Few locations boast quite the same “license to thrill” credentials as the Bahamas. James Bond author Ian Fleming coaxed silver-tongued Sean Connery to the then little-known island paradise of New Providence in 1965 for the making of Thunderball, the fourth in the celebrated 007 film series. By 1970, word had leaked out about the barefoot luxury attributes of this 700-island archipelago, with a record one million sun-seekers jetting in to feel the sand between the toes for themselves.
These days however, it isn't just a taste of the tropical high life that’s stoking investor interest in this former British colony located 180 miles off the Florida coast, but a favourable tax regime. The islands’ zero rate income tax, capital gains tax, wealth tax and VAT is clearly luring wealthy foreign investors looking to avoid spiralling tax burdens overseas.
“Stable government and sovereign status are among the country’s strengths as an international financial centre,” says Ellison Thompson of the Bahamas Tourist Authority.
“Tourism is the country’s primary source of income, with 50 per cent of GDP coming from the hotel and resort industry. But residency status, now granted to qualifying owners of property valued in excess of 500,000 Bahamian dollars, is enticing foreigners, many soon-to-be-retirees, to put down permanent roots. Direct British Airways flights five days a week from the UK to Nassau are also boosting British traffic, with a $400m airport extension to accommodate additional long-haul airlift likely to see Cathay Pacific and Virgin Atlantic opening up new routes.”
Like many offshore idylls, the islands are still feeling the lingering effects of the global recession, with a fall-off in real estate values since 2008, although local realtor Heather Peterson feels that today's more "realistic" pricing – 15-20 per cent below previous thresholds – is actually helping to bolster investment. “Five years ago over-inflation defined the premium end of the market. Now, buyers looking to purchase in established locations such as New Providence and Grand Bahama are finding there’s some room for manoeuvre on price," she says. "The introduction by the Bahamas Real Estate Association (BREA) of the Multiple Listings Service (MLS), an online database of all listed properties, has also fast-tracked the property search process for foreigners who can now browse all available homes in a single location online.”
Further signs of an uptick are the rising levels of interest for homes in the lesser-developed outer islands, just a short hopper flight from Nassau, with the scenic Abacos chain leading the way. Populated by the descendants of British loyalists fleeing the United States during the War of Independence, these low-lying coral islands lined with shallow bays are rich in history with plenty on offer beyond lazy days on the beach.
Property choice is diverse: traditional clapperboard cottages and characterful townhouses nestled alongside contemporary custom-build villas, with a sprinkling of small-scale resort communities. An Abaco realtor adds: “Overseas buyers thinking about relocation or retirement tend to go for stand-alone properties in one of the residential ‘hubs’ such as Marsh Harbour or Hope Town. Entry-level prices for a two-bed townhouse start around $300,000.
"Second-homers with rental returns in mind prefer the hassle-free set up of a managed resort such as Abaco Club on Winding Bay or Schooner Bay in South Abaco. The year-round season means net yields of around eight to 10 per cent are achievable, with a domestic and foreign visitor base to tap into.”
WHERE TO BUY
Schooner Bay – Great Abaco. Launched in spring 2012, this 330-acre harbour front community on the easterly fringes of Great Abaco has already acquired a cosmopolitan ownership base, with residents from the US, Britain, Germany, Canada and Sweden. The heartbeat of the community, a 14-acre working harbour, allows homeowners to have a small boat mooring, with full marina services open to fishing boats as well as visiting vessels. A choice of bespoke designs gives individuals plenty of input into the aesthetic of their home, although the overriding architectural theme remains true to the Bahamian vernacular – clapperboard exteriors, cedar shingle roofs, shuttered jalousie windows, and wraparound verandas which make the most of the cooling island breezes. Plots range from $180,000 for a two-bedroom cottage harbour village lot to $2.5m for an acre beachfront plot, with an average build time of around eight to 10 months.
Baha Mar – Nassau. A joint venture between the Bahamian and Chinese governments, Baha Mar Resort, located on scenic Cable Beach on the north shore of New Providence Island, has just released its first tranche of luxury townhouses, land parcels and boat moorings for purchase. Scheduled to be completed in 2014, this 400-hectare, US$3.5 billion development will include four new luxury hotels, 307 private freehold residences and a generous portfolio of leisure facilities including two brand-name spas, a tennis centre and an 18-hole Jack Nicklaus Signature Golf Course. Prices range from US$1.1 million for a one-bedroom residence to US$14.6 million for a four-bedroom detached beach villa.
Abaco Club – Winding Bay – Great Abaco. Formerly owned by British entrepreneur Peter de Savary, this hilltop resort is attracting a high ratio of golf-playing purchasers thanks to its 18-hole Scottish links designed by Tom Mackenzie and Donald Steel – a demanding course of grass-topped sand dunes, deep, sculptured bunkers and wide swales of native grasses. Golf aside, there’s an abundance of leisure activities, including windsurfing, deep sea fishing and diving, as well as tennis and a spa. Two-to-four-bedroom turn-key cottages are selling for $1.2m to $3m. Averaging 2,000 square feet, cottages have pitched ceilings, stone tile baths and spacious sun decks. Deeded fractional ownership offers a one-bedroom apartment for 10 weeks of the year in perpetuity from $105,000.
Buying in the Bahamas: key facts There are no restrictions on foreigners buying freehold property in the Bahamas. Registration fees are between £95 and £375. Legal fees range from one to 2.5 per cent of the property purchase price. Stamp duty ranges from eight to 12 per cent and is usually shared equally between vendor and buyer. There is no inheritance tax, Capital Gains Tax (CGT) or wealth tax.
Foreign owners can apply for residency status. Preferential consideration of applications for permanent residence is given to investors and to qualified owners of residential property valued in excess of $500,000.