The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A New Providence real estate developer yesterday said a newly-launched in-house financing initiative was “getting good traction”, as it bids to solve an “alarming” situation where just 5 per cent of its buyers are obtaining mortgages.

Jason Kinsale, principal of the Sanford Drive-based Balmoral project, told Tribune Business that out of his last 40 property sales, just two - only 5 per cent - had been to purchasers with mortgage financing.

That had meant all-cash buyers were accounting for 95 per cent of Balmoral’s market, and with such purchasers in relatively short supply in both the Bahamas and the world, Mr Kinsale said the project’s in-house loan programme was a direct response seeking to remedy the situation.

“What it’s done, it’s kind of exposed a lot of the frustrations you see in the financial lending market right now,” Mr Kinsale told Tribune Business. “We’re trying to make it a hassle free way of purchasing.

“A lot of buyers are all cash. Out of the last 40 buyers, only two had obtained mortgages, which is kind of alarming. I’m trying to find alternatives to cash buyers in Nassau and the rest of the world, and was having pretty limited success.

“Probably 95 per cent of the people in the market need mortgages, and not being able to sell to those is pretty limiting.”

Hence Balmoral’s decision to launch an in-house financing programme at the beginning of November, an initiative that will run for two months until year’s end.

Indicating that he might extend it depending on how successful the initiative is, Mr Kinsale said the only requirements for buyers were a downpayment equivalent to 10 per cent of the purchase price.

Interest rates are set at 9 per cent, towards the top end of the typical 7.5-9 per cent rates charged by Bahamian commercial banks, but Mr Kinsale said Balmoral’s process did not require any credit checks and minimised the use of bureaucratic forms.

“We’ve got good traction on it, done some deals and these people would otherwise not be in a position to buy,” Mr Kinsale said.

“We started about three weeks ago. We’ve done five deals with this programme so far. That’s five people who otherwise would not have purchased.

“We’re making it very easy, and are taking the pain out of it. People get frustrated in going to the bank. I can’t blame the bank; I would do the same thing in their shoes. But by the time you’ve filled out 20 forms, and there’s another 10 to go, people get frustrated and abandon the process. I’m just making it a little bit easier.”

Mr Kinsale added that Balmoral, which is currently constructing the 84th out of what will likely end up as 119 units ultimately, could extend the in-house financing if it needed to move its remaining inventory.

Properties range in price from $289,000 to $595.000, and Mr Kinsale said some six-seven currently remained for sale.

Indicating that the two-month time limit on the in-house financing programme was intended to give buyers a ‘sense of urgency’, and compelling reason to buy now, the Balmoral principal added: “We would not have launched it if the market was recovering in the way we wanted it to recover, but it has made a big difference.

“We’re still forced to be creative, forced to recreate offerings in an effort to spur sales on. It’s still a market where you have to do these things consistently. It hasn’t changed.

“We want the storm to be over. It’s been raining for long enough. Four years of rain is a lot of rain. But I can’t complain. If you look at the other developments in Nassau, we’re doing pretty well.”

Mr Kinsale told Tribune Business that Balmoral was exploring the feasibility of doing a development-wide solar energy project, in a bid to reduce electricity costs.

“That’s probably a bit further down the road,” he revealed. “I think the prices need to come down a bit more for solar to become cost effective.

It may have a ways to go, perhaps another year, but solar prices seem to be coming down quite a bit.”

A major issue, Mr Kinsale added, was whether the Bahamas Electricity Corporation (BEC) would permit such community-scale renewable energy projects, while net metering was also an issue.

“Our infrastructure can be modified to allow for it. It depends on whether BEC allows it. We’re all frustrated by the cost of electricity,” the Balmoral principal said.

He again warned Bahamian buyers that they were in danger of “missing out” on opportunities in western New Providence gated communities, adding that they were “underestimating the effects of Baha Mar” on the market.

With 7,000 jobs set to be created, and 700-1,000 likely to be expatriates, Mr Kinsale said the latter were likely to gravitate towards communities such as Balmoral, Sandyport, Nautica and Turnberry.