Island opportunity as wealthy flee cities
Bermuda could benefit from the trend of wealthy people fleeing cities in search of places less impacted by Covid-19.
Real estate market spikes in places such as the Turks & Caicos Islands and upstate New York have been driven by rich city dwellers and remote workers seeking to get out of the city.
Penny MacIntyre, a partner at Rego Sotheby's International Realty, said she was seeing such interest from wealthy families, presenting economic opportunities for the island.
“We have a number of inquiries from ultra-high-net-worth individuals and families looking to rent or buy internationally available property in Bermuda to provide a quality of life away from the congestion and higher exposure in urban and city environments,” Ms MacIntyre said.
“A number of international families are deciding to also travel less and have selected one destination this year to stay put for six months or up to a year, to avoid the resurgence of Covid-19 cases in their home town and usual vacation spots like the Hamptons.”
While some have expressed concerns about the potential harm that an increase in remote working could do to local employment levels in the island's international business sector, the flipside is that the island could be an attractive base for remote workers relocating here from elsewhere — if rules were to allow it.
For a local real estate market that was going through a slump even before Covid-19, the trend presents an opportunity that should not be missed, Ms MacIntyre believes.
She said: “I consider attracting wealthy remote workers as not only beneficial, but also essential to shifting the tide on the year-over-year volume of vacant commercial spaces and residential rental inventory on market here.”
Others also see opportunities, including Charles Gosling, the Mayor of Hamilton, who urged the Bermuda Government to look into the economy-boosting possibilities with haste.
“There is an opportunity for Bermuda if we can give them something that allows us to get these people here,” Mr Gosling said.
“They would not be engaging in local business at all, they would be entirely exempt, so there should be no issue there.
“But it would help us to bring in added numbers to help support Bermudian businesses. Some may look for some temporary office space as well, if we can get those people down here.”
Brian Madeiros, president of Coldwell Banker Bermuda Realty, said Bermuda could be attractive to some high-net-worth remote workers, given the shift from the cities to the suburbs, the island's climate and beauty, and its proximity to New York and Boston.
He added that there were more than 40 homes on the market for sale which overseas buyers can purchase, worth more than $300 million in total.
“If a fraction of these homes sell, attracting licence fees of 8 per cent, this would be a significant and a much needed foreign currency contribution to our tax base,” Mr Madeiros said.
“Very often many of these homes are extensively refurbished after they have been acquired thereby creating employment opportunities in the construction-related industry.”
Wealthy residents' year-round purchases would also provide a boost for small and medium-sized businesses which employ 60 per cent of the community, Mr Madeiros added.
He said his firm had noticed an increase in inquiries and viewings from overseas buyers even before the pandemic and that the trend had picked up again since shelter-in-place.
Mr Madeiros added: “We need to determine exactly what our global market consumer wants around the current remote-working shift and decide if our community wish to authentically embrace this opportunity.
“There are a lot of good ideas being fed into the Economic Advisory Committee; it's just whether or not the Cabinet want to pull the trigger on some of this stuff.”
Toronto-based Stephen Beatty, global infrastructure chairman for KPMG, said Bermuda has a reputation as a safe place with good healthcare services: key considerations for international remote workers seeking a new base.
In an interview with The Royal Gazette last month, Mr Beatty, said the effectiveness of videoconferencing technology during the pandemic would probably cause businesspeople like himself to clock up many less air miles in future and to be based where they most wanted to live.
Mr Beatty said: “I could see a thousand Steve Beattys wanting to move their families to Bermuda — if there were changes in the law around people who want to make Bermuda their home.
“I could see that having a major impact on the island's economy.” Ms MacIntyre agreed an influx of new wealthy residents would cause an increase in work and employment for local contractors. In the longer term, it would provide broad-based and recurring economic benefits, she added.
Ms MacIntyre said: “Their presence means using taxis, dining at restaurants, using hair salons or barbershops, buying a car, grocery shopping, hiring landscapers, housekeepers, architects, general contractors, shipping goods in, retail shops, hotels, charities, etc, which all helps to support multiple facets of our long-struggling local economy.
“All those activities fuel fees and taxes for our Government that in turn helps Bermudians and their families.”
In the US, desirable areas close to cities including San Francisco and New York have seen an increase in real estate transactions and prices.
The New York Times reported that about 420,000 people left New York City between March 1 and May 1, about 5 per cent of the population. In the wealthiest parts of the city, the population fell by about 40 per cent.
The Turks & Caicos saw a spike in sales of single family homes and condominiums during the first quarter, despite the pandemic. The Turks & Caicos Government added incentives for buyers by offering a 50 per cent cut in stamp duty, waiving custom duties on construction materials and cutting planning fees by half.