The Tribune

• ‘Very surprised’ if rivals near to matching 2022 record

• But ‘hottest market in 40 years’ now starting to ‘cool off’

• ‘Feeding frenzy’ to be hit by 50% fall in for-sale inventory

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A realtor yesterday hailed the $1bn in property sales his firm handled in 2022 as a “first” in The Bahamas, and asserted he would “be very surprised” if any rivals were close to matching this performance.

George Damianos, Damianos Sotheby’s International Realty’s president, told Tribune Business the company’s record result had been driven by pent-up demand that “spilled over” from the post-COVID era as wealthy buyers continuing to target overseas real estate purchases.

Praising his staff for an outcome that was featured in Sotheby’s International’s Luxury Outlook publication, he nevertheless forecast that 2023 was unlikely to match last year because the inventory of high-end properties still available for sale had shrunk by 50 percent compared to normal levels in communities such as Lyford Cay.

Mr Damianos’ prediction of a slight ease was yesterday backed by other realtors. Gavin Christie, Corcoran CA Christie’s managing partner, told this newspaper that the industry is now “on the tail end” of the post-pandemic boom although the volume of sales handled by his firm in 2022 rose by 22 percent year-over-year.

Acknowledging that The Bahamas was coming off “the hottest market in 40 years”, he agreed that the market is “cooling off” from the “feeding frenzy” sparked by COVID-19. However, rather than plunging, Mr Christie said it was undergoing an orderly “correction” back towards more normal activity levels, while the lack of available for-sale inventory will create upward pressure that maintains existing high-end property prices.

Mario Carey, the Better Homes and Gardens Real Estate MCR Group Bahamas principal, also branded 2022 an “exceptional year” for real estate sales and said his firm was “enthusiastic” about 2023 prospects. However, he added that it was “paying attention” to feedback suggesting buyers may adopt more of “a wait and see” approach due to the negative headwinds created by inflation and higher global interest rates.

Meanwhile, Mr Damianos, confirming that the $1bn figure referred just to sales by his company alone, told Tribune Business: “We were quite pleased with our results. I think it’s the first time any real estate company made $1bn in sales or more in one year. I think it’s a good indicator to show what’s happening in The Bahamas.

“I think other companies did well, too, but I’d be very surprised if any others came anywhere near that. It was kind of an overspill from 2021, which a lot of people said was their best year. It was pent-up demand, people wanting to come offshore and make investments. We had a lot of developer sales, people acquiring land to develop property commercially. It will be interesting to see how it pans out, who builds and gets things done.”

The Sotheby’s International publication said its Bahamian affiliate, headed by Mr Damianos, had exceeded the $1bn property transactions mark by the end of 2022’s third quarter on September 30. The company specialises in high-end real estate sales that involve values that are typically in the millions of dollars.

Mr Damianos, though, dampened expectations that last year will be matched or even bettered in 2023. “There’s no real reason for our market not to keep going,” he said. “The wealthy still want to invest, they still want to enjoy pleasures in the sun and they still want to enjoy the warm weather.

“But I think we’ll probably not have that type of year [we had in 2022]. There’s two reasons. One, in particular, is definitely inventory. The problem is having enough inventory to sell. The only thing that is going to penalise us is the amount of inventory we have to sell to these people. That’s our big thing. We have a small handful of developers. The question is whether they catch up with demand before it falls off again.”

Asked how much available for-sale inventory at the market’s high end is down compared to historical levels, Mr Damianos replied: “I’m going to make an educated guess. I’m going to say our inventory is down at least 50 percent in the high-end space.

“When I first started in Lyford Cay in the early 2000s, I’d say between 7 percent to 10 percent of the properties here would have been on the market. We’re probably down to 2-3 percent. That’s from 2021-2022. Over the years it’s dwindled, but now it’s probably the lowest it has ever been. If you don’t have a product you can’t sell it.... But it’s not anything I would call doom and gloom.”

Mr Damianos said the real estate market typically went through cycles, and the present low inventory issue will be rectified as it “comes alive” again. He acknowledged, though, that the absence of competition could encourage sellers to hold out for high or above market prices, while potential purchasers may decide to hold-off if they found nothing that met their requirements.

He was backed by Mr Christie, who agreed that the restricted supply of available for-sale properties will help keep prices “consistent”. He told Tribune Business: “The year has started off very, very well. We’re on the tail end of the hottest market we’ve had in 40 years. The change we have seen is that the feeding frenzy COVID sparked, that has slowed down.

“Our market, though, remains extremely hot from last year and, within that, we had many properties selling at asking price and above asking price. That has cooled off, but the market remains very, very strong. I believe that, in 2023, that will continue, especially in the luxury market. People will always say the market is dropping, but it has corrected itself back to where it should be.

“What we saw during COVID was an abnormal amount of transactions, and numbers being up 10 percent, 15 percent, 20 percent. The market is correcting itself but remains strong. There’s extremely low inventory which helps our prices remain consistent.”

As for the next 12 months, Mr Christie predicted: “Our projection for 2023 is it will still be a very good year due to the lack of inventory helping to keep our prices consistent. All of our projections for 2023 are still a very strong market in the luxury space.

“Last year was a very good year. Our numbers were up, I think, about 22 percent year-over-year in sales volumes coming off an abnormal year in 2021. I think this year has the potential to do just as good as last year. We don’t have a crystal ball to predict, but as long as as don’t have any significant changes I think we’ll be just as good as last year.”

While the cost of mortgage financing has risen for international buyers, due to the increases in US and other interest rates, Mr Christie argued that this was offset by strong demand for The Bahamas as a “sought-after destination”. He added: “Whatever market we’re visiting, there always seems to be strong demand for The Bahamas.”

Mr Carey, too, said the Bahamian real estate market appeared “to have settled a bit” following the post-COVID sales surge. Yet he added that the main economic indicators impacting it “seem to be healthy” despite the threats posed by inflation and rising global interest rates.

The Better Homes and Gardens Real Estate MCR Group chief said The Bahamas appeared to have reverted back to its pre-COVID seasonal trend, with most activity taking place between the end-December and May period. “I would think 2022 was an exceptional year,” he said. “You almost get to a peak of a market. It was an exceptional year. Can we match that? Who knows?

“With inflation, a lot of buyers are holding back. Some buyers are feeling they’re going to wait it out and see what happens. Last year we didn’t have that conversation. Before inflation picked up we didn’t have that type of conversation, but now we’re having it. I’m in contact with a lot of very smart business people, and they bring this stuff up. Inflation gives them a level of concern. We might see more of a wait and see posture in 2023.

Acknowledging that wealthy buyers were among those most immune from inflation’s impact, Mr Carey nevertheless pointed to the slowing US real estate market as an example of trends that could ultimately impact The Bahamas. Yet he added: “We’re enthusiastic about this year. We’re paying attention to some of the conversations, but so far everybody says the market is still good.”