The Bahamas real estate market continues to experience gains in value as interest rates remain low and home values climb in price. Nearly $400 million in residential real estate was Bahamas Real Estate sold or under contract during the first quarter of 2021. Comparable figures from the second quarter of last year show a similar increase. Transactions almost tripled compared to the same period in previous years. Some analysts believe that this growth can continue into the second half of this year.
This recent rise in transactions follows a few months of slow market growth for Bahamas real estate investors. The decline in residential sales may be due to higher than usual vacancy rates in select areas, or a slowdown in rental yields following the hurricanes. A slowdown in rentals may also be due to foreign buyers who previously bought condominiums, town houses and high-end single family homes, which took most of the available market. The slowdown could result in lower rental yields for the remaining properties, resulting in lower appreciation for buyers.
With less rental yield and higher vacancies, it may take a longer time for buyers to obtain the desired investment properties. Purchasing a property outright is a popular option among investors looking to purchase today because the purchase and maintenance fees are lower than a mortgage loan. However, it may take several years before a buyer receives full return on investment for this type of purchase. Many investors have been waiting for a solid return from their Bahamas real estate investments for many years and now they are finally being rewarded.
The recent increase in real estate transaction costs has caused some consternation among the buyers. Some sellers have passed the cost savings onto the buyer and others are blaming the seller for the increase in cost. For buyers, the question is whether the recent changes in real estate transaction costs are related to the growing demands for rental properties in the Bahamas. If the costs are related to these demands, the impact on buyers will be minimal. On the other hand, if the recent increases are the result of the lack of supply of property for sale, the impact on prices will be severe.
While there are many factors affecting the real estate market of the Bahamas, the recent additions of vacation rentals and international persons landholding act as one of the main causes behind the recent surge in the prices. The Bahamas International Vacation rentals have helped the market to retain some of its properties despite the recent downturn in the economy. Since most of the tourists that come to the island to visit either the islands of the Bahamas or the neighboring island of St. Thomas, the rental properties in the region are able to attract steady increases in rental income. If the recent developments in the real estate industry continue at the same pace, the demand for vacation rentals will continue to grow at a rapid pace and the prices of real estate properties in the Bahamas will continue to appreciate.
Another factor affecting the property market of the Bahamas is the lack of available property for international and domestic tourists. Although St. Thomas and the islands of the Bahamas have become much friendlier to tourists over the past few years, many of the islands have become over-crowded and even uninhabitable for many years. Many of these islands have seen a significant increase in the number of tourists over the past two to three years due to the growing popularity of the islands. Many of the tourists that come to the Bahamas and the islands of the Bahamas either plan a short vacation or a longer vacation of years. For these investors, the ability to acquire permanent residence in the Bahamas is of great importance. The increase in the number of properties for sale on the islands of the Bahamas and the increase in population of the Bahama Islands have both contributed to the slow but steady increase of the prices of real estate properties.