By NEIL HARTNELL
Tribune Business Editor
Realtors yesterday predicted the Bahamas’ downgrade to ‘junk’ status will not impact the foreign second home market, amid “one of the busiest starts to the winter season for a long time”.
Ryan Knowles, of HG Christie, told Tribune Business that the Bahamas appeared to be “really close to getting over the economic hump” despite Standard & Poor’s (S&P) action, provided Baha Mar and other investment projects came on stream in 2017.
While acknowledging that the downgrade to ‘junk’ status “isn’t great”, Mr Knowles said the “fundamentals” that attracted foreign real estate buyers to the Bahamas were still holding and unlikely to be impacted.
He was backed by Peter Dupuch, ERA Dupuch Real Estate’s president, who told Tribune Business that sales to the expatriate market were also “picking up and things seem to be good”.
Agreeing that the S&P downgrade would not impact second home purchasers, Mr Dupuch suggested it would have more effect on persons coming to the Bahamas to invest in development projects.
He expressed concern, though, for the still-flagging Bahamian segment of the real estate market, and the ongoing uncertainty that has caused many locally-owned businesses to “lose faith”.
Mr Knowles, meanwhile, said he and his HG Christie colleagues had been “incredibly busy” dealing with potential high-end purchases of Bahamian real estate as 2016 came to a close.
“My gut feeling is that I don’t think it’s going to have any major negative effect,” Mr Knowles said of the fall-out from S&P’s downgrade.
“For me, the fundamentals that make the Bahamas attractive for investor and leisure buyers alike are still the same. The fundamentals are still in place; the downgrade isn’t great, but I don’t think those are going to change.”
He listed the Bahamas’ qualities as its US proximity and status as an English-speaking nation, together with amenities “that many of the other islands don’t have”, and a tradition of political and economic stability.
Implying that foreign demand for Bahamian real estate remained strong, Mr Knowles added: “We’ve been incredibly busy. It’s one of the busiest starts to the winter season for a long time.”
He disclosed that a $20 million property in Ocean Club Estates had just gone under contract, while he himself had been showing clients properties in the $5-$10 million range, and closing several deals at around $3 million.
“It just shows that there’s a lot of activity,” Mr Knowles told Tribune Business. “It hasn’t slowed down at all, and I don’t see it slowing down.
“The instability in other parts of the world is good for us. Our buyers are not checking what Moody’s and Standard & Poor’s are saying before they make an investment.
“Some of these guys are very high net worth clients. If they’re worth $200 million, spending $2-$5 million in Bahamas is not a ‘life and death’ type of investment.”
Mr Knowles added that he had just conducted a viewing for a client interested in taking space at The Pointe development, adjacent to the British Colonial Hilton.
Aided by this project, Baha Mar and other investment projects set to come on stream, he suggested that the Bahamian economy might finally shrug off its post 2008-2009 recession lethargy in 2017.
“If we get these things up and running, we’re going to be in good shape,” Mr Knowles said. “We’ve kind of been making our way up the hump, and now we’re really close to the getting to the top and over the other side.
“I don’t see any real fall-out from S&P, and I’m hoping they will reinstate us and move us out of ‘junk’ status.”
Mr Dupuch adopted a similar position, saying second home buyer activity remained strong even though the S&P downgrade “can’t be good” for the Bahamas.
“It’s funny, because people are still buying,” he added. “We had a couple of good sales. They see the beautiful beachfront, and people buying second homes are not looking so much at S&P. I don’t think they take it as seriously.
“They come for a couple of weeks a year, and see their gated community and clubhouse. Someone coming here to invest, that might be a different story.”
Mr Dupuch said he and his firm were enjoying increased margins by selling higher-end properties to foreign buyers, but he expressed concern about the challenges facing Bahamians.
“Sales are picking up and things seem to be good,” he told Tribune Business. “My business is good and I shouldn’t be complaining.
“But it hurts me when you have someone coming out of school; they have a long road ahead of them. Bahamians are still having trouble, and the banks are tight.
“Looking around, I also see other businesses that have been around for a long time, and who are worried and uncertain as to what’s going on. The Bahamian businesses don’t have any faith.”