Bahamas: Price History

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Last Updated: Mar 02, 2009

The Bahamas property market slowing

The Bahamas property market slowed in 2008, because demand for luxury housing in the Bahamas comes mostly from US and UK buyers, who are most affected by the global financial crisis.

In the absence of official house price figures, it is very difficult to know how much house prices have fallen. According to news reports, actual transaction prices of residential properties were down by as much as 20% in 2008. However, listed property prices only fell slightly in 2008, because many sellers refused to budge much on asking prices.

Selling prices of houses located in prime areas range from US$2,221 per sq. m. to US$8,374 per sq. m., according to recent Global Property Guide research. On the other hand, condominium prices range from US$3,085 per sq. m. to US$5,159 per sq. m.

Luxury houses and villas sold for a wide range of prices, from US$2 million to US$16 million in 2008. While Bahamas properties are predominantly bought by the super wealthy, smaller waterfront properties are available for amounts typically ranging from US$500,000 to US$1.5 million.

Foreigners who own properties in the Bahamas are eligible for a homeowner’s residence card (renewable annually) and those who purchase properties valued at least US$500,000 are given priority in permanent residence applications. However, neither permanent nor annual residence gives a foreigner the right to work in the country.

The Bahamas has enjoyed stable economic growth, with an average annual GDP growth rate of 3% between 1997 and 2007. However, due to sharp declines in tourism and financial sectors in 2008, GDP growth is estimated to have slowed to 1%.

Tourism accounts for 60% of GDP, and employs more than 40% of the total workforce. There are more than 4.5 million tourist arrivals every year, dominated mostly by Americans and Europeans. Offshore finance, the second largest industry, accounts for around 15% of GDP.

Construction activity declining

In 2007, construction activity in the Bahamas was weak. Residential completions dropped 5% in 2007, while residential construction starts also fell 25%. The total number of residential permits issued fell 3.3% to 2,719 permits.

A number of projects in the Bahamas have been halted, because foreign investors’ ability to obtain funding has suffered as a result of the credit crunch. These include (see Prime Minister Hubert Ingraham 2009 Address to the Nation):

Ritz Carlton project on Rose Island
Ginn at West End, Grand Bahama
The former Royal Oasis property in Freeport, Grand Bahama
Royal Island Resort in Eleuthera
Aman Resort at Norman’s Cay, Exuma
The sale and redevelopment of the Walker’s Cay Resort in the Abaco
The second Marina Village of Kerzner International
Time Share Resort at Hurricane Hole, and
Bahamar Project in Cable Beach

In response, the Bahamian government has decided to accelerate several infrastructure projects to create jobs and boost the economy. The US$130 million New Providence Road Enhancement Project was recently re-launched. Other major road projects were undertaken in Eleuthera, Harbour Island, Current Island, North Abaco, and Acklins.

The Ministry of Housing has also speed up the Housing and Subdivision Development Programme in New Providence, Grand Bahama, Abaco and Exuma. In 2009, work on the following projects will commence:

Downtown Nassau (Bay Street and Prince George Wharf) redevelopment
Construction of the new Straw Market
Construction of three new government office complexes in New Providence, Grand Bahama and Abaco
Completion of the new school in Oakes Field
Construction of the new Registrar General’s office complex on Market Street
Completion of the Magistrate’s Court Complex on Meeting Street
Construction of the new National Stadium at the Queen Elizabeth Sports Centre
Construction and reconstruction of sea and airports in some Family Islands, and
Completion of the Government Office building next to the Ministry of Works on JFK Drive

Interest rates and the mortgage market

Interest rate for residential mortgages hovered around 8% to 9% from 2000 to 2008, mainly because the Bahamian bank rate has been almost static. In 2005, the Central Bank of The Bahamas (CBOB) reduced the benchmark rate to 5.25% from 5.75% (where it had been since 1999). The key rate has since been unchanged.

The Bahamian mortgage market has expanded significantly, from 26.7% of GDP in 2003, to 40.9% of GDP in 2008.

In 2008, total outstanding mortgages rose by 9.3% y-o-y to US$2.84 billion, a deceleration from an average growth rate of 15% during the past 5 years. The value of residential mortgages, which account for about 93% of total outstanding mortgages, rose by just 2.9% during the year to end-Q3 2008.

