Last week, the Prime Minister who is also the Minister for Finance in the Bahamas gave a budget communication which had very significant changes to the real estate landscape in the Bahamas.

The changes that have been made are a follow on from the introduction of Value Added Tax in the Bahamas. For the first 6 months of this year, 2015, VAT was not applicable to the sale of real estate itself. Any attorney fees or a broker commission or any other service related to a real estate transaction was “Watable” however the actual sale of the real estate was exempt from the tax.

Beginning July 1st though, real estate transactions will now be subject to Value Added Tax in the amount of 7.5% of the price in addition to a 2.5% flat rate Stamp Tax. Gone is the graduated scale which elicited lower tax rate at the lower price transactions.

Palmetto Villa

Above: Beautiful New Listing Palmetto Beach Villa, Click and check it out.

What are the actual implications?

Real Estate sales under $100,000 are exempt from paying VAT, therefore the sale of a piece of land for $60,000 will not only attract a tax rate of 2.5%, whereas previously that same transaction would have attracted a stamp duty rate of 8%. This is an extremely positive move for the lower price range of real estate. Closing costs for land and homes under $100,000 has been dramatically reduced which will have very positive effects on the market place.

A purchase of a home for $250,000 will attract the same amount of tax now as before. Before the applicable tax was 10% Stamp Duty, NOW it is 2.5% Stamp Duty + 7.5% VAT. In essence the closing costs on a $250,000 purchase will remain the same. And this is effective at all price ranges above $100k up to the multi millions.

Of particular note, is that by converting the tax payable from Stamp Duty to VAT, the government has dramatically lowered the transaction costs for a Bahamas VAT registered business in purchasing or selling real estate. The VAT registered business can now credit their real estate purchase tax liability back. In essence for VAT registrants, the closing costs on real estate have changed to 2.5% stamp duty instead of the 10% is was previously. (+Attorney fee +Broker Fee).

There was also mention of a pending change to the Bahamas Real Property Tax Act whereby a new ‘category’ will be created for ‘Residential’. At the moment there are 2 categories for property tax in the Bahamas, ‘Owner-Occupied’ and ‘Non Owner-Occupied’. Essentially if you live in your home you see a drastically lower tax rate, and everything else including commercial, retail, industrial, residential rental properties, even a home you own but don’t rent and don’t live in could attract the higher rate of 1.5% of the value.

With the creation of a Residential tax category, all Residential properties whether lived in or rented would be within this category. This is a substantial concession for owners of duplex and triplex residences who would have had to pay a relatively hefty property tax on the rental apartments. The ‘Residential’ category will likely incur the same rate as the current ‘owner-occupied’ rate of 0.75% however the legislation has not yet been tabled or approved, but the communication indicated the change would occur prior to the October bills going out this year.

These two adjustments which may seem minor on the surface will have significant impacts on the ownership of real estate in the Bahamas. In essence improving the attractiveness and lowering the soft cost of acquiring, holding and selling real estate here.

Also of note was the elimination of import duty on bicycles, so everyone go out and buy a bike, get out and see the Bahamas on 2 wheels.

And a reduction of duty on ‘Stuffed Pasta’??? Someone has a food fetish there hey?

Lastly, another important point was the extension of the “Family Island Encouragement Act” whereby home construction and repair is permitted to bring in building materials duty free. The spirit of the legislation is to spur economic growth and create short and long term employment through the development and construction of homes. The Act is supposed to be extended to Eleuthera and Abaco which previously were excluded. I welcome feedback from someone who access the Act benefits in Abaco.

