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Last Updated: Feb 13, 2017 - 1:45:37 AM |
(Audio HERE) As Jimmy McMillan would say as a slogan when running for Governor of New
York back in 2010 with the political party of the same name: "The Rent
is too damn high!" We feel you Jimmy. We can also say here in The
Bahamas that the price of property is too damn high. Just too damn high!
The price of land has sky-rocketed in The Bahamas over the last 25
years. Many parcels of land today, in middle to lower-middle income
areas without a dwelling on top, can fetch any where from between $70
thousand to $95 thousand dollars. In fact, a piece of property 40 by 80
in a middle-income area in 1985 went for anywhere between $2,500 to
$3,000 dollars. Yup, the generation post 1995 was given a raw deal with
this. A raw and dirty deal.
For upper scale areas, parcels of land can start from $200 thousand
dollars and upwards to $1 to $2 million dollars. This is also without
dwelling on it.
Based on The Bahamas's GDP per capita at a very liberal $22 thousand
dollars (a grossly inflated estimation of GDP per capita as it doesn't
take into consideration the over-saturation of incomes from the top 20%
high-wage earners compared to the bottom 70%), leveraging for land
becomes more than a task. It's almost impossible for average families to
purchase land and a home of their dreams without being in debt to banks
or land developers for years on years.
This, coupled with the perpetual and seemingly ubiquitous soft-services
economy, an economy yet to fully rebound from the ravages of the 2008
economic collapse and financial crisis, we have a dire and particularly
important issue of land-reform that's desperately needed in The Bahamas.
Land reform, or the intention of land reform, has not been missed by all
and sundry. In fact, recent developments based on rulings of two major
and long-standing cases (one of these matters dating back to the early
1980's)for a major land development company in The Bahamas, Arawak
Homes and their associated company, EleutheraProperties Ltd., drove the
critical issue of land reform home to many Bahamians.
Without going into the details of the particular court cases, the major
issue involved a process called "Quieting Titles". A process by which a
person can transfer title of a said property through the Supreme Court
though particular means. Whether through just occupying the land for a
considerable amount of time, or just through being interested in the
land and the original property owners are uninterested in doing any
thing with it, for some reason or the other.
Thus was the case for Eleuthera Properties Ltd. in North Eleuthera and
their claim and subsequent acquisition, through a Supreme Court ruling,
of nearly 2500 acres of land.
A second case, involving the parent company, Arawak Homes, is a more
acute case of Quieting Titles andinvolved the purchase and re-sale of
property that was disputed from the onset. This court case involved a
particularly controversial area in The Bahamas- Pinewood Gardens. An
area where someone put a petition to Quiet the land that was already,
reportedly, purchased and owned by Arawak Homes.
This issue also underscored the need for a proper land registry in The
Bahamas and a revamping of the Registrar General'soffice and
thedepartment charged with insuring the integrity and validityof
property titles.
So, here we have it, one company being both avictim andclaimant intwo
separate court cases surrounding the Quieting ofTitles conundrum,
where the same company came out the victor in both of the court
proceedings.
This prompted the president of Arawak Homes, Mr. Franklyn Wilson, to cry
about the abuses of Quieting Titles in The Bahamas. And we cry with him
too! Really!
All of this, in addition to other matters surrounding the murky process
of obtaining Crown Land from the central government; the lack of
commitment by policy makers and the judiciary in finding a workable,
best-case-solution to Generation Property (with Generation Property
being land handed down from former plantation owners to their slaves
primarily); and another issue of contention, The International Persons
Landholding Act. of 1993 (making land purchases and ownership less
cumbersome for foreigners), which repealed the former Immovable
Properties Act., and is a key reason behind the explosion of land prices
in The Bahamas.
In fact, with current prices taken into consideration with the
Landholding Act of 1993, a Realtor from one of the most prominent real
estate companies, H.G. Christie, lamented on the now 90/10 split in
property sales with the 90% of sales being high-end North American,
Canadian and European clients.
