The Government is currently reviewing the laws covering foreign investors who purchase second homes in the Bahamas via the International Persons Landholding Act, the minister of financial services and investments told The Tribune yesterday.
Vincent Peet said the pricing of land, particularly in the Family Islands, was causing increasing concern for the Government and it will continue to review its policy.
"We are reviewing the land policy, and we will continue to consult the relevant stakeholders and take market conditions into consideration," he said. Mr Peet said the Government is particularlv concerned that land remained affordable for Bahamians.
He added that on some islands, particularly Harbour Island and Abaco, real estate was so expensive that Bahamian residents either cannot – or find it extremely difficult – to purchase property.
"This is a concern for the Government and is one of the reasons we are reviewing the policy," he said.
The issue of Bahamians being squeezed out of the real estate market by wealthy foreign second home buyers who push the price of land and property out of their reach through strong demand, raised its head at yesterday's Small Island Developing States (SIDS) Tourism conference in Nassau.
One conference attendee from Abaco said: "This is building a whole lot of dissent against the tourist. Prices in the real estate market are escalating so high, they are out of reach of locals. Locals are feeling pushed out by the tourist and foreign investor."
In response Vernice Walkine, the Bahamas' director-general of tourism, said this nation and others in the Caribbean were "almost victims of their own success", as it was their investment-friendly policies that had attracted foreign second home buyers in the first place.
Ms Walkine acknowledged that the issue was "a challenge", with governments in both the Bahamas and wider Caribbean "struggling with it".
She added that the Bahamas' investment-friendly policies had "invited them in", and it was this demand that had driven real estate and property prices upwards.
"How do we balance this foreign investment coming in, the need for foreign exchange to galvanise our economies, with the interests of our people," Ms Walkine asked, admitting that she did not have the answer.
Of particular concern, she added, was how land could be maintained and reserved for Bahamians, particularly beachfront property, which was seen as most desirable and being rapidly gobbled up by foreign investors and second home buyers.
Ms Walkine acknowledged the problem Was likely to get "deeper" as various investment projects continued their buildout over future years. Many developments, particularly in the Family Islands, are heavily reliant on land sales to foreign buyers to generate the cash flows that will finance their investments.
"There are a number of impacts this investor-friendly policy is having on the islands of the Bahamas," Ms Walkine said. " I don't know at what stage we say enough is enough, we're running out of beachfront land, we're running out of property."
The Bahamas has become a 'hot destination' for second home buyers due to its proximity to the US and Florida. There is virtually no beachfront property left for development in Florida, which has forced developers and buyers to switch their attention to the Bahamas.
However, the rush for real estate and property in the Bahamas has caused increasing concerns among Bahamians, who believe this is depriving them of the best land and their chance to own a piece of their homeland by raising prices too high.
While second homes provide a source of revenue for the Treasury via Stamp Tax, and generate employment and incomes for the construction industry, their long-term benefits for the Bahamas are questionable. This is because the home owners often do not spend more than a few weeks per year in the Bahamas, although the economic impact is multiplied if they are leased or rented out to others.
The controversy over rising prices and foreign second home owners is why Prime Minister Perry Christie announced in the Budget that the Government was looking to purchase land in the Family Islands that could be used for housing for low and middle-income Bahamian couples.
On Rum Cay, the rush for land has provoked an unseemly scramble and disputes among foreign land speculators who have questionable title via the estate of late [and allegedly corrupt] lawyer, Effie Knowles.
By CARA BRENNEN Tribune Staff Reporter
and NEIL HARTNELL Tribune Business Editor
