The global economic shutdown is showing its effects on the local real estate market, with sales by ‘completion date’ in The Bahamas’ Multiple Listing Service (MLS) down 37 percent over the first trimester, compared to the same period in 2019, notes Colin Lightbourn of Engel & Volkers.
Engel & Volkers is a recognized premium residential property, commercial real estate, yachts and aircraft brokerage and Lightbourn said that although the decline was expected, more can be done to help bolster the industry and help kick-start the Bahamas economy. Last month, it was reported locally that real estate-related activities accounted for 18 percent of The Bahamas’ gross domestic product (GDP) in 2018.
“We still have buyers actively inquiring, making offers and even going to contract,” says Lightbourn.
“People will certainly look to take advantage of good deals and this is just the reality of any market cycle. The challenge right now is the entire property market system has slowed and time is the biggest killer of deals. By the system, I am referring to realtors, lawyers, bankers and the government, we are all part of the same team that nurtures these transactions to fruition. We need to be more in sync as efficiency is an important element in an investor’s decision making process.”
The real estate professional said he understands the government’s current management challenges, but is hoping that they see that real estate sales can boost their revenues at this critical time.
“I know this has been challenging for everyone on many levels but I believe the government has been making the right crisis management decisions,” said Lightbourn.
“And if our low pandemic-related numbers continue to be far less shocking or globally news-worthy as other countries, the post-narrative from The Bahamas will attract tourists and real estate enquiries.
“Real estate has been pivoting to online and virtual services for several years now. We are not only competing within The Bahamas but with other popular real estate investment markets globally. We have been working like this for some time, the only difference now is that it is ‘all in’ with virtual and online communication.”
Lightbourn said the real estate sales industry has not been included in any of the government’s exempt industries to date, although he would like it to be.
“In the current curfew situation, it’s a high reward industry with a low virus spread risk,” he said.
“Low risk because we can show a house virtually through Facetime or other video applications. Even in normal times, it is our practice in one-on-one showings to have physical distancing. The reward to the government is 10 percent of a transaction plus VAT and the various related professional service fees.
“All of this can be achieved with very limited physical interaction. We should be able to function like this in any environment if we are to be considered an advanced country.”
Currently, on the real estate Multi Listing Service, there is $62 million in “pending sales”, with contract dates between November 1, 2019 and April 30, 2020. At a 10 percent tax rate, that is $6.2 million that could be in the Treasury.
Lightbourn adds, “Not all of these sales will close, but a lot of them could. At the same time, this is only sales in the MLS and is not representative of all pending sales in the market.”
The real estate professional feels that once the economy opens, the vacation rentals market will have an additional appeal to visitors for the built-in health and safety aspects not present perhaps in hotels. Bahamians will likely have the first chance to travel to the Family Islands before borders are opened to international travelers. Lightbourn believes the crisis will create buying opportunities for vacation homes throughout the islands and Bahamians should take advantage of the market.