Developer, 3D architect, Steve Bell.
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There is a new “boom” beginning to emerge
from the almost cataclysmic collapse of the Caribbean property market back in
2007-2009. It appears the region, particularly the Bahamas, is experiencing
another chance at prosperity with the help of some very strong allies.
There has always been a strong attraction
to the region for its climate, beauty and absence of income and corporate
taxes, but like most tourist and lifestyle driven regions it suffered badly
when the world markets withdrew their cash to focus on pressing issues at home.
The dynamic Caribbean economy was “left holding the bag” on new and proposed tourist
driven and infrastructure projects. To further complicate matters the USA implemented
an aggressive policy of financial regulations, resulting in little to no
funding being made for new business and property development not only in the
USA but in the Bahamas as well.
So for a country that survives off the
business, trade and tourism generated from larger world markets what options
are left?
Enter the Dragon…
China, with its exceptionally deep pockets
and overwhelming workforce has presented itself as a partner that is extremely
interested in co-developing existing assets. The investment into Baha Mar on New
Providence and other ventures is drawing the Bahamas’ interest away from USA
and Canadian partners and into the fold of what is becoming the world’s new
financial powerhouse. The location is prime for the Chinese, right next to the
USA, and the timing is perfect for expanding their influence both financially
and politically.
While it may appear that Chinese expansion
is a new development, those experienced in their way know that they are not
brazen investors and think extremely long-term. There is a much deeper story
that begins and may culminate on Grand Bahama. It goes back to the 1999 strategic
buy up, and estimated $1B investment, by Hong Kong’s Hutchison Whampoa Limited (HWL) and
is enhanced by some new and quite timely developments planned for the island.
While the previous economic cycle saw the
Bahamian capital Nassau and nearby Turks & Caicos grow, Grand Bahama had
almost no activity. In fact it would appear that the entire island was trapped
in time, with no movement forward, fresh developments, ideas or refurbishments.
The entire island had essentially vanished from the radar –which is
significant considering it used to be the “hottest” place in the region.
A hub for tax sheltered corporations, a
mecca of gambling, and a playground for the rich and famous, Grand Bahama
appeared to have everything going for it. Its unique “corporation within a
country” structure of the Grand Bahama Port
Authority (GBPA) attracted big names and the big money that came with them.
Natural beauty, superior infrastructure, and a friendly environment for
business and play made it irresistible to many.
Where did it all go wrong?
Many believe that the unexpected death of
Edward St George in December 2004, a driving influence and co-chairman of the
GBPA, was when everything froze. It would appear that the force that was to
take Grand Bahama through the looming economic boom had been removed and there
was a leadership vacuum. The remaining shareholders, Sir Jack Hayward, the St
George’s financial partner who passed away this month, and St George’s children
effectively operated in a caretaker mode rather than entrepreneurial. To
compound this there was a prolonged bitter and very public ownership battle of
the GBPA that could be blamed for the departure of planned investment and the
soiling of the “Freeport” brand.
Add a couple of severe, unexpected
hurricanes to the mix and the whole island became more than financially
stressed – it was emotionally devastated.
Meantime, New Providence, the location of
the Bahamian capital Nassau, continued its growth reaching a level of population
per square mile that is extreme in regional terms – more than 4100 people per
square mile based on 2010 data compared to 98 per square mile on Grand Bahama.
“Too much too fast” has New Providence suffering from an increase in crime,
underworld activity and the general symptoms of overcrowding such a small
island.
A general consensus among Grand Bahamians
is that the current and previous governments concentrated only on New
Providence, taking a “hands off” approach to Grand Bahama and leaving the
management to the GBPA. The GBPA has certainly garnered the lion’s share of
attention despite not doing much to attract it. Either way it appears that most
Grand Bahamians concentrate more on blame, and the longing for the “old days” when
Freeport had celebrity status, than moving forward. Regardless of opinions,
both the GBPA and the Bahamas government, while cautious of inviting another
2007-2009 situation, are eager to facilitate investment if it comes their way.
As of today it appears that nobody has
picked up the reigns and what appears to be ignored by many, excepting the
Chinese and a few others, are some unchanged and undeniable facts regarding
Grand Bahama:
·
A tax sheltered and tax free
zone that is just miles away, commuting distance, from the USA;
·
Underutilised and high-quality
infrastructure;
·
Natural beauty and attraction;
·
An existing base of high-profile
international corporations;
·
The GBPA is keen to facilitate
new ventures and has a structure that is very attractive to international
business.
