By NEIL HARTNELL
Tribune Business Editor
The Government could hurt more Bahamians than it benefits if current real estate policy thinking ends up restricting who can buy and own property in certain locations, a top realtor warned yesterday.
George Damianos, head of Damianos Sotheby’s International Realty, told Tribune Business that Bahamian land owners would be unable to “get the best price” if they were restricted to selling to their fellow countrymen only.
Warning the Government that this would throw the market “completely out of whack”, Mr Damianos said it needed to adopt an incentive-based approach to encouraging land development, as opposed to penalties.
And he urged the Christie administration to clarify its policy towards foreign investment and second home owners, particularly whether the ‘fast track’ permanent residency process for persons purchasing properties valued at $1.5 million-plus was still in operation.
Mr Damianos said the answers the Government was seeking from the Bahamas Real Estate Association (BREA) suggested it had no clear policy.
And he warned that this would only create uncertainty in the Bahamian real estate market, leading to price and sales volumes declines and, ultimately, to fewer jobs and economic activity.
“My view on this is that there should be no government control on who can buy what land and where,” Mr Damianos told Tribune Business.
“It’s no secret that the minute you start telling people you can only sell to certain nationalities, that’s discriminatory.”
He added: “What if the owner of the land wants to sell it, and he’s only able to find a British buyer, an American buyer or a Brazilian buyer?
“If they restrict this, it means the seller can no longer get the best price for his property. You reduce who Bahamians can sell land to. It doesn’t make sense for any government to start to require that.
“The market forces go completely out of whack. You can’t have your cake and eat it. I’d go as far to say more Bahamian land owners will suffer, than Bahamians benefit, from such a policy.
“The more restrictions you put on anything - real estate, travel, people’s movements - it creates uncertainty in the marketplace, and once there is uncertainty prices will decline and interest in the Bahamas declines.”
The Government’s objectives, as far as can be discerned from the questionnaire issued to BREA members, appear to be to find a balance that allows Bahamians access to affordable land, but without disrupting international investment in Bahamian real estate.
The Christie administration appears to be reviewing the minimum $500,000 investment threshold for permanent residency, and assessing whether foreign buyers of vacant land should be given deadlines by which they have to start developing their holdings.
Mr Damianos’s remarks hint that such policies, if adopted, could have unintended consequences for the Bahamian real estate market, especially if restrictions on who land can be sold to are imposed to preserve access to ‘local ownership’.
The Damianos Sotheby’s chief, meanwhile, told Tribune Business that the Government should use incentives, rather than penalties, to encourage land owners to develop their properties.
Suggesting real property tax and import duty breaks as two possible incentives, he explained:
“This government, if they were thinking clearly, if they think about a Bahamian or foreigner buying a piece of property, give them some incentive to develop it, rather than give them conditions that restrict you from buying the land.
“That stimulates the market, and puts Bahamians back to work in the construction industry.”
Suggesting that incentives be provided if vacant land owners started to develop their properties between six-12 months after acquisition, Mr Damianos said the existence of penalties would make buyers “think twice” about going through with the purchase.
And he argued that a bigger issue was the Goverment’s policy on foreign investment in Bahamian real estate, and the second home market. This was noticeably absent from the BREA questionnaire.
“What is the Government’s policy,” Mr Damianos asked. “The Government has not said anything about attracting foreigners to buy second homes in the Bahamas.
“We’re not saying to them: ‘We invite you, encourage you, want you, need you’. This is the kind of thing we need to be positive on if we want to encourage second home owners, and send the correct signal.”
Pointing out that the Bahamas was competing with multiple rivals for second home owners, Mr Damianos said a case in point, when it came to current uncertainty, was the ‘fast track’ permanent residency approval for persons who purchased real estate valued at $1.5 million and above.
Put in place by the Ingraham administration, Mr Damianos said his firm’s Lyford Cay office had closed several sales where buyers went through this process.
He added that the only stage that was “a bit tricky” resulted from the fact the 21-day Immigration Department ‘answer’ related to post-interview, not post purchase.
Calling on the Government to clarify whether this was still in operation, Mr Damianos told Tribune Business: “We’re just second guessing the Government’s policy at the moment.
“We have been second guessing what it is, and using the same rule of thumb the previous administration put in place, and assuming that if you say nothing, that’s still there.
“It’s mixed signals. Is the Government going to restrict, doesn’t want foreign investment? They need to say it, speak it. It’s created more uncertainty.”
He added: “If the Prime Minister is asking BREA to answer these questions, it’s clear they don’t have a policy in place or otherwise they would not be asking BREA to do this survey.
“There’s no policy in place, no definitive way forward right now, and they’re looking for that.
“We need more foreign investment coming in, more foreign reserves for the Central Bank. We need to stimulate the economy, keep the restaurants going, the tradespeople going, the car dealers going, the gas stations going.”