Domestic banks largely lend to Bahamian households with loans denominated in local currency (BSD1 = USD1). Real estate purchases by wealthy foreign buyers are mostly paid in cash.

Rents and yields

The rental market in the Bahamas is huge, especially the affluent vacation rental market, as millions of tourists flock to the islands every year.

In Nassau, the average rent for houses is around US$5,000 to US$6,000 per month while penthouses rent for US$9,500 per month. In the Out Islands, three-bedroom houses can be rented for US$3,000 per month.

Rents in the Bahamas can be freely negotiated and adjusted except for those dwellings with total value of less than US$25,000 (Rent Control Act of 1975).

Real properties in the Bahamas give good rental yields, according to Global Property Guide research (based only on long-term rentals). Among the different types of properties in Nassau, inland houses have the highest average gross yields of 9.02% versus 6.33% for houses along the water. On the other hand, Nassau waterfront condominiums had slightly higher yields than inland condominiums.

The most expensive Bahamian island

New Providence is home to about 215,000 people or about 75% of total population, making it the most populous island in the Bahamas.

Nassau, the capital city, is dominated by high-rise luxury hotels, townhouse developments and casinos. Properties in Nassau are the most expensive in the country. Prices of private houses range from US$3 million to US$20 million.

Likewise, residential land is so expensive. In 2009, the price of a single-family land in Coral Breeze Estates, Nassau was US$95,000 and US$120,000 for duplex lots.

Paradise Island, located on the northern edge of New Providence, is another favorite tourist destination. Condominium prices in Ocean Club Residences have risen sharply, to about US$2.7 million in 2008 from US$1.7 million two years ago. In the Atlantis Paradise Island, apartment prices start at US$508,000 while properties are priced at US$895,000 in the Harbour Beach.

“Venice of the Caribbean”

Grand Bahama, dubbed as the “Venice of the Caribbean”, is the second most populous island in the Bahamas (pop. 50,000). The average price of both inland and waterfront houses is around US$1,400,000.

Freeport is the island’s largest city and an important free trade zone and commercial center. Lucaya, Freeport’s residential area, has a vast network of interconnected canals lined with thousands of residential lots. House prices in Freeport vary from US$250,000 to US$6 million.

Prices of canal-front lots range from US$125,000 to US$250,000. One-acre beachfront lots are priced at US$1.5 million and up.

At the Ginn Sur Mer, located in West End, prices of residential properties were between US$635,000 and US$1.4 million.

Rising popularity of the Out Islands

Out Islands, also known as Family Islands refer to all the smaller islands in the Bahamas archipelago, which provide a quieter and more relaxed ambience. Generally, the Out Islands are less expensive than Nassau and Freeport.

Exuma, a popular yachting destination located south of Nassau, has undergone rapid developments in the past years. In early-2008, higher-end properties in Georgetown, Great Exuma were selling for around US$1,475,000. Apartment prices in the Pagoda Beach, Great Exuma started at US$345,000.

Eleuthera is an unspoiled and still unknown island located east of Nassau. Condominium prices in the island range from $235,000 to $500,000 while villas sell for US$600,000 up. One-acre beachfront lots sell for US$500,000.

In Abaco, located north of Nassau, prices for one-acre beachfront lots range from US$1 million to US$2 million. In Port St George, located in Long Island, prices of building lots start at around US$500,000.

Bimini, known as a center for deep-sea fishing, is just 50 miles from Florida. The island offers condominium units with boat slips at a price of around US$600,000. A 2.7 acre beachfront lot sells for US$1.7million.

Condo townhouses located in 870-acre Rum Cay Resort Marina were priced around US$900,000 while beach properties were sold for as much as US$3.5 million. In Baker's Bay Golf & Ocean Club, located in Great Guana Cay, properties sell for about US$5 million.

In the undeveloped Family Islands, property prices are much less expensive. In Andros, beachfront lots sell for US$200,000 to US$250,000. One-acre beachfront lots in Cat Island are priced in a range of US$350,000 to US$400,000. In Long Island, prime beachfront lots sell for US$375,000, and lots on a narrower beach are just around US$185,000. In Crooked Island, a four-acre beachfront lot sells for US$525 ,000, 95% less than in Nassau.

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