By NEIL HARTNELL
Tribune Business Editor
A New Providence developer yesterday said he was effectively “waiting for 90 per cent” of the real estate market to “come back”, and suggested it would have benefited more if the Government had imposed “time limits” on its recent tax cuts.
Jason Kinsale, principal of the Balmoral project, said that in contrast to the multi-million development’s first phase, when 60-70 per cent of buyers had obtained bank financing, his last 20 sales had seen “only one or two” use mortgages.
While grateful for the presence of all-cash buyers, Mr Kinsale told Tribune Business the absence of clients with bank financing meant he was effectively selling to just 10-15 per cent of the overall real estate market.
And he conceded that Balmoral had seen “no benefit” from the Government’s moves to cut the top Stamp Duty rate from 12 per cent to 10 per cent, and impose a $50,000 real property tax ceiling, in the Budget.
Instead, Mr Kinsale suggested that the Government put a ‘time limit’ on when buyers could access such incentives, explaining that this would create the “urgency” currently lacking in the market.
“What I’m seeing in the market right now, with the last 20 deals we’ve done only one or two had got a mortgage,” Mr Kinsale told Tribune Business.
“Realistically, that’s 15-20 per cent of the real estate market, and probably 10-15 per cent of the market, that I’m trying to sell to.
“In the first phase 60-70 per cent got bank financing. One thing is that the banks are still lending, but people are still nervous.”
And he added: “We really need to see that person who makes a 10 per cent downpayment, and goes to the bank for 90 per cent, return. I’m waiting for 90 per cent of the market to come back.
“I’m thankful for the cash buyers, but we’re selling into a very limited space.”
As a result, Balmoral, in common with other Bahamas-based real estate developments, has got creative and innovative in a bid to stimulate demand.
Mr Kinsale said the development had now introduced in-house financing products to “make that process a little bit easier for buyers”.
And he also suggested that the Government could further assist the real estate market through introducing more subtle tax breaks/incentives for it.
While applauding the measures announced in the 2012-2013 Budget, the Balmoral said they were unlikely to stimulate potential buyers to make their purchase decision now - the main issue holding back the market.
As a result, Mr Kinsale suggested the Bahamas follow the lead established by nations such as Holland, and introduce lower Stamp Duty rates, for instance, for a short period - stimulating clients to buy now in order to access them.
“To answer your question, no, we’re not seeing a benefit from it,” Mr Kinsale said of the Budget measures.
“I know a number of people are calling for a reduction in Stamp Duty rates across the board, but the most difficult to overcome right now is creating urgency.
“What they could have considered was attaching a timeframe to it. Implement it reduction for nine months. You have nine months to take advantage of the Stamp Tax reduction. It focuses people to make a decision. They did that in Holland and it worked very well. Hopefully, they’ll listen to us.”
Currently, Mr Kinsale said buyers believed they could return in several months’ time, and still get the same deal in terms of price and transaction costs.
Noting that some $30 million had been invested by the developers to-date in Balmoral’s infrastructure and build-out, Mr Kinsale said that between full-time employees, contractors and construction workers, around 100 persons were working at the Sandford Drive site.