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Property market rebounds as cash sales soar

Growing demand: there was an uptick in the Bermuda property market last year

The real-estate market has bounced back, according to a new report from a major industry player.

But Coldwell Banker Bermuda Realty said the recovery had a long way to go before it matched pre-recession boom years in the property market.

Agency manager Susan Thompson said sales by the firm rose 60 per cent last year compared to 2014, with 37 per cent of the transactions being cash purchases, compared to just two per cent in 2010.

She added the anticipated Island-wide total of 300 properties sold in 2015 was up from the 209 logged in 2012 — the worst year on record — although way below the 714 recorded in 2008.

“The real estate market has suffered tremendously over the past few years,” she said.

“The latest figures are a very promising sign when you look at the confidence people are showing in their spending transactions and that 37 per cent of the transactions were in cash.”

She added: “There may be a couple of overseas buyers in there, but the vast majority of that 37 per cent are Bermudians and people living on the Island — permanent resident certificate holders and spouses of Bermudians.”

Ms Thompson was speaking after Coldwell Banker released its sales market update yesterday.

The report said: “While we cannot confirm that the Island is out of recession, we can support the positive indications of a healthier economy.”

Ms Thompson said: “What has happened is a couple of things — people were not confident in Bermuda and the economy for a period of time and they were holding on to their money.

“For a while it was tougher to get money out of the banks. Now people have seen that prices have gone down over the years: 25, 30 per cent and some have gone down more.

“People are getting back to work and there are people coming to the Island. People were holding onto their money and looking and waiting for the right opportunity.

“Some of these people buying with cash have perhaps sold a property which is higher in value and are downsizing. In some cases, they may have sold a property which adds to the cash flow they have.”

The update noted that sales of commercial property and vacant lots had also gone up, with the highest demand for smaller spaces of between 1,500 and 4,000 square feet.

Ms Thompson said: “People who have bought commercial property have bought for occupation, not investment.

“These are people, once again, who have been prudent. They are looking at growth opportunities or asking why they are renting when they can buy a property which is affordable.

“Demand is definitely on the smaller end. We’re not getting huge demand for large spaces of 5,000 square feet and above.

“But it’s smaller companies coming on the Island, starting their businesses and maybe growing.”

She added there was also a trend of companies opting for smaller office spaces, but that “we are seeing more people coming onto the Island, which is positive because there is more money coming to the Island”.

The report said the average price of a family home now stood at $1.2 million and that, despite a large inventory, the average price for condominiums was $655,000 last year.

It added: “Contrary to popular belief, condo inventory is in fact selling and makes up approximately 27 per cent of total sales.”

The report added that rental demand was strong in Hamilton, increased rental activity in the west, the focus of the America’s Cup, while there had been an overall increase in single-bedroom properties rented across the Island.

“There is still a need for stand-alone, three-plus bedroom family home inventory and our four dedicated residential rental representatives have reported an increase in rental activity in the western end of the Island,” noted the report, which also recorded an increased Bermudian level of interest in the luxury end of the market. About 60 per cent of homes sold for more than $2 million going to Bermudians.

The update predicted that 2016 will see continued momentum at the top end as Coldwell Banker staff are at present negotiating new sales and preparing to close on six luxury homes.