In Bermuda, real estate is never very far from anyone’s mind.
Homeowners are constantly looking to upgrade their present houses, or
considering buying a larger one — or perhaps a smaller one, in
the case of those of retirement age. Renters save for their first home;
business executives search for the perfect home for their families; office
space is in huge demand, and is filled as soon as it can be constructed;
and non-Bermudians plan to buy a holiday home here, or perhaps a time-share
that will allow them to visit Bermuda every year.
In a small
community such as Bermuda, housing is the number one priority. The pressure
on a growing society to provide housing for all is a constant challenge. The
Government, responding to fears that the escalating price of Bermuda homes
would put housing out of the reach of some Bermudians, has moved to limit the
sale of properties to non-Bermudians. At present, only certain condominiums
are available for sale to foreigners.
Several
factors drive the price of housing and commercial real estate. Among the most
significant, obviously, are growing demand and a limited amount of land. Other
factors include a peculiarly Bermudian habit of setting a price for a house
that is to be sold or rented, and then waiting, sometimes for years if necessary,
to achieve that price, rather than lowering the price for a quick sale. In
a small market, information is widely available and people are well-informed,
reducing the chances of finding a bargain.
In any market, but particularly in a small place such as Bermuda, the
buyer and seller’s best friend is the real estate agent. The Island
is especially well served for realtors. A small number of large, full-service
firms and a larger number of smaller, often one- or two-person agencies
comb the market for available properties.
Desirable properties do not stay on the market very long if they are
sensibly priced, at almost any level. Commercial properties are often
pre-leased before a single brick has been laid. The island’s housing
stock is constantly being upgraded, and sometimes it can be harder to
find a plumber than an actuary in Bermuda!
Commercial property
Bermuda’s business community has grown by leaps and bounds in
the past 20 years. The City of Hamilton, home to the lion’s share
of the Island’s business interests, has been transformed since
the Second World War from a sleepy village into an intense, thriving
world where billions of dollars are routinely handled every day.
Demand for office buildings has been fairly constant for almost a decade,
at a level that exceeds the Island’s ability to add to its commercial
real estate stock. New buildings rise in every corner of the city. The
centre of Hamilton is intensely developed, and new construction has spread
from East Broadway to Pitts Bay Road. Now a new initiative has been announced
that will see the buildings of North Hamilton — “back of
town” — brought into the 21st century.
A few years ago, the demand was for “first class” property.
Today, the quality of office construction is taken for granted. The best
example of this might be Par-la-Ville Road North, which in its time has
been residential, then fringe commercial, and is now almost entirely
filled with multi-story buildings that have turned that part of town
into what some people call “Little Manhattan”. Warehouses
have given way to state-of-the-art office buildings, as modern and efficient
as any in the world.
With new billion-dollar insurance companies arriving in Bermuda with
every disruption of the world supply of insurance, the prognosis for
Hamilton can only be “more, bigger, and better”. Those looking
for significant office space are well-advised to secure space in buildings
as yet unconstructed. Smaller spaces can be found, but the choice is
limited.
Residential property
In a rapidly-developing real estate market such as Bermuda’s,
the property ladder requires a constant supply of first-time buyers.
Rising prices in the late 1990s threatened to derail this process, and
in response the banks loosened their conditions, lengthened mortgage
terms and eased deposit requirements.
The supply
of housing remains a difficult social problem. No society has ever come up
with a solution to the problem of satisfying the housing dreams of all its
citizens, and Bermuda wrestles with the problem daily. Housing is undeniably
expensive — but consider what is required. Everyone wants a dream home
in paradise.
One solution
to this and other social problems, such as traffic, has been the construction
of apartment buildings in Hamilton. Two major projects are complete, with others
on the way. The future of housing in Bermuda, should the current growth rate
continue for some time, must surely be upward, since there is no way for Bermuda
to grow outward.
This will
require a modification in thinking on the part of the younger generations.
With their parents and grandparents living longer, an additional squeeze is
felt. The only answer that will work is for some younger Bermudians to amend
their hopes to include an apartment or a condominium instead of a plot of land
with a small private palace built on it.
That said,
plenty of land remains in the outer parishes at each end of the Island, but
for many, such a move may be a compromise too far.
For non-Bermudian
buyers, a condominium or timeshare apartment represents a sensible and cost-efficient
way to own “a piece of the Rock”. With a seemingly inexhaustible
supply of well-heeled overseas buyers, Bermuda has to be careful not to be
seen to be satisfying the needs of non-Bermudians while failing to meet the
needs of locals. The condominium and timeshare solution achieves that.
Conclusion
Around
the world, real estate has proven to be the best investment a family
can make in the long term, as well as providing a home and a foundation
for the family. Bermuda’s place in the world, and its small size, all
but guarantee the growth in value of Bermuda real estate. Today’s
average home costs $1.25 million, and office space is equally expensive
by global standards — but if you were to ask almost any home owner
or office renter, the chances are that they would say it was worth every
penny.
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