What’s happening in… The Bahamas?
Say “Bahamas” and you probably have a mental image of cocktails on the beach – which is not a bad association at all – but there is much more to this island destination than being a vacation hotspot.
The Commonwealth of The Bahamas – the official name – is located in the West Indies. It is the richest country in the region, with a GDP ranked 14th in North America – built primarily on tourism and financial sectors (specifically offshore banking). The nation is renowned as a tax haven, with no income, corporate, wealth, or capital gains tax – a strategy that has earned them both fans and critics.
Here’s what you need to know about commercial real estate (CRE) trends and news in this region…
Travel restrictions easing
The Bahamas is one of the first countries to lift the restrictions on international visitors who are fully vaccinated. In May 2021, the new regulation became effective which means those travelers “who are fully vaccinated and have passed the two-week immunity period will be immediately exempt from testing requirements for entry and inter-island travel”. Fully vaccinated travelers must still apply for the Bahamas Travel Health Visa with proof of vaccination, at travel.gov.bs.
This is a welcome relief for the hotel and tourism sectors which is a critical part of the economy – making up some 51% of GDP – and it should provide a kick start for tourism related CRE deals that were stalled or delayed as a result of the global Covid-19 pandemic.
Thinking outside the box
The government is keen to incentivize land sales at the moment, and is using fresh techniques to promote business, such as offering discounts on land parcels to young professionals in the western area of New Providence.
Prime Minister Dr. Hubert Minnis announced in December 2020 that new development was on the cards in this region which constitutes “crown land”. “Crown land is really the people’s land, it’s not individuals, it’s the people and we just want to ensure that the people receive their land,” he said, adding that the government would promote duty-free building and automatic mortgage qualification for applicable targets of the development.
The Bahamas Real Estate Association’s (BREA) president Christine Wallace-Whitfield has spoken in support of the proposal which would put homeownership within reach for more Bahamas residents. This would also likely create development opportunities down the line which is a positive for the construction and CRE industries.
Legislation debates
On a slightly lower note, there is currently a robust debate around plans recently proposed in the House of Assembly (during the 2021-22 annual budget presentation) that the government could potentially recoup outstanding property taxes directly from the tenants of commercial office and retail properties. The Tribune reports that this would involve paying monthly rentals directly to the Department of Inland Revenue (DIR) rather than the “delinquent landlord – until the debt is settled”. A collection of prominent CRE professionals have spoken out in criticism of the proposal, and it is an ongoing matter.
Also among the budget updates were new tax provisions that would see VAT on realty transactions increasing. The BREA said that the “sector would accept the tax hike if it was accompanied by an improvement in the ease of doing business”.
These are the kind of legislative and regulatory matters that require robust local knowledge, which is why NAI Global always advocated dealing with regional experts, like NAI Bahamas Realty Commercial.