The Tribune

• 2023 ‘pause year’ after ‘record shattering’ 2022

• $47m New Providence high for single family

• Elbow Cay at $14m; Eleuthera ‘watershed’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian realtor yesterday disclosed that high-end sales volumes “cooled” by 20-25 percent during the 2023 first quarter following a “record-shattering” year for single-family home prices on several islands.

Ryan Knowles, founder and chief executive of MAISON Bahamas, told Tribune Business the market will likely take “a pause” this year following the “crazy, frantic” buying frenzy that was sparked post-COVID. This, he added, will allow available sales inventory to replenish after numerous properties were acquired over the past two years and also permit buyers and sellers to eliminate their “disconnect” over prices. 

Speaking as MAISON teamed with Forbes Global Properties to release an “outlook” for the world’s high-end real estate market, Mr Knowles said while “the spike has come down” - with prices dropping on average by 10-15 percent following the post-pandemic - the market is merely catching its breath and is poised to resume “accelerated growth” yet again in 2024.

In a message to clients in the Forbes Global Properties report, he added that The Bahamas remained an in-demand destination with 2022 seeing several records for high-end single family home sales. One New Providence-based property fetched $47m, while Elbow Cay in the Abacos saw a $14m sale closing, although neither home or buyer/seller was identified. 

“The luxury property market in The Bahamas enjoyed another stellar, and in many ways, historic year in 2022,” Mr Knowles wrote. “Buying trends continue to demonstrate that luxury home buyers from around the world are particularly attracted to the warm climate, accessibility to other global hotspots, tax-friendliness, high quality of life and variety of luxury property options in The Bahamas as compared to other Caribbean destinations.

“The capital of New Providence, which saw a record-setting single-family home sale of $47m, led the way in both demand and activity, establishing itself as one of the most desired warm-weather locales anywhere in the world. Outside of Nassau, familiar hotspots such as Eleuthera and Exuma saw incredible growth in terms of pricing, construction activity and volume of sales.

“Eleuthera, in particular, is in the midst of a watershed moment, with more luxury sales taking place there in 2022 than in any prior year on record. Elbow Cay in Abaco, where picturesque Hope Town is located, also had a very strong year, with a number of celebrity purchases and a record-shattering $14m single-family home trade,” he continued.

“Elsewhere, newly-announced projects such as Montage Cay by Montage Resorts and The Ocean Club Residences by Four Seasons are setting a new standard for what can be expected in a residential real estate experience. With luxury home buyers willing to pay 25 percent to 35 percent more for a branded residence compared to a non-branded one, we expect this trend to continue in the months and years to come.”

Mr Knowles, speaking subsequently to Tribune Business, said the high-end real estate market consisted of properties valued $1m and upwards. Recalling 2022, he said: “We were coming off the heels of 2021, which was a fantastic year - probably the most active year in the history of maybe our country. Certainly for the luxury market we’ve never had a stronger year than we had in 2021.

“We saw that, globally, coming out of the pandemic there was a lot of urgency for buyers flush with cash to spend to relocate their families and businesses. We saw an unprecedented amount of activity that spilled over into 2022 a little. There was a bit of a cooling off because when so much real estate is sold it takes a lot of supply out of the market which then has to be replenished. We saw a little bit of a cooling off in 2022.”

While concerns over inflation and Russia’s invasion of Ukraine had a modest dampening effect, Mr Knowles added: “2022 was still a very strong year, almost as good as 2021. What we’re seeing now as we come past 2022 and past the pandemic is we’re starting to see it normalise; that normalising of activity. Buyers are being a lot more prudent.

“I don’t want to say it’s fallen off, but the spike has come back down. Buyers are taking a little bit longer to make decisions, and while sellers were getting amazing prices for their homes two years ago they are not getting numbers to the extent they could then. They stick their foot in the ground and are not going to budge. But buyers are saying: ‘Do I need that third or fourth home? Maybe I do, but I’m not going to pay more than that’.

“They were willing to do it two years ago, but any more. That’s what’s caused the cool down. At $5m and above, people are thinking longer and harder about it: ‘Will I get great value for my money?’. That’s been a shift we’ve noticed over the last 18 months, whereas before they needed it, had got to get it, got to have it and were willing to pay a premium,” he added.

“Now, it’s a ‘wait and see’ approach. If it’s a good deal it’s always snapped up, but the pace has slowed down.” Asked about the impact on 2023 real estate volumes for the year-to-date, Mr Knowles replied: “I would say it’s probably slowed down 20-25 percent for the first quarter of 2023 compared to the first quarter of 2022.

“Having said that, certain segments are doing incredibly well. The $1m-$5m market is still highly active, and we’re still seeing in certain areas a great deal of price appreciation. Places like Sandyport, values are going up even though the overall market has cooled to a degree. There are pockets where there is a lot of demand, and not a lot of inventory, and that’s causing prices to increase. It’s an interesting market and we’ll see where it goes in the next six months.

“At the higher end we’re starting to see sellers make peace with the fact they will not get the price they wanted, so we are starting to see some price reductions, which is healthy... We were seeing properties selling two times’ in one year, and people doubling their money, increasing by 50 percent, 60 percent and 70 percent. That’s just not sustainable.”

Explaining the factors that have driven the recent “cooling off”, Mr Knowles said: “It’s not because buyers aren’t around. I would argue that there are the same amount of buyers. We have tons of buyers looking, but we don’t have the same amount of inventory and there’s this disconnect. Buyers feel the market should be here, and sellers feel the market should be where it was 18 months ago.

“It’s causing a little bit of stagnation as you see expectations come back into line and become more realistic from the seller’s standpoint. The buyer, for the most part, decides if a deal is going to get done. If all the buyers feel the prices are too high there won’t be any activity.”

Asked about the impact on high-end real estate prices, the MAISON Bahamas chief said: “It’s mixed. It depends on the area and depends on the product. It’s not a straight line. If I had to average it out, we’ve not seen a decline in prices; we’ve seen a decline in price growth. We might have seen a 10 percent drop in average prices, maybe 15 percent in some cases, but it’s not been much since 2021.

“I believe that as we come closer to 2024 sellers will come to terms with where the market is and start to price properties appropriately, and that will cause a lot more deal flow than what we see now. There was all this crazy, frantic activity, with people buying left, right and centre, and they are now taking a pause. 2023 will be a bit of a pause year, and then we will see what I believe will be accelerated growth starting in 2024.”