Here is how it should be done.  If a small private charter company can operate a regular charter service at comparable rates to the big airlines (Silver Airways, Bahamasair, American Airlines) and over a quicker more luxurious ride, then why can’t the big guys do it?  Seriously!  I recently looked up flights from Marsh Harbour to Miami roundtrip and the fare was $800.  looked up a fare to Fort Lauderdale recently too, $700.  This Saab plane is designed to handle 50 passengers, but these guys have outfitted to extra legroom and only accommodate 30 per trip.  How great is that? and the fares are significantly lower…  You know who I’m flying with next time…!  www.wildcattouring.net

Now if we could just get Delta to fly from Atlanta….

new air service

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

Total Bahamas MLS listings active right now:  2,145

Total Listings Sold On the Bahamas MLS in the past 6 months: 86

However, it is worth noting that I personally have been involved in 3 transactions in the last 6 months, that are not being recorded on the MLS for various reasons, either it was a ‘pocket listing’ or just recently expired etc. If one assumes that one quarter of the licensed agents in the Bahamas have been involved in one transaction that was not recorded on the MLS it bumps up the number of sales transactions up to 221.  This sales volume figure is modest but indicates strong gains over the previous year.  In the past month, every active broker or agent I’ve spoken to has seen a marked increase in inquiries, visits, showings and offers.  This is all leading to a significantly improved real estate market for the year of 2015.

The long wait since 2007 is definitely officially over in my opinion.

IMG_8214

Above: Beautiful Luxury Estate on Man O War Cay. Multiple dwellings, 3 beaches, large private marina. More information here:

http://www.hgchristie.com/details/abaco/man-o-war-cay/house-as12394/

Every company in the Bahamas is seeing major improvement across the board. In the local Bahamian real estate market, it seems the commercial banks are starting to make loans a bit easier to reach although the lending standards are still quite high. Typically Scotiabank is looking for the borrower to have 30% equity, however they are currently offering extremely low interest rates. RBC has in my opinion been the easiest bank to work with in terms of securing a mortgage with 10% deposit/equity and they will allow the borrower to finance closing costs which is a major help to a first time real estate buyer looking to start out. The government stamp tax of 10% (usually split between buyer and seller) is still a major financial hurdle for most buyers of real estate in the country, so being able to get financial assistance with that is a blessing. CIBC Fist Caribbean is offering 15% equity/deposit with interest rates on par with the other institutions.

In the non-resident or second home owner market there has been a large increase in interest from potential buyers and the sales activity is indicating a strong improvement. The problem I am seeing now though is that sellers who had been on the side lines waiting for the past couple of years have now seen the market improvement and chosen to put their property on the market. This has had the effect of increasing the inventory of available properties on the market which causes the market to skew in favour of the buyers. That said, I believe we are out of the woods and it is still a great time to buy.

When you have multiple people looking at making offers on one piece of real estate that definitely shows a vastly improved market for the past years. I have seen multiple offers at the same time on 5 different occasions in the past 6 months.

Happening right now a reality TV show called ‘Below Decks’ filming in Abaco right now. It is a Bravo network show similar to Big Brother set on a luxury yacht. The film crew is based out of Abaco Beach Resort and has been using the beautiful scenes of Abaco as the backdrop. Good exposure for the island, however I think it only appeals to the teenage audience so economic spill over is likely to be very limited.

I have heard mention of the possibility of the Marsh Harbour airport runway being extended so we might finally see direct flights from New York and Atlanta. Something that will make getting to the Abacos from Europe and the Northeast US much, much easier.

The Friends of the Environment Annual Reef Ball was recently held at the Abaco Inn with great success, and the Marsh Harbour edition is coming up in about a week. Great Cause, Great Food and Great Fun to be had at the Marsh Harbour Marina.

Upcoming events in Abaco – Great Abaco Family Fitness Weekend (Triathlon), Fishing Tournament season, Hope Town Music/Songwriters Festival (Happening Now).

Get out of the snow and come down for a visit.

Here’s to wishing you are thoroughly enjoying your holidays, be it Christmas, Chanuka, Kwanza or just having fun.  And may you have a wonderful 2015.  I know I am looking at it with positive thoughts. – D.

The WordPress.com stats helper monkeys prepared a 2014 annual report for this blog.

Here’s an excerpt:

A San Francisco cable car holds 60 people. This blog was viewed about 2,900 times in 2014. If it were a cable car, it would take about 48 trips to carry that many people.

