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Unrest near and far hits property market

Market dropped: A review of the real estate market last year, by Rego Sotheby’s International Realty, found that luxury homes sales dropped by half year-on-year (File photograph by Sinclair Realty)

Political uncertainty and unrest at home and abroad has hit the property market, a top real estate figure said yesterday.

Penny MacIntyre, director of Rego Sotheby’s International Realty, spoke after the firm’s review of last year found that luxury home sales dropped by half compared to 2015 — and prices plunged by around a quarter.

Year-end sales volume and total dollar volume, including home, land and commercial sales all fell — ending the 2013 to 2015 increases since the market hit bottom in 2012.

The grim news was revealed in the 2016 review which said that only seven homes at the top end of the market — those with an annual rental value of $126,000 or more — sold last year.

And the average and median sale prices in the luxury sector were about 25 per cent lower at $4.4 million and $3.5 million respectively.

Bermudians made up 50 per cent of the sales in the sector, the others were British buyers.

Ms MacIntyre said the US presidential election and Brexit had affected international sales, while domestic unrest had slowed demand in the Bermudian market.

She added: “I believe that with any election you will find people tend to want to see what the outcome is.”

She added domestic unrest, including transport stoppages and the shutting down of the House of Assembly in a protest against the public private partnership deal to rebuild the island’s airport, had dented consumer confidence at home.

“It makes it very difficult for people to enjoy Bermuda. It certainly has that effect. It’s not just the effect on the international buying audience, who are put off by it to a lesser extent.

“People want to know they are in an environment moving forward — a safe place to be and one that generally doesn’t have unrest.

“Business will go on, people will do what they have to do, but they will just be more cautious.”

Ms MacIntyre added: “As we try to encourage people to think through what’s in the best interests of Bermuda’s economy as well as its residents, we want to make sure we are not moving in the direction where it’s self-inflicted wounds.”

Luxury condominiums — those with an ARV of $25,800 up — provided one ray of sunshine, with average prices increasing by 7 per cent to $910,000 over 2015 prices.

Bermudians made up 80 per cent of the buyers in the sector, with US, South African and Swiss buyers represented in the remaining 20 per cent.

And the average sale price across the residential market remained “relatively unchanged” for the eighth year running at around $1.1 million to $1.2 million.

The year end report said: “While 2016 sales continue to be recorded, we expect the homes available to Bermudian buyers only will not reach the volume of 65 units sold in 2015.”

Sales at the lower end of the condominium market, those with ARVs of less than $25,800, totalled nine in 2016, on a par with 2014 and 2015, but the average sale price fell $57,000 from $322,000 to around $265,000.

A buyer’s market meant that purchasers struck tough deals on discounts on properties that needed upgrading.

Sales of undeveloped land also dropped, down by a quarter compared to 2015.

The residential rental market remained in line with the previous year, with rental activity boosted in part by long-term properties taken up by America’s Cup teams, reducing the overall inventory available for long-term tenants.

The report said rents had consistently fallen between 2008 and 2015 due to an increase in available properties, creating a “tenant favourable market.”

It added: “Properties during that same period often took longer to rent and faced rent reductions to secure tenancies.”

The report said that Devonshire, Pembroke and Paget remained the top choices for two and three bedroom homes with at least two bathrooms.

The highest rental price in 2016 was for a five-bedroom home which went for more than $22,000 a month.

RSIR said that the latest average asking rental rates went from $1,800 a month for a one-bedroom property, through $2,800 for two bedrooms and $4,500 for three bedrooms.

The firm added that permanent resident certificate holders entered the real estate market over the last two years, buying 28 per cent of the luxury homes, which encouraged more sales and supported the overall value of residential property on the island.

The report said: “We hope this year’s America’s Cup in particular provides the much needed short-term and long-term stimulus to our island and the entire real estate industry.”

Ms MacIntyre added: “People want to see Bermuda thrive, from international business to the public sector. If Bermuda does well with the America’s Cup coming up, that will be good for confidence and investment.”