Addressing more than 60 members of the Bahamas Real Estate Association at BREA ﾴs Christmas luncheon at Chez Willie, Central Bank Governor Julian Francis ventured his guess as to “the slowly improving condition of the economy in The Bahamas.” He said, “We can be guided by the experience of our past and would have to be extremely pessimistic to believe that we wonﾴt be out of this in two or three years, discounting any major problem arising out of any major war, such as Iraq .”
He added, “The economy needs that we should do more to stimulate real estate development because the construction/housing sector has always been the one which provides the highest value added to this economy. That is because you have much more domestic input and tendency for money not to flow out than for almost any other investment you can think of in The Bahamas.
“In buying a car, for instance, the entire investment goes out because we donﾴt make cars. Itﾴs in real estate we actually retain the largest part of the dollar.”
He reported, “The Bahamas today and our economy, rely almost 100 percent on foreign investors. Otherwise, we will not be able to maintain the standard of living and lifestyles which most of us have come to enjoy and expect.”
In response to a realtorﾴs question, he replied, “A lot of people think that foreigners should not be entitled to the same advantages as we enjoy in the Bahamas . They think foreigners should be treated worse than Bahamians. I donﾴt understand this point of view at all. I’ve seen Sol Kerzner demonized and the guy has been more responsible than anyone else for the turn around in our economy.”
He suggested, “more can be done with the banking institutions to make money more readily available for property development in the Bahamas . The banksﾴ approach is in a reasonably conservative way. In a really long sweep our economy has grown consistently. We’ve never had more than two or three year downturns, a direct result of the tremendous foreign investment and our ability to capture it.
“Property, you canﾴt take it anywhere. That is a profound statement. “Invest in property and if the economy is growing you will see a picture which is always on average looking more interesting and creating value.
“In solving housing shortages, he said, “maybe we donﾴt have the institutions to do it. Maybe we need to create longer term institutions that specialize in this sector of the economy and which are not subject to the stringent strictures that commercial lending institutions are subject to.
“In my opinion there are real opportunities to move on and benefit by investing in property in the Bahamas . …Often we get boxed into the conventional way of doing things. Look around and see those who have Succeeded are the innovators who have dared to get out of the box and find news ways to fund development.”
He urged BREA to obtain consultants and enter discussions with the Central Bank and other banks to see what could be done. BREA Vice President Garth Buckner, in his thank you remarks, replied ” BREA does have a real estate policy which it has already put forward to both Government and Opposition. I think it is pretty far reaching and has some ideas to move real estate and the Bahamian economy at a faster pace.” He offered a copy to the Governor.
Following a lively question and answer period, Mr. Buckner pointed out, “we have reached a glass ceiling in development because of the inability of essential providers to provide vital services cheaply and efficiently. We need to deregulate these. If you are doing a subdivision and it takes BEC three years to act, you are in a great deal of trouble. If you look at each lot as 15 to 20 jobs waiting to happen, we have lost a lot of jobs.”
In regards to financial services regulations Mr. Buckner noted, “We understand a gun was held to the nationﾴs head. Not only to our head but to the heads of many of our competitors who responded in a much more minimum fashion than we have. It is shown that it really doesnﾴt have to do with the resources available. It has to do with the type of government and regulations. What we do need to look at is our competitors. See what legislation they have in place then have another look at ours and make sure ours is at least as competitive if not more so. There is no question there has been some negative effect and fallout from financial legislation and to some extent throwing the baby out with the bath water. I think we need to look at that and look at changing some of these regulations.”
Gov. Francis said he agreed with several of Mr. Bucknerﾴs points, adding, “The Bahamas is, for a couple of reasons, maybe too conservative. …There are many interest groups which are powerful and which protect these arrangements. Generally speaking, the proof is there that in a deregulated environment, which is free, you have more prosperity.”
The financial leader said, “It is difficult for me to be objective about financial services, ” but couldnﾴt agree that “The Bahamas has done more than any competitor to comply with new regulations.” He did agree, and drew laughter and applause, saying, ” Some of what we have done doesnﾴt work very well, but weﾴve done a lot more than the U.S. . Thatﾴs for sure.”
BREA President David Morley reminded members that license renewals for 2003 are due by December 31. (Only licensed BREA realtors may legally deal in Bahamian real estate.) He asked members to submit e-mail addresses to help the Association cut costs.
