Published On:Saturday, October 22, 2011
By NEIL HARTNELL
Tribune Business Editor
A FORMER Bahamas Real Estate Association (BREA) president yesterday said he had converted part of his home into an office in a bid to reduce costs, telling Tribune Business the market "sucks", with sales values and volumes off 30-40 per cent.
William Wong, head of William Wong & Associates, said that while he needed a "crystal ball" to predict when the Bahamian market would recover, he estimated it might start in another 15-16 months once the Bahamian general, and US presidential, elections were concluded.
His comments came as another leading realtor told Tribune Business the Bahamas should follow Turks & Caicos' lead in looking to stimulate its real estate market through tax-related incentives, adding that property prices had declined by around 30-40 per cent since the recession's start.
Mario Carey, principal of Mario Carey Realty, said Turks & Caicos, recognising the major spin-offs that the real estate industry provided for numerous industries, had eliminated real property tax, cut Stamp Duty rates from 12 per cent to 10 per cent, and allowed the latter to be paid over a three-year period rather than one-time upfront.
As a result, the Bahamas' southern neighbour had seen market activity "start to get better", and Mr Carey suggested this nation ought to look at something similar. To date, the Ingraham administration has gone the other way, increasing Stamp Duty be two percentage points for all tax brackets, despite conventional wisdom suggesting that tax increases are the worst thing to do in a recession.
"It's still a buyer's market, and values are still down," Mr Carey told Tribune Business. "It's safe to say that values have been going down as much as 30-40 per cent. We've seen that pretty consistently. It seems to have been long accepted by the market."
The Government's Mid-Term Budget statement for the 2010-2011 fiscal year revealed a $43.1 million shortfall in Stamp Tax collections compared to forecasts, something it said "largely reflected weakness in respect of real property transactions over $250,000".
It added that there was "a significant decline in the value of transactions during the first six months of the current fiscal year".
Noting this, Mr Carey said yesterday: "The hard marker is that the conveyancing dollars have gone down tremendously. What is this administration doing to address that? Where is our stimulus? Where is the discussion about stimulating this sector? I've not seen anything to make that happen."
Suggesting the Bahamas should learn from Turks & Caicos's actions, Mr Carey said a vibrant real estate market created a "domino effect" felt by a variety of Bahamian industries. Every time a transaction concluded, there were economic benefits for attorneys, realtors, banks, insurance companies, furniture and maintenance people, and gardeners.
Given the spin-offs, Mr Carey questioned: "Why is that not being addressed. I've been asking that quite a bit. I've spoken to people from all parties, and I'm curious to see what they say."
Noting that the Government increased Stamp Duty across the board at "a stroke of a pen", Mr Carey said: "No one spoke to us as professionals. We have about 1,000 realtors, and no one government entity came to us and asked us: 'What do you think?'"
Arguing that "something had to give" to eliminate the current sluggishness afflicting the Bahamian real estate market, Mr Carey asked rhetorically: "What is the only thing that can give?
"The agents are negotiating their rates, the lawyers are negotiating their rates, the banks have tried to reduce their rates. The one constant that has not given at all is the Government.
"To get out of it there has to be some sort of stimulus plan. It can be short-term, long-term at some level. The banks can do better, but the Government policy has to shift."
Telling Tribune Business he had earlier this week met a 30-year veteran of the police force who was looking to do something in real estate, Mr Carey said there needed to be "an incentive" for him to come into the market.
With nothing on the horizon to drive real estate trends in a positive manner, Mr Carey added: "A lot of people are looking, a lot of people are curious, but they're not making a decision to buy. They may rent to take some of the risk out."
Banks, though, were still "aggressive" for business coming from foreign buyers who were able to put down significant equity downpayments on Bahamas-based property.
Mr Wong, meanwhile, described the Bahamian real estate market as "still a bit soft".
He added: "A lot of us are trying to hold on till the market turns around again.
"I don't have a crystal ball for that.
"Hopefully, it will be in the next 15-16 months that things change, probably after we have the election here and the US have their election. Then we'll know which way we will go."
The former BREA president told Tribune Business: "Right now we're in the trenches trying to revamp and reconfigure ourselves.
"Some of us have gone into other businesses to survive.
"I've converted part of my home into a home office to reduce expenses.
"We're hoping the Government does reduce some of the Stamp Tax to make it a little easier. Business currently sucks. My sales are down 30-40 per cent from last year, both in volume and value."