Current Trends In Bahamian Real Estate 2021 – 2022

Current trends in Bahamian real estate 2021-22: a hot market for luxury buyers

Current Market Trends in the Bahamas

The Bahamas is a network of islands that is one of the most stunning in the Caribbean. This country has been a stable and reliable tax haven for decades; a destination for investing in Caribbean luxury real estate. Amidst the turmoil in the financial markets and the aggressive examination of federal agencies, it has maintained its integrity. By adhering to established financial regulations and following legal guidelines, the Bahamas has weathered the storm which has led to the demise of neighboring tax havens.

Real estate in 2021 was the most successful year yet for the Bahamas, demand currently exceeds supply. Luxury prices are up 10-15% over pre pandemic prices. How has this impacted 2022? Buyers will be more likely to purchase pre-construction and perhaps more owners will be more inclined to capitalize on the hot market and sell. An established real estate agent remarked that: “Homes that we would have seen be on the market for more than a year, we are now seeing them on the market for less than 30 days,” she said. “We’re talking price points of upward of $1 million, all the way up to $9 million and above.” This stability and reliability has not gone unnoticed by real estate investors. In a snapshot: The average sale price across the Bahamas in 2020 was $359,079, with 3,179 homes listed for sale. In the first six months of 2021, the average price was up to $628,887, with 2,244 homes listed. This article investigates the reasons behind the Bahamas being one of the hottest real estate markets in the Caribbean in 2022.

Factors That attract Investors to the Bahamas

Geography

The system of islands that makes up the Bahamas is the closest Caribbean archipelago to Florida, this proximity to the USA and Canada is a definite selling point. It is also in the same time zone as the principal stock exchanges. This proximity is a competitive advantage; there are approximately 12 flights daily from Miami; the flight itself is under an hour.

Economic stability

The government of the Bahamas has maintained a stable and good economy over the years. The lack of volatility is attractive for investors seeking to invest their money in a stable jurisdiction. An independent state since 1978, the Bahamas is a member of the Commonwealth, the United Nations, the Organization of American States and the Caribbean community.

In addition, the Bahamas offers access to the world’s banks and financial systems; a relationship that has been built over decades.

Tax Advantages

The Bahamas offers a number of tax advantages to resident aliens and citizens.

These include:

  • No taxes on personal income
  • No inheritance tax
  • No taxes on gifts or capital gains

Instead, the government derives revenue from other forms of tax, including value-added tax (VAT), property taxes, stamp taxes, import duties, and license fees. The Bahamian dollar is on par with the American dollar.

Property taxes are detailed as follows:

Owner-occupied property:

  • $0 – $300,000 = Exempt
  • $300,000 – $500,000 = 0.625%
  • Over $500,000 = 1%

Ceiling for Properties valued over $6,000,000 = $120,000

Commercial Properties (more than 4 units that are not owner-occupied):

  • $0 – $500,000 = 0.75%
  • $500,001 – $2,000,000 = 1%
  • Over $2,000,000 = 1.5%

The costs involved with real estate transactions:

  • VAT
  • Legal fees (usually 2.5% of the property value)
  • Real estate commission (6 % on improved properties)

VAT (Value Added Tax) –

  • 2.5% where the value does not exceed $100,000
  • 4% where the value exceeds $100,000 but does not exceed $300,000
  • 6% where the value exceeds $300,000 but does not exceed $500,000
  • 8% where the value exceeds $500,000 but does not exceed $700,000
  • 9% where the value exceeds $700,000 but does not exceed $1,000,000
  • 10% where the value exceeds $1,000,000.

Experience with real estate construction and development

Since the 1970’s the Bahamas has been revered as a tropical destination. Offering a variety of dwellings from hotels to luxury beachfront villas, construction has been at the forefront of the Bahamian economy for decades. This was last seen in a dramatic way with the building of the mega resorts, Atlantis and Ocean Club on Paradise Island; two beautiful developments that have changed the landscape of Paradise Island. Currently smaller developments are in the works on the lesser known islands of Abaco and north of Andros. The more intimate keys and islands offer unique investment opportunities, ranging from entire islands, to beachfront villas all surrounded by stunning vistas and natural beauty.

Whether it’s purely an investment, or a property for personal use, buyers looking at the mid-upper end of the luxury market should be enticed by the Bahamas and what it offers in terms of infrastructure, tax benefits as well as in options in investment.