Commercial real estate in prolonged downturn’
Bermuda’s stagnant economy has had a knock-on impact on the island’s commercial real estate market.
Forty commercial properties are listed for sale on the Property Skipper website, some of which have languished on the market for prolonged periods.
The most expensive property checks in at just under $10 million, while some 21 properties are available for less than $1 million.
Real estate agents surveyed by The Royal Gazette said that annual total dollar sales volume is well off the highest yearly figures of the last 14 years.
Scott Powell, an agent with Coldwell Banker Bermuda Realty, said the number of transactions during that period peaked in 2008 at 20, but otherwise annual sales have been in the single digits or low double digits. The highest sales volume during this period, he said, occurred in 2006 at just more than $90 million, while 2013 saw $80 million in sales.
“Sales figures in both number of transactions and dollar volume have oscillated with the low of the market flagged in 2017 with the total number of sales transactions at nine, and selling at ‘bargain prices’,” Mr Powell said. “In 2018, the market bounced back nicely with figures doubling and volume nearly tripling. Having said that, the total dollar volume is still very low compared to 2013.
“As tenant demand has softened over the years, and vacancies have grown, prices have dropped. We find owner occupation more of a motivator than speculation. There are few properties available with rent-rolls that are attractive enough to attract some of the prices being asked. There is scant interest in development or redevelopment.”
Brian Alkon, of Brian Alkon Real Estate, said the market has been in a prolonged downturn. “I personally have sold three commercial properties in the last two years,” he said. “All real estate in Bermuda, commercial or otherwise, dropped in value in 2008 by 25 to 30 per cent. It has been a buyer’s market for the last 11 years.”
Rosanna Cox, an agent with The Property Group, said very little commercial real estate is being sold in Hamilton apart from recent purchases by the Green family, owners of Hamilton Princess and Beach Club.
The Green family’s market activity, Ms Cox said, is “wonderful as they will keep Bermuda looking in good shape”. However, she said the Greens purchased commercial properties “at very low prices [and] it has influenced comparable prices in Bermuda and made it difficult for owners to sell at a price they feel is correct for their property, even taking into account the downswing in prices in recent years, because purchasers can use those sales prices as a comparable reference point”.
Sales activity is price dependent, Mr Powell said. “The real estate market is very much price driven. Therefore, each property is unique, but if a property is priced according to market conditions, it can and does sell quite rapidly and in some cases there are price wars. Days on the market can be protracted depending on location, price and demand.”
An uptick in the commercial property market will only happen when Bermuda’s economy expands, Mr Powell said.
“There is no question that the flood of companies/people looking to Bermuda as the domicile of choice has fallen off substantially from that of ten or more years ago. An uptick will come when we roll out the red carpet in welcoming these opportunities and making their move as hassle-free as possible.”
Ms Cox mirrored this view. She said: “We need to see more overseas companies being welcomed to Bermuda to start up business. Their work permits should be processed faster and [there should be] a lowering of stamp duty on leases which has been hugely raised just recently especially on high end rentals that have a number of years on the lease.”
While he specialises in the residential market, agent Will Kempe of The Property Group said from the outside the commercial market “looks pretty dire, we need a more Cayman like immigration policy and therein hopefully more people”.
• What is on the market
The most expensive commercial property listed for sale on the Property Skipper website is the five-acre Munro Beach Cottages, which overlook the south shore near Port Royal Golf Course in Southampton. The property, which includes a private beach, is listed by Rego Sotheby’s International Realty for $9.95 million.
Rego is marketing the property as a “rare opportunity to acquire an exclusive resort destination redevelopment site”. Zoned tourism and coastal reserve, agent Penny MacIntyre says on the website that the property “offers the chance to develop a truly unique resort and/or condominium offering and currently consists of nine individual units which have recently been refurbished”.
Staying with golf-adjacent properties, the former clubhouse of now-closed Riddells Bay Golf and Country Club is available for $2.85 million. Listed by agent William Kempe of The Property Group, and agent Daina Outerbridge of Rego Sotheby’s, the property having a lot size of 1.93 acres is zoned recreational. Two adjacent cottages are offered for sale along with the purchase of the clubhouse, priced separately at $600,000 and $850,000. Alas, Mr Kempe reports “little to no interest” in the property to date.
In Hamilton, the most expensive listing is 19,000-square-foot Magnolia Place, situated at the intersection of Victoria Street and Parliament Street. Built in 1969, the three-storey building is listed by Barry DeCouto of DeCouto & Dunstan Real Estate for $6 million. The building is configured with storefront/retail on the ground floor with offices on the other two floors. The basement level can be used either as an office or for retail, the agent says.
Second spot in Hamilton goes to Veritas Place at 65 Court Street. Having seven floors, the building is listed for sale by agent Scott Powell of Coldwell Banker Bermuda Realty for an asking price of $4.66 million. Tenants currently occupy more than 6,000 square feet of office space on the fifth and six floors. The second and third floors have not been fitted out, while the fourth floor is fitted out but vacant. Total vacant space available for an owner occupier amounts to 14,582 square feet, the agent says.
The building at 71 Front Street, which houses Crisson & Hind African Gallery, is available through Herb Crisson at Crisson & Company Ltd for $2.99 million. Having 23 feet of street frontage in Hamilton’s retail district, the three-storey building was built around 1930, the agent says. The ground floor has nearly 2,900 square feet of space, while the upper two floors each have approximately 1,150 square feet. The agent says the City of Hamilton Plan allows for retail, restaurants, cafés and similar on the ground floor. The upper floors may be used for office space, retail, residential, or entertainment, the agent says.
At 27 Queen Street, a 6,000-square-feet of space over two floors is available in the Bermudiana Arcade. Agent Rosanna Cox of The Property Group represents the property, which is listed for $2.3 million.
Other commercial properties available in Hamilton include The Rego Building on Reid Street (Brian Madeiros, Coldwell Banker Bermuda Realty, $2.05 million), Reid House (Scott Powell, Coldwell Banker or Ben Rego, Rego Sotheby’s, $1.5 million), the former Flying Chef property at 54 North Street (Brian Alkon Realty, $1.3 million), a combined commercial/residential property on Court Street that houses Bulldogs bar (Ambika Scott, Moongate Realty, $1 million), a combined commercial/residential building at 52 Angle Street that formerly housed Hubie’s jazz club (Brian Alkon Realty, $912,000), and a combined residential/commercial property at 40 Court Street with four commercial units and four two-bedroom apartments (Hasan Durham Realty, $880,000).
In the East End, the building on Kings Square, St George that has housed several pub-like operations over the years, is awaiting buyer interest. Represented by multiple agents, it was first listed for $1.47 million, was reduced to $1.25 million — and is now available for $975,000.
On Slippery Hill, overlooking the town, a purpose-built residential home is listed with Dale Young Properties for $1.3 million. The building has two floors with a staircase along with an electric chair lift giving easy access to the top floor, the agent says. Some of the rooms have a bath en suite and others share a bath. There is a large industrial kitchen, several sitting areas along with a reception.
In the West End, Charing Cross restaurant, on Cambridge Lane in Sandys, is available. Established in 1792, the property is composed of two lots of land with a bar with two bathrooms, liquor store with one bathroom, two finished storage rooms below and a large warehouse, the agent says. There is space for up to 50 cars and a newly renovated two-bedroom apartment. It is listed with Brian Alkon Realty for $1 million.
A mixed commercial/residential property on Watlington Road in Devonshire had an asking price of $980,000, and has a pending offer. Two commercial units include the Devonshire Laundromat, while there are also three residential units on site. The property is represented by Bermuda Longtail Real Estate Ltd.