No condos sold, Govt to unveil special financing plans
A year and a half since ground was broken on the Grand Atlantic housing development, none of the new condos has sold while the hotel planned for the South Shore, Warwick site has been put off indefinitely.
Now taxpayers could be on the hook for millions of dollars loaned to Government by Butterfield Bank to pay for building the first phase.
A total of 24 condos were built at the South Shore site so far and
The Royal Gazette has learned GL construction has been paid $12.5 million in accordance with the development agreement.
The 24 condos were ready to move into towards the end of last year.
Developer Gilbert Lopes said yesterday he believed there was “no question the condos will sell”.
He noted they were priced well, brand new and were oceanfront. However, he felt there should be more marketing of the condos.
“They could have a marketing office on site and appoint a realtor to sell them,” he suggested. “There's only been one open house and more than 100 people came to it - there was a lot of interest in them.”
The open house was held last September when potential buyers toured around 16 finished condos.
A spokesperson for the Public Works Ministry said yesterday while none of the condos had sold, there were 18 parties seriously interested in buying a unit, and the Bermuda Housing Corporation was planning to announce a special financing package.
“Special financing terms are about to be revealed for the Grand Atlantic Development,” the Public Works Ministry spokesperson said. “Once the special terms have been finalised, the Minister will provide an update when appropriate.
“In late December, the Corporation was given possession of 24 units and has 18 clients that are working on their financing terms. Each phase typically takes approximately six months to complete the closing on the units and the BHC is currently on its projected schedule.”
The Ministry added a marketing plan has been arranged which was “centred around the special financing packages that will be available to purchasers of the units”.
Government would not discuss the financing of the development, saying only: “The project is on schedule and on budget in accordance with its financing plan.”
Billed as affordable homes, the condos are priced at $495,000 for 1,130 square feet two-bedroom, one-bathroom units, up to $600,000 to $670,000 for 1480 square-foot three-bedroom, two-bathroom units.
Mr Lopes said work was continuing at the site on building 27 more condos in the second phase, which should be ready to move into by summer.
There's an option for a third phase of 47 condos, bringing the total to 78 units. Mr Lopes said GL has not been given the go ahead for that phase yet, but the Public Works Ministry said the plan was still to build the final 47 units.
When asked if the BHC felt the pricing for the condos was too high, the Public Works Ministry spokesperson said: “No, the Grand Atlantic Project is achievable. These units are beach front and they are considered value for money invested.”
BHC general manager Major Barrett St Vincent Dill said last August that around 200 people had expressed interest in buying the condos, and he was confident that the demand was there for “prime ocean view residences” with “a majestic view”.
He said while the condos were aimed at first-time home buyers, pretty much anyone who was interested in buying one could apply: “The target market is middle income earners that could not afford the demanded market rates of the past for two and three bedroom units.”
Explaining the arrangement with the developer and lender, Major Dill had said: “BHC will purchase the condos from the developer and then resell to preapproved buyers.”
In all, Government has said the project was expected to cost $40 million.
After it was announced, then Housing Minister David Burch said Government would spend $40 million to purchase 78 units, but would be “immediately” selling them on to clients of the BHC.
Mr Burch had explained Government was not making an up front cash injection into the project while land owner Larry Swenson said Government was not purchasing any property from his company, rather, BHC clients would be purchasing the homes once they were completed.
Mr Burch added that the development was part of the Progressive Labour Party's pledge to provide affordable housing for Bermudians.
But in the year and a half since then, the housing market has faltered in Bermuda, and condo prices, especially, have dropped considerably with a number of two-bedroom units now on the market for less than $650,000.
The average price of a house (under $153,000 ARV) declined six percent from 2010 to just under $1.2 million in 2011, while the average condo price dropped to $473,000, a 16 percent decline over 2010, Rego Sotheby's International Realty's 2011 figures have shown.
A new 100-room hotel and fractional units was planned as part of the highly-publicised development agreement with Government.
However, Mr Lopes said there's no firm date right now for his company to break ground on the proposed hotel.
Mr Lopes said the climate in Bermuda needed to improve to attract investment in a new hotel. He said he believed potential investors were “being put off by negative messages”, including last summer's transport issues facing cruise ship passengers in Dockyard.