• Chamber chief says Bahamians being priced out
• Reveals island’s rental rates jump 63-88% in 2-3 years
• And high-end real estate prices surge 25% post-COVID
By NEIL HARTNELL
Tribune Business Editor
Exuma’s Chamber of Commerce president yesterday warned that the island’s soaring vacation property success was “choking off” Bahamian access to affordable rental units.
Pedro Rolle, a realtor by profession, told Tribune Business that demand for Airbnb-style vacation rentals had curbed the availability of rental accommodation while also pushing price points beyond the reach of relocating government workers and lower/middle income persons.
He revealed that while a “good apartment” could have been found for $800 per month some two to three years ago prior to COVID-19, the same unit today was likely to be between 63-88 percent more expensive costing between $1,3000 to $1,500 per month.
Describing the problem as “fixable”, Mr Rolle said he, the Chamber and others were now trying to encourage entrepreneurs to “build rental units” targeted at the local market and address an inventory shortage caused by landlords increasingly focusing their properties on overseas vacation renters.
Describing Airbnbs and other vacation rentals as “a real bright spot” amid Exuma’s efforts to rebound from COVID-19’s economic devastation, he nevertheless told this newspaper: “The Airbnb market has cornered so much of the Exuma rental market that it’s kind of choking off or pushing our regular renters - government people, lower and middle income people.
“It’s a challenge for them to find real rental units because of the take-up by the Airbnb market. It’s a huge concern, and we’re seeing if we can encourage others to build rental units with locals in mind. That’s a market that is always going to be here, and it’s something local people can do. We don’t need foreign investment to come in and build units; we can do it ourselves as that’s an ongoing source of income.
“We’re trying to push people to enter that market in a real way. I think we are having measured success, but it takes a while for persons to enter that business because it takes money to do it. I believe that in the next year or two we’ll see an increase in locals building for locals. It’s a start. We’ll see measured success over the next year or two.”
Mr Rolle said most Exuma residents with vacation rental properties have been enjoying solid business since The Bahamas re-opened to international tourism last November following the COVID-19 lockdowns and restrictions. He added that the sector’s bookings were “as good as they’ve ever been over the last three to four years”.
Reiterating that the shortage of Bahamian rental accommodation was “a fixable problem” that will be “definitely addressed and resolved over time”, Mr Rolle said: “In the interim, what it’s doing is that it makes it really difficult for civil servants, whether teachers or government persons coming in into the island, to afford units.
“The Government, in the short-term, needs to give them greater allowances for their rental accommodation because rentals are expensive in Exuma. If the Government is going to give them $800 to $1,000 for their rental assistance, they are sacrificing to come here because the Government is not covering their rent.
“I don’t know what the percentage is but in the past, where a person got a good apartment for $800 per month, relatively speaking, that apartment now - two to three years later - they will need to spend $1,300 to $1,500 per month for that same unit,” he continued.
“It’s a challenge. It’s a consideration that needs to be given to allow them to be able to live comfortably while in Exuma. I just hope we can take advantage of this opportunity and invest locally so that we can reap the rewards. That’s always the goal, rather than let others come in and take advantage of it. We have an opportunity to make something of this market.”
Mr Rolle added that, in common with much of The Bahamas, Exuma’s high-end real estate market has seen prices increase by 25 percent compared to pre-pandemic levels as pent-up international demand for beachfront properties is unleashed following the pandemic and worldwide vaccinations.
“They are always looking for the beach view and sea view and have you,” he added. “There is an extensive shortage. The amount of people inquiring about these properties, we don’t have inventory to serve them in certain markets. On the high-end market there’s a shortage of inventory. It’s a good problem to have.”
With limited supply helping to push prices upwards, Mr Rolle added: “It’s crazy when you get to the point that, if you had something before the pandemic to now, prices on the high-end - beachfront properties and what have you - have increased by 25 percent from pre-pandemic to now. The other more moderately-priced properties, not so much.”
The Prime Minister has frequently touted vacation rental properties as being among the tourism niches that have rebounded most quickly since the pandemic, which is why the Government has sought to extract an extra $31m in taxes this fiscal year by ensuring VAT applies to the rental rate as well as the listing/marketing commission.
Unveiling the Budget at end-May, Dr Hubert Minnis said: “On the property front, short-term rentals in the Airbnb market have already shown signs of rebound since the careful reopening of our tourism sector in November.
“Occupancy rates have more than doubled, from 8.2 percent in November 2020 to 16.6 percent in March 2021. At the same time, there was a 2 percent increase in average daily rental rates and a 52 percent increase in room reservations.
“Based on Central Bank data for the period end-March 2021, vacation home rentals and comparable hotel listings increased by 65.9 percent and 55.4 percent, respectively. This also impacted average daily room rates which similarly increased by 10.8 and 7.5 percent to $497.95 and $169.36 for vacation home rentals and hotel listings, respectively.”
The Central Bank, in its economic update for May, added: “As it relates to the vacation rental market, data provided by AirDNA revealed some modest improvements during the month of May, largely supported by gains in domestic demand.
“In particular, the reduction in total room nights sold moderated to 14.2 percent from 26 percent in the preceding year. Contributing to this outcome, the declines in bookings for entire place listings and hotel comparable listings tapered to 15.1 percent and 6.3 percent from 27.7 percent and 11 percent, respectively.
“Conversely, the average daily room rate (ADR) for hotel comparable and entire place listings increased by 2.9 percent and by 2 percent, to $177.45 and $491.07, respectively. On a year-to-date basis, total room nights sold grew by 3 percent, underpinned by a 4.8 percent rise in bookings for entire place listings, which offset the 10.4 percent fall-off in private room listings.
“Pricing data revealed that the ADR for both entire place and hotel comparable listings rose by 16.1 percent and by 4.9 percent, to $468.35 and $165.70, respectively.”