Click here to see the complete report.

Southworth Development LLC has joined the investors who see value in the island of Abaco.  a recent announcement in local news was made recently.  see the ZNS video on youtube:

In other news, the sipsip is that the buyer for Treasure Cay walked away, so nothing will be changing there.  Shame, the hotel and commercial areas really need a major facelift and a nice 20-30 room boutique hotel on that beach would be a wonderful addition to the Island.

https://www.youtube.com/watch?v=Ci3GlzuYFbw

Happy Holiday, Happy Christmas, Happy Hanukah, Happy…  well you know what I mean.

Heres to making a better effort to write updates move regularly in 2015.

Over the past 6 years, Great Guana Cay seems to have been hit harder by the receding recession than the other settlements and cays of Abaco.  Hope Town and Elbow Cay have definitely seen a strong improvement in the housing and real estate sector.  Tourism on Elbow Cay is vibrant with activity through the slow period right now.  Marsh Harbour is till struggling, but was not hit too badly.

One of the reasons for Guana Cays current situation can be attributed to Baker’s Bay – I am not bashing the community, I think it is wonderfully executed Ultra Luxury destination.  No the problem was rampant speculation was made by people buying property outside and unrelated to Bakers Bay, elsewhere on Guana Cay.  Beachfront and interior lots were being sold at twice the prices of a few years previous.  In short there was a massive bubble on the micro market of Guana Cay.  The bubble was partly due to the world at the time, real estate speculation was out of control in Las Vegas, Miami, and other touristic destinations, the mentality fed the machine and the perceived influence of Baker’s Bay added to it.  Well, bubble popped and Baker’s Bay is here and seeing great market acceptance but it has no effect on real estate values outside of the gates.  Plain and Simple.

So where does that leave things now – Guana Cay is now ripe for a significant upward correction.  In my view the pendulum swung too far down and will see a good swing back up.  Point being, Guana Cay is the place to invest in right now.  There are some spectacular opportunities on the cay.  A few Beachfront homes that if they were located on Elbow Cay they would have sold 5 times over.  On top of the expected recovery in the market in Guana Cay as a natural correction, there are some things in the wings which when they come to fruition will great enhance the cay.  More visitors, more home owners and more capacity will simple enable a critical mass which I believe will bring the island out of hibernation.

Below are some of the best bang for buck homes and lots on Guana Cay.  call or send me an email if you want more information on them.

Huge Waterfront Home At drastically reduced pricing, $899,000:

http://www.hgchristie.com/properties/abaco/house/12387/dolphin-beach-estates/

$899

Beachfront Home for $599,000, unheard of.  And Charming too:

http://www.hgchristie.com/properties/abaco/house/19335/shorecrest-ii/

shroecerest

Rainbow Parrot, Beachfront, close to Nippers, This one would rent for 25 weeks a year almost guaranteed, $495,000

http://www.hgchristie.com/properties/abaco/house/21161/guana-cay/

parrot

Charming recently renovated sea view cottage $249,000:

http://www.hgchristie.com/properties/abaco/house/AS12139/just-renovated-charming-out-island-cottage/

$249k

Beachfront Lot for $295,000, these beachfront lots traded at $600,000 in 2007.  It can only go back up from here:

http://www.hgchristie.com/properties/abaco/vacant-land/20476/beach-lot-p4-guana-cay/

beach

And lastly, a settlement home for less than $100k.  Excellent rental potential.

http://www.hgchristie.com/properties/abaco/house/AS12292/quaint-fixer-upper-on-guana-cay-has-some-commercial-potential/

IMG_1292

And interior home sites can be found at prices starting at $55,000.  Guana is poised for growth, take advantage of it.

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:

Abaco sales sep13-aug14 copy

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!

http://www.hgchristie.com/blog/regatta-time-in-abaco-2014-race-recap-with-dwayne-wallas/

Regatta Abaco 2014

Well written Dave.

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