Demand for stand-alone houses is strong, but pricing for condominiums slipped last year as growing inventory gave buyers plenty of choice.

Coldwell Banker Bermuda Realty market update’s described the overall market as “relatively buoyant” in the latter stages of last year.

However, it added that the commercial real estate market is facing major challenges, with more than 500,000 square feet of vacant or underused office space on the market.

The realtor found that condominiums represented 26 per cent of closed sales during 2017, while 30 per cent of all purchasers were first-time buyers.

“Even with a high percentage of first time buyers, Bermuda’s entry-level condominium market is anything but robust,” the report stated.

“Supply continues to increase and sellers will be confronted with longer than average days on market if the property is not correctly priced.

“Our market analysis suggests that the average price of condominiums sold in 2017 continued to decrease to around $650,000. Price, perceived value and downsizing, continue to be the major contributing factors from a demand perspective.”

The realtor reported that the proportion of cash buyers remained high at around 40 per cent — compared to well under 10 per cent before the 2008 global financial crisis.

Demand for stand-alone homes with a price tag of up to $2.5 million in sought-after neighbourhoods remained “healthy”, Coldwell Banker said.

“Recently, a correctly priced executive home received multiple offers and went into contract in less than 90 days after coming on the market,” the report stated.

“Demand emanated from both Bermudians and Permanent Resident Certificate holders with the primary motivation being to purchase a home for their growing families.”

The inventory of homes available to overseas buyers stood at a record high of 40.

“Although we have noted an uptick in demand from overseas buyers since mid-2017 onwards, our market would benefit from the presence of more buyers as supply currently exceeds demand,” Coldwell Banker said.

With a glut of office space still available on the market, the realtor called for a fresh approach to try to attract more business to the island.

“Property owners will be forced to explore alternative uses in this competitive market or respond to vacancy challenges by offering rent-free fit out periods or competitive market pricing,” the report stated.

“There are a number of large office buildings on the market at prices reflecting great values, especially for potential owner-occupiers.

“As the City of Hamilton provides the infrastructure for our economic engine it would be advisable for policymakers and economic growth stakeholders to continue to aggressively explore the global market to identify real opportunities for potential job creators to relocate to Bermuda.

“Maintaining the status quo is not an option if we wish to see more investment in the city, additional taxpayers and new consumers.”

And the report outlined a cautiously optimistic outlook for the months ahead.

“We predict that 2018 will mirror last year in terms of performance within the various market segments; although, we expect a potential uptick in the sale of stand-alone luxury homes up to $2.5 million, providing this inventory type is appropriately priced.

“Our ageing population will continue to explore downsizing options as they plan for their long-term accommodation requirements. As new luxury resort and residential properties are completed and introduced to the market, we anticipate an increase in sales towards the latter part of 2018.”