By NATARIO McKENZIE
Tribune Business Reporter
nmckenzie@tribunemedia.net
A Cabinet Minister yesterday conceded that the Government had been forced to “reconsider” plans to double the permanent residency investment threshold to $1 million, due to the “considerable pushback” by realtors and developers.
Hope Strachan, minister of financial services and local government, said a final decision on increasing the threshold from the existing $500,000 is expected “within the next several weeks”.
Addressing a Society of Trust and Estate Practitioners (STEP) Bahamas luncheon, she moved to reassure Bahamian realtors and developers that regardless of the Government’s decision, “all efforts” will be made to maintain business currently “on the table”.
This reflects calls for the Government to give a one-year warning of the change, so that all market participants can adjust, and for it to ‘grandfather in’ developments that are already selling to foreigners in the $500,000 to $1 million price bracket.
Some realtors have estimated that increasing the threshold for accelerated permanent residency consideration immediately could undermine up to 60 per cent of active real estate developments.
“Since November of last year we have had considerable push back with respect to the announcement from the real estate community,” Mrs Strachan acknowledged yesterday. “Therefore, it forces us to reconsider it.
“We have to take into account all sectors. We have to look at projects on stream in the Bahamas, expectations that may be in place as a result of those projects, and we have to perhaps take advice as to the advisability of doing it, and to what extent, as well as the timeframe, which is of great importance.”
Mrs Strachan added: “If there is going to be an increase we have to look at whether it’s going to be an increase that comes into effect right away, or whether you give it so many months of lead time before it is implemented; whether you give it a year before it’s implemented.
“It is under consideration, under consultation and under advisement. We will know within the course of the next several weeks what the final decision is going to be.”
Mrs Strachan had announced the investment threshold increase last November at a seminar hosted by the Higgs & Johnson law firm. Speaking on the current $500,000 threshold at that time, she said: “This threshold is no longer achieving the intended objective, which is to attract high net worth individuals to our country and to support the real estate market in a tangible way, while maintaining the integrity and profile of the Bahamas as a premier financial centre.”
The announcement prompted considerable push back from local realtors and developers, with some labelling the move as one which was “unacceptable”, “foolish” and threatened to destabilise the real estate market.
Mrs Strachan said yesterday: “I want to reassure the real estate sector that whatever decision is made, all efforts will be made to ensure that we are able to maintain whatever business is on the table for those realtors who are affected, and all stakeholders that may be affected.
“That may mean looking at a lead time before implementation. As it stands now people should go about their business as per usual.”
Comments
Sickened 7 years, 3 months ago
I'm in shock! A politician (PLP at that) giving a common sense suggestion of giving changes a 'lead time'. This is incredible and a HUGE step forward for government.
BahamaPundit 7 years, 3 months ago
The problem is a huge amount of the Bahamian rental economy is devolving into foreign, non resident hands. Foreigners are buying up all the reasonably priced homes in gated communities to rent to other foreigners living here. They are directly competing with Bahamian landlords. Further, Airbnb allows foreign property owners to compete directly with the hotels. I have 100% no problem with foreigners, but I do think the way they are competing with Bahamians for the white collar tenants is getting out of hand and should be inhibited in some way to rebalance the outflow and erosion of rental proceeds from the country.
banker 7 years, 3 months ago
Once again, what you say is true, but it demonstrates the unbalanced, skewed elements of the monolithic economy. The banks have hundreds of distressed properties with non-performing mortgages for sale. Bahamians have no access to re-finance capital. Right now housing prices are lower due to over-supply of repossessed homes. There is a housing shortage, but Bahamians cannot afford new houses with the shrinking economy. Oftentimes the mortgages are so leveraged that they do not reflect the current price of the house ie. the bank has more money into them than what they are worth. The sad fact is that most average Bahamians cannot even afford houses that are reasonably priced.
Along comes Mr. Foreigner who has access to capital in his home country. He can go down to the bank and have a bank loan from his home bank, using his foreign property as collateral to buy a house as a rental property here.
However, banning such activity here will only make it worse for Bahamians. I am a firm believer in a free economy and an open business environment.
When traveling in the US and Canada, one sees numerous wild animals killed on the highways. In the south they are possums and squirrels and in the north they are groundhogs and raccoons. The crows and ravens come to clean up the dead bodies. It is those foreigners who buy affordable Bahamian houses that are the crows and ravens of our economy. I think that they are doing a service by cleaning up the financial messes of re-possessed houses in New Providence.
The fact that the banks hold the huge number of non-performing mortgages shows that there are systemic problems in the economy. It is those systemic problems that are shrinking the middle class and depressing the populace that need addressing.
