 500-room Paradise Island Hotel (a Loew’s Hotel property), the Britannia Beach Hotel, and the Paradise Island Casino, among others.
In 1987, Donald Trump paid $79 million for 67 per cent ownership in Resorts International for a short-lived reign over the island. By the following year, US media mogul, Merv Griffin’s group had acquired the company and invested large sums in the development of the island.
By the mid-1990s, however, the various properties had seen better days and the glitz and glamour of Hartford’s era had started to fade. Griffin retained the property until 1994, when South African developer Sir Sol Kerzner acquired Resorts International’s properties on the island for $125 million.
Having bought almost 70 per cent of the island, Sir Sol rolled out a visionary development plan that would ultimately boost the national standard of living and provide Paradise Island with a global profile.
From 1994 to 1998, the South African mogul’s company Kerzner International (NYSE:KZL) invested more than $800 million to bring the mythical city of Atlantis to life and create a tourist offering unparalleled in the region. The new resort facility included: the 1,200-room Royal Tower, with the largest casino in the Caribbean region; the world’s largest open air marine environment, with around 50,000 sea creatures, lagoons, waterfalls, a unique Mayan Temple water slide, and six swimming areas; and a $15-million megayacht marina.
That was just the start. In 2007, Atlantis launched a billion dollar expansion that brought on stream the 600-room Cove Atlantis; the 497-unit Reef condo-hotel; a 14-acre dolphin habitat and education centre called Dolphin Cay; a 63-acre waterscape addition, named Aquaventure; new conference facilities; the Mandara Spa; and Aura nightclub.
Since it began operations, Atlantis has invested more than $2.5 billion in The Bahamas. It is the largest private sector employer in the jurisdiction, with nearly 8,000 full-time employees, contributing between 15-20 per cent of the country’s gross domestic product.
The Atlantis resort property is now owned by Brookfield Hospitality Properties LLC and managed by Kerzner International. Atlantis’s 560 acres encompass multiple hotel properties, with the seven facilities offering a combined inventory of 3,950 rooms at press time.
“Atlantis is really not a resort as much as it is a multi-dimensional destination,” says George Markantonis, president and managing director of Atlantis Paradise Island. “It’s probably the only place I’ve ever seen in my life where you can bring three generations of the same family at the same time. They only meet up once for dinner, but everyone is having a great time doing different things.”
Other developments on the island also add to the overall investment and tourism offering. Adjacent to the Atlantis resort is the all-inclusive 379-room Hotel RIU Palace Paradise Island, which is owned by Riu Plaza Hotels and Resorts and stands on a gorgeous three-mile stretch of white sandy beach. Next to that is the 228-room Comfort Suites, in which Atlantis has a small stake. The complex recently underwent a $2.5-million renovation, with upgrades to the bedrooms, bathrooms and meeting rooms, and a new business centre was brought onstream.
On the other side of the island is the all-inclusive 246-room Paradise Island Harbour Resort purchased by Warwick International Hotels at auction in late 2012. The hotel is expected to undergo a $10-million refurbishment this year. There are also timeshare facilities, private condos/townhomes and rental properties all around the island.
“Paradise Island is rich in amenities,” says George Damianos, president and managing broker of Lyford Cay Sotheby’s International Realty and Damianos Sotheby’s International Realty. For the last four decades, Damianos has sold real estate inventory on Paradise Island ranging from $250,000 to $20 million. “I think it’s the amenities available to the potential buyer–the restaurants, the Atlantis resort, beautiful beaches, the convenient location to downtown Nassau–which are all attractive selling points.”
Homes on the island range from luxurious one-of-a-kind estates and gorgeous beachfront sanctuaries to exclusive high-rise condos and world renowned hotel brands, says Damianos.
At the eastern end of the island sits Ocean Club Estates–one of the most exclusive oceanfront and golf-course communities in The Bahamas. The luxury, 120-home site development was the old Paradise Island airport when Kerzner bought into the island. Since then, homes have been constructed and bought and sold many times over. To date, about 80 of the lots have been fully developed by the owners, says Markantonis.
Some Ocean Club homes sit on the 18-hole, par 72 championship golf course designed by professional golf legend Tom Weiskopf and also owned by Brookfield. For several years running, the golf course had been home to the Michael Jordan Celebrity Invitational. In May 2012, the Ocean Club Golf Course hosted its first PGA event, the Pure Silk-Bahamas LPGA Classic. The 2014 event will be held this month, taking the prestigious position of being the first LPGA event of the new season.
Room for growth
Despite all these developments, Markantonis says Atlantis still has space to grow. There are five different land parcels totalling 100 acres that the megaresort has yet to develop. “Some of these parcels sit in amazing locations,” Markantonis disclosed.
“The three largest, in fact, are on prime beachfront property.”
The more easily identifiable tracts of land include the very large parcel that sits in front of the Royal Towers and ends at the harbour. The area once served as a helicopter pad. A second site is the remainder of the land upon which the Club Med property stood overlooking Paradise Beach. A third tract is located near the RIU hotel.
Markantonis declined to give the exact size of these parcels of land explaining that they could be “tinkered with” to make them contiguous to each other and expand the footprint that they presently have by moving some non-essential Atlantis features, such as employee parking lots or tennis courts.
For now, however, Atlantis has adopted a “wait and see” approach to further developments due to the $3.5-billion Baha Mar project taking shape a few miles away on the Cable Beach strip on New Providence. When it opens at the end of this year, the megaresort will bring a total of 2,200 hotel rooms onstream, spread across four major hotel brands.
“All of our development and expansion plans are temporarily on hold,” says Markantonis. “There is a possibility that there will be market saturation when the Baha Mar development opens. It will be foolhardy for us to commit to invest funds into the location until we see how the market absorbs the new room inventory.”
When asked if Atlantis is planning further investment here, however, Markantonis remains confident, noting that the resort will continue to develop in stages, as it has done over the last 20 years. “This is something that we’ve always said is the secret to success for large projects,” says Markantonis.
“They need to be phased in so that the infrastructure can catch up with what we are developing, what we are adding. It has taken 20 years for Atlantis to reach this stage.”
Although barely recognizable from when Hartford first realized its potential as a tourism and investment destination, Paradise Island has continued to make the most of its natural gifts, attracting millions of visitors each year, as well as millions of dollars in foreign direct investment (FDI). The next phase of development will no doubt offer further opportunities for investors.