International buyers are "pulling back" due to uncertainties caused by Moody's threatened downgrading of the Bahamas to 'junk' status, realtors have warned.
Mario Carey, founder of Mario Carey Realty (MCR), told Tribune Business that foreign clients were "holding off" on potential projects until they could assess the fall-out from any Moody's action that impacts the Bahamas' sovereign creditworthiness.
"We've got a challenge with the downgrade by Moody's," Mr Carey said. "We're seeing people pulling back on making decisions.
"They were getting ready to do some stuff, and then told us they were going to hold off because they didn't know what a Moody's downgrade would look like.
"We're starting to see a pattern. The market is retrenching for foreign clients because they don't know what's going to happen."
Mr Carey added that this was impacting all segments of the Bahamas' foreign real estate market - potential purchasers, existing homeowners and tenants.
Any slowdown in activity will be a further blow to the already-struggling Bahamian economy, as the foreign real estate market has been one of the few relatively bright spots in recent years.
Stronger growth levels in the US and other developed world economies, combined with lower interest rates and better access to credit, have helped fuel Bahamian real estate purchases by foreign investors.
The Bahamas, with its favourable tax/investment regime, location and history of stability, remains an attractive destination for foreign capital, especially Canadian and European clients seeking to escape 'high tax' regimes at home.
This demand has generated important foreign direct investment (FDI) and currency flows that now stand to be impacted, along with work for realtors, attorneys, contractors and others who earn a living from the real estate market.
Mr Carey's concerns were echoed by Ryan Knowles, a realtor with HG Christie, who warned that a downgrade by Moody's - especially one that pushed the Bahamas to 'junk' status - would negatively impact investor perceptions of this country.
He added that this nation's "pristine image" with overseas buyers would be threatened, as any downgrade would raise concerns over the safety of their investments and the Government's economic management.
"Perception is reality," Mr Knowles told Tribune Business. "If we are downgraded to 'junk' status, and our bonds are considered 'junk', we're going to lose that pristine image we as a country have in some places.
"We don't want to be associated with Jamaica and those in the Caribbean. We want to maintain our status as an ideal place to invest.
"The Bahamas is probably number one in the region, and certainly our real estate market is; we're the strongest market in the Caribbean for buyers. We could lose that if things like this happen."
Moody's placed the Bahamas on a two-month review, which could lead to the potential credit rating downgrade, on July 1. It warned that any cut could be by "one notch or more", giving it the flexibility to slash this nation to 'junk' status.
Mr Carey, meanwhile, hit out at the Bahamas' 'ease of doing business' woes, which he warned were deterring foreign investors from acquiring real estate and establishing physical businesses here.
"We have all these buyers that want to come in and do developments and to do businesses, and they complain about how difficult it is to do this in this country," he told Tribune Business.
"How many layers of approvals, how many run arounds. There's a lot of frustration that we see. I think it's pretty real to people wanting to come in and do business."
Mr Carey said such investors frequently drew unfavourable comparisons between the Bahamas and the Cayman Islands when it came to 'business ease'.
He recalled a recent conversation with Royal Bank of Canada (RBC) executives, who told him how quick and easy it was to conduct business in the Cayman Islands, plus hire needed expatriate talent.
Mr Carey also said the Bahamian real estate market was also being affected by forces such as the US dollar's strength on the foreign exchange markets, coupled with Great Britain's decision to leave the European Union (EU).
He explained that UK and Canadian owners of Bahamian real estate, in particular, had been influenced to sell by the current weakness of their respective currencies.
"People are trying to sell to take US dollars out and buy at home at good rates," Mr Carey said. "It's good. It creates a real estate market here for people wishing to sell, but they're also exiting the country.
"It's just an interesting trend. These are things that ebb and flow. We've lost a lot of Canadian buyers because of the Canadian dollar's weakness. That's a very big market."
Mr Carey reiterated his belief that a revitalised real estate market, aided by Government tax cuts and business-friendly policies, is a critical factor in helping to fight off the likes of sovereign rating downgrades.
"I feel very strongly that with the right approach to real estate, stimulating the real estate market, creating incentives and creating different products to attract the international buyers out there, we can bring this country out of a big, dark hole," Mr Carey told Tribune Business.
"I feel that we still have so much to offer. There's been zero government incentives, initiatives to stimulate the real estate market; nothing to encourage sales.
"I've been preaching that for a long time. Every time a transaction happens, it creates employment. The statistics show it."