In 1955, the Government of the Bahamas agreed to a request by Wallace Groves, the primary developer of Freeport and a former president of the GBPA, to allow for a number of tax concessions in the city. In return, Groves promised to attract developing commercial and industrial businesses, while also taking responsibility for developing roads, utilities, schools and hospitals.
The agreement freed investors from taxation on capital gains, real estate and private property until, initially, 1985 – a provision that has since been extended to the year 2054.
Aside from the tax advantages, Freeport is strategically placed for business. It’s the largest offshore port to the U.S. and is just 55 miles off the coast of Florida. This ideal location located along major sea-trade routes makes it a hub for international commerce and shipping, which flows through the Panama Canal.
While it is true a lot investors flock to Freeport for the tax advantages, many people are buying real estate on the island because of the area’s “charm, beauty, infrastructure and first class amenities,” says Daniel Lowe, whose company offers a number of real estate services in the area, including sales agency, buyer agency, rental and leasing services, property management and development/ investment consulting.
Grand Bahama is also home to world-class scuba diving operations, three national parks: the Peterson Cay National Park, The Rand Nature Centre and the Lucayan National Park, which boasts one of the longest underwater limestone cave tunnels anywhere in the world.
State of the market
Overall, homes values in the Bahamas softened during the economic downturn, Lowe says, but is expected to rise soon.
“I would say that it is definitely a buyers’ market with pricing around 15% below what it was earlier. We expect pricing to start to go up next year and obviously there are pockets where value has maintained.”
Lowe says that investors could find townhouses in Grand Bahama for as little as US$120,000 and single family homes for US$175,000. Depending on the size and location, these properties typically rent for US$750 to US$3,000. But, as a rule of thumb, rent yields in the Bahamas are on average 7.5%, according to globalpropertyguide.com.
While beachfront properties in Lucaya, an appealing community within Freeport, are getting harder to find, Lowe says there are many lots still to be developed at a fraction of the cost comparable lots would cost in Florida.
For example, Lowe just sold a plot of land with a 124-foot private beach area for only US$70,000.
“Now you don't find that every day, but there still are some bargains,” he says.
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Investment Hot Spots:
Rose Bay, Nairn Centre, Island Beach, North Middlesex, Mossbank
Freeport, Grand Bahama is a magnet for international investment. The reason? The Grand Bahama Port Authority (GBPA) operates a free-trade zone in the region under the Hawksbill Creek Agreement.