By NEIL HARTNELL
Tribune Business Editor
THE Eurozone's sovereign debt crisis has boosted sales volumes in the Bahamian high-end real estate market over the past year, Tribune Business has been told, with deals hitting the "sweet spot" of between $2-$4 million on average.
George Damianos, president of managing broker of Damianos Sotheby's International Realty, confirmed that the continent's well-publicised economic woes had increasingly driven wealthy Europeans to seek a relative 'safe haven' for their assets and money, one option being Bahamian real estate.
"We have been seeing it over the last 12 months in general," George Damianos told Tribune Business of the increasing desire for high-end Bahamian real estate among wealthy Europeans.
"It's a real positive for us. They're right in our market, and today the sweet spot's been between $2-$4 million. A lot of Europeans, the wealthy ones, have been advised correctly, and this [the Eurozone crisis] has been going on for at least two years. Europeans looking to preserve wealth are considering other jurisdictions and safe havens."
French buyers have been especially prominent, a trend likely aided by the recent French presidential election, which saw Socialist contender, Francois Hollande, a real tax hawk, defeat incumbent Nikolas Sarkozy.
George Damianos said the demand for high-end Bahamian real estate among Europeans, whether as their primary domicile or for a second/vacation home, was also likely being aided by the relatively low returns being produced on bank deposits and other safer fixed-income instruments at the moment.
"It's a good time to buy with the market very depressed," he told Tribune Business. "If you are a continuum buyer, you buy low and sell high."
Writing Damianos Sotheby's International Realty's market update, Nick Damianos, another of the firm's realtors, said: "While prices still have not rebounded to pre-recession levels, we have seen an increase in volume over the past year.
"Much of our volume increase has been due to the economic turmoil and uncertainty in the Eurozone. Many wealthy Europeans have sought shelter in the stability of the Bahamas and our tax neutral laws. In 2012, we have seen an increase in the number of French coming to the Bahamas, buying real estate and placing their money in our locally-based private banks.
"However, it's not just the French. Europeans of all stripes have been choosing the Bahamas and buying high-end properties to establish residency here. By establishing residency in the Bahamas, Europeans are insulating themselves from the inevitable tax hikes needed to fund bailouts and prop up banks in the Eurozone."
Above all, this trend illustrates just how interconnected the Bahamas is to events elsewhere in the global economy, and that sometimes negative developments overseas can breed positives here.
Acknowledging that the local Bahamian real estate market was "hurting", George Damianos said Damianos Sotheby's International Realty's business was focused on a different segment - the high-end, luxury category - with the firm's average sales price being around $1.3 million.
Clients in this area, typically high net worth individuals and their families, still had significant means despite being hurt by the recession, and were now scenting deals in the real estate market.
While prices had declined 30 per cent from their pre-recession peaks as a "broad" generalisation, George Damianos said there were signs that the real estate market - both here and across the globe - had "bottomed out".
In his market analysis, Nick Damianos said the Bahamian real estate market appeared to be bucking the traditional trend, namely that its recovery from a recession always occurred six months to a year behind that of the US.
"As it relates to the housing rebound, we have been ahead of our neighbours to the north. While prices still have not rebounded to pre-recession levels, we have seen an increase in volume over the past year," he said.
"While we feel that prices have finally bottomed out, we do not expect massive price increases in the near future. However, given the current affordability of real estate, it is a great time to make a long-term investment.
"The Economist magazine agrees, stating: "On our gauge, prices nationally (in the US) are still 19 per cent below fair value," causing investors with cash to snap up properties quickly, as they know prices are not likely to get any better."
George Damianos, meanwhile, told Tribune Business that Damianos Sotheby's International Realty was hoping that 2012 would match 2011, which had turned out to be a good year for the company.
"We had a good year in 2011, and are on par with what we did in 2011," he said. "The only year that was a down year in the market for us was 2009. We're really anticipating that 2012 will be on par with what we did in 2011. We're in the black, and making a bit of money."
Nick Damianos added that Canadians had been "a significant part of the ongoing recovery in the Bahamian real estate market", aided by the tax benefits stemming from residency in this nation and the continuing strength of their real estate market.
"This positive attitude towards real estate, combined with increasing wealth in Canada, the strengthening of the Canadian dollar and the tax benefits of property ownership in the Bahamas, have made the Canadians one of our largest buyer segments," he added.
"Finally, it is interesting to note that the Americans are returning to our market in greater numbers. Wealthy and middle-income Americans are again looking at the Bahamas for investment and vacation property.
"Now that the US economy has settled a bit, savvy investors see our real estate market as being far more stable than that of the US, and view Bahamian real estate as an excellent hedge against the rising inflation in North America."