2018 Bahamas Real Estate Market Report

INTRODUCTION

The Bahamas Real Estate Market generally follows the performance of the US Real Estate Market and has experienced similar growth over the past 5 years. 2019 will be a very dynamic year for the Bahamas real estate industry as a number of luxury market condo projects break ground and bring a new volume of contemporary amenity driven real estate projects to Nassau and Paradise Island. Foreign Direct Investment is a critical component to The Bahamas’ growth and these projects will have a significant impact.  In October 2018, The International Monetary Fund (IMF) chose to “shave - rather than slash - its GDP growth forecasts for The Bahamas for both 2018 and 2019. It cut its economic expansion prediction for this year from 2.5 percent to 2.3 percent, while reducing its 2019 estimate by just 0.1 percent - from 2.2 percent to a revised 2.1 percent.”**

In the US, existing US home sales fell slowly in 2018 and The National Association of Realtors is expecting more of the same overall sales volume for 2019 with a 10% increase in new home sales* The Bahamas should also see a similar performance in 2019 vs. 2018.

DATA DRIVEN – The purpose of this report is to provide the Bahamas real estate industry comprising buyers, sellers, developers, lenders, agents and its associate professionals with a baseline study of the real estate market in the Bahamas over the past 5 years.  The information in this report is extracted and analyzed from the Bahamas Multiple Listing Service (MLS) which is the Bahamas Real Estate Association’s central database of listings and sales activity. Approximately 1800 property transactions have been used in this report and it is important to note that NOT ALL sales in The Bahamas are reported to the MLS however at the present time this is the most centralized public data system of which to comprise a market analysis.  The key data extracted for this report for all transactions were completion date, sales or rental price, days on market, square feet, number of bedrooms, average price/square foot and the list to sales price ratio. All data was extracted at Jan 1, 2019, any data entered after this date is not included.  Engel & Volkers supports the development of a national sales database for realtors, banks, insurance companies and government agencies which will support more astute financial decision making for all parties involved.

*https://www.nar.realtor/sites/default/files/documents/forecast-01-2019-us-economic-outlook-12-28-2018.pdf

** http://www.tribune242.com/news/2018/oct/10/gdp-growth-slashs-pleasant-surprise/

Analysis:

The 2015 spike on Paradise Island were 2 Ocean Club Residences condos that rented at an average of $14,120/month. The Yield averages in this graph are calculated solely by average annual rent and average sales prices in the respective sub markets. Rental properties will perform both better and worse than the averages depending on several factors.

The median monthly rent for Paradise Island over the 5 year period was $3,500/month while the median for Cable Beach was $2,700/month.  The average square feet of a rental apartment on Paradise Island was 1,784 square feet while Cable Beach averaged 1,658 square feet. 90% of Cable Beach rentals and 69% of Paradise Island rentals were under $5,000/month.

Developing Islands

Summary:

Sellers Market: - Old Fort Bay, Sandyport and the Abaco Cays, primarily Elbow Cay and Treasure Cay.  Supported by both long and short term rental markets, planned communities, amenities and list-to-sale-prices consistently in the mid to low 90’s, these communities are the best performing Bahamas residential investments over the past 5 years.  Paradise Island, which is generally on this list, is still desirable but has seen strong competition from new development inventory that has affected MLS sales, days on market and list-to-sales ratio.  These communities should continue to see growth in 2019.

Buyers Market: - Vacant Lots. Buyers are looking for more immediate income and are moving away from the effort of building.  On New Providence, the lending requirements have been strict although there appears to be some increased lending in 2017-2018. Vacant land sales should improve in 2019.

Buyers Market:- The developing islands and southern islands.  These islands have seen minimal activity on the MLS over the past 5 years.  Pre-recession (2009), the remote islands were a hot speculative purchase however in recent times investors are looking for steady income, better airlift, amenities and a clear exit plan.  Opportunities exist in the developing islands for investors, builders and entrepreneurs.  There is a growing market, particularly renting to the vacation rental enthusiast who wants less traffic, no casinos and a pristine natural environment with authentic people and culture.

REAL ESTATE THAT BENEFITS FROM A WORLD CLASS MARINE ENVIRONMENT

“The national park system of The Bahamas, comprising approximately 2.2 million acres of both terrestrial and marine areas, was created, and is managed by, The Bahamas National Trust, a private-public collaboration established by an act of Parliament in 1959. 

Uniquely, the Trust is the only such non-governmental entity in the world responsible for the management of a country's national park system. 

In 2019, the BNT will celebrate its 60th anniversary. During the past six decades, the Trust has helped to: "conserve and protect Bahamian natural resources", while serving as a "powerful force for [regional] and global biodiversity conservation.”

Through passion and courage, a commitment to education and excellence, respect for others, and through integrity, transparency and accountability the Trust has helped to conserve and celebrate the archipelago of biodiversity that is our common wealth of national parks and protected areas. 

Over the next five years, the Government of the Bahamas will collaborate with the Trust as it implements the 2018-2022 Strategic Plan. This will include ongoing efforts to address climate change, combating the effects of plastics on our environment, and other measures to conserve our natural environment and to educate Bahamians about our shared environmental trust.” Dr. The Hon. Hubert A. Minnis, Prime Minister Of The Bahamas

The Bahamas National Trust plays a critical role in safeguarding the biodiversity of The Bahamas as well as the function of its ecosystems and the services they provide to Bahamian people. The Bahamas National Trust also plays a pivotal role in supporting research efforts to better understand the species and ecosystems of The Bahamas and developing the tools and strategies needed to protect and restore them.

Dr. Craig Dahlgren - Perry Institute for Marine Science