The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A leading realtor yesterday said he would “love” for his firm to beat 2013’s 35 per cent increase in total transaction value, but warned that much depends on how the Bahamas “sells” Value-Added Tax (VAT) to foreign investors.

George Damianos, head of Damianos Sotheby’s International Realty, told Tribune Business that while VAT’s extra costs were unlikely to directly impact high-end purchases, overly negative sentiments from Bahamians could.

Acknowledging that he was personally opposed to VAT, Mr Damianos said the tax could impact his high net worth market if buyer perceptions/sentiment took a hit from coming into contact with Bahamian ‘doom and gloom’.

“In my marketplace it’s not a big factor. I’m just concerned about what it may do to the Bahamian people’s psyche or mentality if it comes across too negatively to Bahamians.”

Explaining how this could have a knock-on effect on foreign direct investment (FDI), Mr Damianos added: “If a Bahamian sits down and tells you the place is going to hell, it’s in recession and no one has money, that will definitely frighten foreign investors. That’s why I’m cautious about 2014.”

Noting that 15 per cent VAT will likely be levied upon the realtor’s commission, attorney’s fee, appraisal fee and home inspection fee, Mr Damianos said: “Will it stop a person buying a $5 million? Will it deter them? Probably not.

“But we can sell it to them in a positive manner, not a negative manner. That remains to be seen.”

He explained that every Bahamian who came into contact with a potential second home or foreign investors, such as a banker or restaurateur, had a part to play in reinforcing a positive state of mind.

“There’s a number of mouths involved in the conveying and parlaying of whether VAT is a positive or negative thing,” Mr Damianos told Tribune Business. “We have to be careful and hope for the best.”

Asked whether Damianos Sotheby’s aimed to match or exceed the 35 per cent increase in total transaction value it saw last year, Mr Damianos added: “I would love to, but I don’t know.

“I’m watching this VAT situation, and hoping we’ll be able to and improve. That’s our objective; to improve year-after-year. We have to be cautiously optimistic. A lot of realtors are busy, We can feel it.”

Mr Damianos added that VAT could also have a dampening effect on his luxury residential niche from a practical standpoint, if it threw the Bahamian economy into recession.

Any increase in unemployment, he added, would likely correlate to a rise in crime, causing investors to question whether the Bahamas was a safe place to either put their money or live.

“I’m against the VAT. I think it’s going to hurt the poor people more than the rich,” Mr Damianos told Tribune Business. “If they don’t have the money, will it send the country into recession? Hopefully it will not affect the real estate market too much.”

Damianos Sotheby’s said that last year its firm was responsible for almost 60 per cent of all the sales on the Bahamas Multiple Listings System (MLS).

It added that its average sales price for the year was $1.7 million, whereas the average sale price on the MLS was $564,000.

Mr Damianos told Tribune Business yesterday that 2014 had started off promisingly, with a “considerable” year-over-year increase in client interest.

“We’re busy, thank God,” he added. “The deals are developing slowly, but we’re busy, There’s interest, there’s activity, things are happening.

“We’ve made a couple of large sales in January, and I’ve got one private island where I’m hoping something will come though in the next two to three months. I’ve already closed on one last week, and we just got paid.

“We did OK in January and there are a couple of big ticket items on the burner for February. January wasn’t a home run, but at least we made sales.”

Mr Damianos, though, told Tribune Business that customer traffic and inquiries were “considerably” up over last January/February.

He attributed this to an improving global economy, with Europeans also increasingly seeking a “safe haven” for their wealth.

Mr Damianos said the Bahamian real estate market was being aided by prices that represented “value for money”, and were “not beyond reach for investors”. If prices became too aggressive, he warned that the market would struggle.

Damianos Sotheby’s added: “While, the market in the Bahamas is gaining momentum, it is still a buyer’s market where outstanding properties are available at attractive prices.

“?Our 2013 numbers surpassed 2012, and our focus for 2014 will remain on the luxury home market throughout our islands. We will also focus on upscale condominium offerings where headache-free living on the ocean is the dream.”