HWL’s quiet, calculated, and mostly ignored
moves are now beginning to show what may be the genius in a long-term strategy
that stretches from the Bahamas to the opposite side of the world.
While being the outright or partial owner
of significant assets on Grand Bahama, such as the port facilities, airport,
Our Lucaya and Devco, their influence has been steadily growing in other
regions. One of the most significant for Grand Bahama is not even located on
the island but in Panama, and this could be one of the most clever strategic
moves that the Hong Kong based magnate Li Ka Shing, the indirect owner of HWL,
has made.
The Hong Kong conglomerate’s vast holdings
also control the ports either end of the Panama canal, a predictable move for a
company that clearly has an interest in ports, which is now climaxing to a
master stroke as the widening of the canal approaches completion in 2016. The
expansion allows for significantly larger ships to pass through, negating the
need for many to unload on the west coast of the USA and transfer cargo to smaller
ships, rail and road shipping to deliver their containers to the east coast. In
effect they have secured a short cut that provides immense convenience to Asia
and other parts of the world for shipping to America’s east coast population
and their ever-growing appetite for consumerism.
What most people overlook is that Grand
Bahama is HWL’s end of the line distribution hub for that network, one that
comes online very soon and is set to service a USA economy that has renewed
vigour. HWL’s understated actions of refurbishing assets on the island and
expanding facilities now appear to be quite premeditated and will undoubtedly
increase growth and wealth on the island through business and migration.
This doesn’t seem to have gone unnoticed by
everyone, with a great deal of interest being garnered by the island in both
business and property terms from international interests, and while many have
considered and run feasibility studies on the island few have committed to
proceeding until now. It appears that 2014 was the year that some new players have
chosen to make their run on the island.
The most significant development proposed
is by Lawrence McDonough’s Kylin Group, with a $6.3 billion project to the
island’s east. It proposes an entire new set of self-sustaining facilities and
infrastructure including eight hotels, a casino and a cruise ship terminal.
Word is that their funding, also from Chinese sources, is in place and they are
awaiting approval by the government of the Bahamas.
Steve
Bell, the lead on the Ascot Grand Bahama
project and a contributor to many of high-end global developments is
collaborating on a fully owned and unencumbered site central to the current hub
of tourist and lifestyle on the island. His proposed 18-acre, 232-unit luxury
residential-resort is positioned to attract the second and holiday
homebuyers
that seek elegance and privacy yet with infrastructure and
services. Having now obtained approval in
principle from the GBPA, Mr Bell, a global property specialist with a flair for
3D and design,
and his team are
moving steadily forward with the development and anticipates activity on site
this year.
A few large assets on the island have been
in limbo and disused for some time, the most prominent being the Xanadu Beach Resort,
currently held by Mario Donato. The rich history of Xanadu alone brings a
certain quality to this site, with stories of the famous “Rat Pack” using it as
a place to party and of former owner Howard Hughes using the entire top floor
as his residence, spending his final years there. Kyle Houts, USA based entrepreneur, is awaiting
government approval for the purchase of the entire property and is eager to
bring it back to its former glory.
The Xanadu sale follows the recent sale of
other significant Donato assets that are now set to reopen.
There has also been significant movement on
the purchase of Port Lucaya, the island’s hub of tourism. Also awaiting
government approval, the UK investor-developer is keen to revitalise the
property.
Business and development will always find
its own level, and there is a wave of opportunity building behind Grand Bahama,
which is rapidly gaining attention despite its apparent obscurity. HWL’s long-term
strategy, the overwhelming factors in the region and the steadily building
economy may just be the ride that these new “surfers” are looking for.
Steve Bell is a specialist in 3D for architecture, design and analysis with a solid background in property development, construction and design. Combining digital artwork with the web and video, Steve Bell brings small and large developments to life well before they are built, analysing data/design, improving overall awareness and enhancing pre-construction sales results.
Based previously and experienced in: Australia, Singapore, Dubai, London, Saudi Arabia, USA, and The Bahamas.
Past and current international clients include: Porsche Design Tower; Trump Sonesta; Four Seasons; St Regis; Ritz Carlton; Humana; Atlantis; Royal Commission for Jubail (KSA); CBS Sports Channel; HGTV; W Hotels; WCI Communities; US Army Corp of Engineers; Turnberry; The Pearl Qatar; El Ghouna, Egypt; Multiplex; Australand; Baulderstone Hornibrook; AV Jennings; Forrester Kurts; and Meriton.