Alex_Charles 7 years, 3 months ago
I'd argue it's quite the opposite. A good portion of those condominiums and luxury gated communities are Bahamian owned, or at least started off as Bahamian owned. Gated Communities/luxury condos also are not marketed toward lower income families because they weren't built for lower income families. The average Bahamian isn't going fork out $2,300 a month on rent. If we haven't been paying attention we have marketed our country as ultra luxurious over the years and that has indeed become a reality with pricing.
Also this is a free market with real estate for the most part so a Bahamian land owner or a foreign land owner can charge whatever they want on their properties. As the population of Nassau continues to rise the demand on rental properties and land will increase thus driving up the cost. It's sad really because everyone is fighting over this small piece of rock while other family islands are economic wastelands with abundance of cheap land, including beachfront and hilltop properties.
On the issue of AirBnB, there should be a nominal flat tax so at least some of the revenue flows back into the public coffers.
We have somewhat created a dual economy, and asserted above, that economy has systemic issues. These issues are only made worse with an atrociously high cost of living combined with low wages. We really need to rethink the way we do things.
banker 7 years, 2 months ago
I agree that there are a lot of Bahamian owned condos for the simple reason that there really is no place for Bahamians with money to invest. BISX is a moribund place without a level playing field. Your returns are limited if you buy government bonds. There is an investment load in going to the American markets. So real estate is one of the last venues for professional Bahamians that generate a lot of Bahamian dollars (thinking doctors, accountants et al).
I however know of many foreign-owned condos (especially on PI) where the owners have not even been to the Bahamas in years, but they generate monthly revenues (homes for the American yacht crews for the uber rich), AirBnB rentals, and a lot of rentals on websites in their home countries where the entire money transaction takes place outside the country. They have a reliable, well-paid maid to clean up after each occupancy who also does double duty of providing keys on arrival.
happyfly 7 years, 3 months ago
Crime is out of control, no Bahamians have two cents to rub together unless they are numbers boys, drugs dealers or politicians. This government has received three downgrades with warnings and now at junk status....... and Mrs Strachan thinks the threshold is no longer achieving the intended objective, which is to attract high net worth individuals to our country. Why dont you go fix some problems instead of creating more of them you dumb a...
banker 7 years, 3 months ago
Hope is dreaming if she thinks this is true. The last billionaire that left our shores from our book of business (sold both huge houses in Ocean Club Estates), said that our "financial services" were overrated and overpriced and underwhelming. He was unable to do basic active portfolio management without a lot of time and a lot of fees. His money went to Switzerland even though he is not a Swiss national.
We have a very poor reputation worldwide, and it has degenerated considerable with this PLP government, especially in view of how Sarkis was treated.
Hope is out of her league and hopeless. She hasn't a clue as to what financial services are needed. The most effective strategy is to throw away any restrictions and investment thresholds to anyone of a business or technology background and let them come here and operate much like Cayman Enterprise City has done in the Cayman Islands. They consider intellectual capital on a higher plane than money, but in the Bahamas, our boongies are jealous of the crap in heads, so we stumble in the dark on a downward spiral. And as for Hope Strachan, I wish that she would shock me to death and say something intelligent and relevant to the position that she holds. It's the stupid leading the blind here.
BMW 7 years, 3 months ago
Banker, remove all restrictions and investment thresholds would work but in the eyes of our xenophobic and homophobic government/people we would be overrun by foreigners. Until we learn that we cannot build up our country with out help from abroad we are screwed!!!!!!
Porcupine 7 years, 2 months ago
We need to quit giving away The Bahamas for the little money that goes into the hands of Financial Services. We seem to forget that Finance produces nothing of value. Money was merely intended to grease the wheels of trade, whereby productive people actually created things and used money as a medium of exchange. Now, in our warped economy and educational system, money is what has value. Financial criminals are still criminals, we choose to worship them for the small hope that some of this money trickles down into our hands. It rarely does, according to reality. Doesn't The Bahamas have enough to offer our economy without the continual pandering to the rich? 8 people in the world now own more wealth than the bottom half of the world's population. And we want to continue down this unChristian path? Quit the charades people. Let's focus on producing things of value and quit these shell games. How many financial geniuses can a country of 400,000 people which places so little emphasis on education really produce?
Well_mudda_take_sic 7 years, 2 months ago
There's only one reason Crooked Christie is backing away from the $1 million residency bar: The investment consortium that Sir Snake is both fronting for and participating in, that is secretly buying up mega millions of dollars in foreclosed mortgage properties from certain of our commercial banks and other mortgage lending institutions, has told Crooked Christie that the higher residency bar will be financially harmful to their profit goals. Crooked Christie's equally crooked son who professes to be a realtor may even have a horse in Sir Snake's investment consortium that has been formed to greatly profiteer off of the misery of poor Bahamians who have lost their homes thanks to Crooked Christie's failed economic policies and fleecing of of our nation!
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