Real Estate and Resort Development in The Bahamas: an introduction
Current Market Conditions
Abaco, Grand Bahama and the surrounding Cays were severely impacted by Hurricane Dorian in 2019. The real estate market in these affected areas has been hard hit and property is being sold at a significant undervalue. There is special tax relief currently available under the Disaster Reconstruction Authority (Special Economic Recovery Zone) (Relief) Order, 2020, to assist with the importation of building materials, real property tax and the sale of real property in these islands. This tax relief is due to expire on 30th June, 2021.
Due to the impact of the COVID-19 pandemic in certain countries, The Bahamas is experiencing a surge in the sale and rental of property in New Providence and certain other Family Islands. Non-Bahamians who purchase a home with a minimum value of $750,000.00 will be eligible to apply for economic permanent residency (without the right to work) and this is particularly attractive to high net worth buyers at this time. There are several multi-unit waterfront projects under construction in New Providence which are slated for completion within the next 18 months to 4 years. These projects are in steady demand as they will offer marina or beach views and access.
The hotel and resort development market remains steady. Projects are continuing and are scheduled to launch in 2022 after the global pandemic normalises. There is a general shift in foreign direct investment from larger resort projects to boutique hotels in the Family Islands with serviced units and amenities to meet the demand for extended occupancy periods.
Unregistered Land System
The Bahamas has an unregistered land system which is based on the conveyancing laws of England and Wales prior to 1925. A seller of land must deduce title for a period of no more than 30 years or title must otherwise commence with a grant or lease by the Crown or a certificate of title granted by the Court in accordance with the provisions of the Quieting Titles Act, whichever period is shorter. Accordingly, it is customary for a buyer to engage a local attorney to search title and to issue a title opinion for the purpose of ensuring that the seller has good and marketable documentary title. If a buyer wishes to obtain title insurance, there are authorised agents in The Bahamas.
Instruments granting an estate, right or interest in land must be lodged for record in the Registry of Records to establish their priority under the Registration of Records Act, 1928.
- The Conveyancing and Law of Property Act, 1909, regulates the sale of land, leases and forfeitures, the exercise of the power of sale by mortgagees and various other matters.
- The Law of Property and Conveyancing (Condominium) Act, 1965 governs the creation and management of condominium property.
- The Bahamas Vacation Plan and Time-Sharing Act, 1999, governs the creation, regulation and management of time-sharing property.
Land Ownership by Non-Bahamians
The ownership of land by non-Bahamians is regulated under the International Persons Landholding Act, 1993, and it will be necessary for the buyer to apply for a Certificate of Registration or a Permit depending on the size of the property and whether the intended use is for residential or commercial purposes.
Local financing is available for non-Bahamians who wish to purchase real estate in The Bahamas, and non-Bahamians who rent or own a residence may also apply for residency status (without the right to work) to facilitate their entry and re-entry into The Bahamas.
Foreign Direct Investment
Foreign direct investment in hotel and resort development, time-share, mixed-use, subdivision or condominium development requires coordination with several government departments. All non-Bahamian investors must apply to the Bahamas Investment Authority (“BIA”), the administrative arm of the National Economic Council (“NEC”), for approval to operate in The Bahamas. NEC is under the direct control of the Office of the Prime Minister and the NEC Board consists of the Prime Minister and several Cabinet Ministers.
Investment incentives and concessions are available under the Hotels Encouragement Act, 1954, to provide for the exemption of customs duties and other tax relief in the construction of hotel and resort projects in The Bahamas. Concessions are also available under the Family Islands Development Encouragement Act, 2008, to encourage development in the Family Islands.