The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday urged to “keep the faucet open”, and not tinker with real estate taxes and regulation in the upcoming Budget, as contracted property sales more than tripled year-over-year.

David Morley, Morley Realty’s principal, told Tribune Business that measures such as increasing VAT on real estate sales would be akin to the Government “cutting off its nose to spite its face” as this would disrupt a “tremendous contracted sales pipeline” that increased by 215.1 percent in the 2024 first quarter.

Voicing optimism that the strong property market will maintain its momentum throughout 2024 “unless the Government” increases taxes or introduces adverse regulatory measures in the annual Budget, he also pleaded for it to “create some consistency” by leaving the real estate regime alone for a five-year period.

Successive administrations have implemented adjustments on an annual basis, and Mr Morley told this newspaper that the frequency of such changes threatens to undermine international investor confidence as they become uncertain as to the rules and how much it will cost to sell/purchase Bahamas-based property.

He spoke after his firm, drawing on data from the Bahamas Real Estate Association’s (BREA) Multiple Listing System (MLS), also revealed in its 2024 first quarter market update that new listings across The Bahamas’ five major islands have collectively more than doubled compared to the same period in 2023.

“A notable trend is the consistent year-over-year increase in contracted sales and new listings across all five island markets for both land and homes. Comparing the 2023 first quarter to the 2024 first quarter, new listings increased by an average of 104.2 percent and contracted sales increased by 215.1 percent,” Morley Realty said.

Asked whether he expects the robust market to continue for the remainder of 2024, Mr Morley replied: “I’m hoping so. Unless the Government introduces any new type of legislation or changes taxes on land sales, we should see it continuing.”

Real estate transactions and taxes are among the Government’s top revenue generators. The Public Treasury is forecast to earn more than $195m from real property taxes in the current fiscal year, while the 10 percent VAT levied on completed sales and their conveyances is projected at around $319m. Together, these two revenue streams alone are predicted to generate more than $500m or half a billion dollars.

Given the industry’s importance to its fiscal health, the Government almost without fail tinkers with the real estate taxation and regulatory regime in the annual Budget, adjusting tax rates via reforms to the VAT Act and Real Property Tax Act while also also seeking to close loophole, improve administration and collection, and crack down on avoidance and evasion.

“My position on that is I look at it from the international investor’s perspective,” Mr Morley said of the annual changes that the private sector and its clients must adapt to. “I wish they would create some consistency for a period of time - maybe only adjust things every five years.

“But is seems like every year or every other year it’s always tinkered with, and investors get worried over how much it costs them to sell. For consistency in international investment in The Bahamas it would be nice to have some continuity.”

Mr Morley said the data obtained by his firm from the MLS, which he estimated probably captures around 75 percent of all BREA members’ active listings, will hopefully persuade the Government against changing the real estate tax regime in the upcoming 2024-2025 Budget that will be unveiled during the final week in May.

“Hopefully they’ll keep the system in place,” he told Tribune Business. “Hopefully statistics like this make them realise there’s a tremendous amount of contracted sales in the pipeline to benefit from, and they don’t cut off their nose to spite their face. Let’s keep the faucet open.”

Morley Realty, in its analysis of the MLS data, wrote: “The Bahamas real estate market in the first quarter of 2024 continues to show signs of growth in its changing market. Reflecting on the past year, a majority if not all five of the islands have had increases in both demand (contracted and completed sales) and inventory (new listings).

“Although new listings continue to outpace contracted and completed sales in volume, certain markets are witnessing larger spikes in buyer demand to balance these figures out. With these changes in The Bahamas real estate market, one can expect the median days on the market, list-to-sale price ratio and sales prices to be affected.”

Despite the doubling and tripling of new listings and contracted sales, respectively, for the 2024 first quarter, completed sales across the five markets - New Providence, Grand Bahama, Abaco, Exuma and Eleuthera - “experienced an average decrease of 5.3 percent” for the three months to end-March this year.

“While this is the case, when looking at these markets quarter-over-quarter, we begin to see some differences amongst the five islands,” Morley Realty said. “For home contracted sales quarter-over-quarter, the data tells us that only the Eleuthera, Grand Bahama and New Providence markets witnessed increases.

“In contrast, year-over-year comparisons show that all islands experienced increases in contracted home sales. Conversely, all five islands experienced increases in contracted land sales. Despite the continued uptrend in new listings, it is encouraging to see contracted sales following suit.

“With new listings having surged over the past year, we begin to see decreases in some of the markets. While there are some decreases quarter-over-quarter when looking at both land and home markets, Abaco, Eleuthera and Grand Bahama experienced increases,” the realtor’s report added.

“For the inventory of homes, Exuma is the only island to experience decreases while, for land, all islands experienced increases except New Providence when comparing the 2024 first quarter to the fourth quarter of 2023.”

New Providence was said to have enjoyed “the highest volume” in new home listings for the past two years in the 2024 first quarter, with a 147 percent jump to 195 compared to the same three-month period in 2023. When benchmarked against the 2023 fourth quarter, this amounted to 7.7 percent growth.

“The New Providence homes market, like many other islands, maintained consistency with the third and fourth quarter of 2023,” Morley Realty said. “While completed sales decreased by 30.9 percent year-over-year, there was a 23.7 percent increase from the 2023 fourth quarter.

“Contrastingly, contracted sales surged by 142 percent year-over-year, and 31.1 percent from the 2023 third quarter, marking the 2024 first quarter as the quarter with the highest contracted sales volume in the past two years.” Contracted home sales in New Providence totalled 80 during the 2024 first quarter, based on data from the MLS, while completed sales stood at 47.

As for undeveloped property, the realtor added of the MLS data: “The New Providence land market experienced a significant surge in demand. While the volume of completed sales increased by 18.2 percent year-over-year, it decreased by 7.1 percent from the 2023 fourth quarter, remaining fairly consistent with 2023.

“In contrast, the volume of contracted sales saw a drastic year-over-year increase of 360 percent and a 142 percent increase from the 2023 fourth quarter. For the first time in two years, new listings didn’t increase quarter-over-quarter but instead dropped by 30.4 percent. However, year-over-year, the volume rose by 40.3 percent. This marks the first instance of contracted sales having a higher volume than new listings in the past two years.” New listings and land sales on New Providence stood at 87 and 92, respectively, for the 2024 first quarter, while completed sales reached 26.

“With the increase in the inventory of both land and homes, buyers are provided with more selection and demand should follow shortly. With more inventory, this may result in an increase in days on the market, a decrease in the list-to-sale price ratio, and a shift toward lower median sale prices.”