What the Realtor didn't explain during his lamentations was whether or
not this 90/10 split was based on the numbers of individuals or entities
buying property; or, in other words, 90 high-end buyers to 10 local
buyers. Or was it a case of sheer value and profit; For example, 90% of
his profit is realized from high-end buyers as opposed to 10% of his
profit from local buyers.
Explaining what that Realtor means can help a great deal towards
understanding how severe the issue is. It also must be noted that H.G.
Christie specializes in the high-end market in any event.
Be that as it may, without question, all of this hascertainly opened
the market to fraudulent activitywith particularly lengthy and
confusing court cases as the fight forproperty for Bahamians becomes
more heated and contentious as the years progress.
I'm not going to pretend that I have the solutions to all of these
issues. I won't even give the impression that I can give you a workable
solution to any of them. But I would like for my reading audience to
consider this formula for helping with reducing the overall cost for
average Bahamian families. This formula may prove fruitful for the rest
of The Caribbean and Latin America at large, where developing country
stagnation issues and bottlenecks are severe in many instances.
One way in which we can look to reducing the cost of land, without
amending the International Persons Landholding Act., is by policy makers
creating a "race to the bottom" scenario. A scenariowhereby real
estate companies, banks,lawyers, relevant stakeholders along with the
government create an atmosphere through capping fees and interest rates
for land valued and zoned in particular areas.
For example, hypothetically speaking,pieces of land in "Eastern
Estates", deemed as a historically Bahamian area for residences and
businesses, the rates at which the stakeholders can extract service
charges and other processing fees should be capped at a certain value.
A Realtor typically asks for anywhere from 7% to 10% for sales, and the lawyer asks for 2-3% on top of that.
Lets say that a piece of property worth $100 thousand typically attracts
10% total fees from the Realtor, Lawyer, etc. But, if mandated that
sales of $100 thousand should not exceed 5%, or $5 thousand; and sales
for property valued at $50 thousand shall be equal to, but no less than,
11% of the total value of the property. That's $5 thousand five
hundred. Parties involved would actually make more money per value off
of the property at a lower price than they would make selling at the
higher price.
Following the rationale of something of this nature needs to have
several other factors put into consideration. One in particular is at
which rates would it be profitable for a Realtor to sell land at
structured price ranges? Without a doubt discussion and analysis into
the socioeconomic dynamics of property sales should be broached with the
Bahamas Real Estate Association.
A second issue for consideration is with regard to what price range
would this ascending fees scale stop? This can also be easily
appreciated by both policy maker and the Real Estate Association.
Last, but not least and what should be atop the pile for consideration
with both the former, is managing the expectations and the articulation
of what regulations vs. free-market policies can mean for the Real
Estate industry. This is important. Important particularly with regard
to persons that bought land at a higher price, but have yet done nothing
with regard to it because they do not have the financial headroom.
One can see persons lashing back at what would be rightfully presumed to
be government interference with price mechanisms in the industry. But
as it stands now, with all of the prevailing factors surrounding the
Bahamian economy, from flagging employment to inflation to
socio-political behavior that has become injurious to investment and
entrepreneurs, standing around doing nothing while property prices
remain at virtually un-buyable prices hurts all involved.
As it stands now however, property sales under a different policy regime
and arrangement is a better way forward than keeping the new status-quo
of high prices and lack of flexibility for Bahamians looking for decent
and affordable homes and property of their choice in their own country.
Youri Aramin Kemp, is
President and CEO of "KEMP GLOBAL", a Management Consultancy firm, based
in the Bahamas which serves all markets. Our core competencies are:
Business and Project Planning and Design; Project Execution; Market
Researchn and Analysis; and Operations Development. Through our
affiliates, we offer Construction Services; Public Relations Services;
and IT and back office support to small and medium sized businesses.
Email: globalviewtoday@gmail.com
Disclaimer:
The views expressed here are solely those of the author in his/her
private capacity and do not in any way represent the views of
TheBahamasWeekly.com
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