By NEIL HARTNELL
Tribune Business Editor
The Government’s seeming intent to double the permanent residency investment threshold by March 1 was yesterday branded “unacceptable” by a Bahamian developer, as it gave the market too little time to adjust.
Jason Kinsale told Tribune Business that “if we lose one investor because of this it’s one too many”, especially in an environment where the Bahamas’ creditworthiness had just been downgraded to ‘junk’.
The developer, whose projects at ONE Cable Beach and Thirty|Six on Paradise Island are targeted at the market that will be most heavily impacted by the Government’s policy change, said there had been no official confirmation of when it will be implemented.
However, Elcott Coleby, the deputy director of Bahamas Information Services (BIS), appeared to confirm that the Government plans to implement the change within two months of the New Year.
He wrote in his regular weekly news round-up: “The Government is targeting March 1, 2017, as the effective date for the increase in the minimum investment threshold from $500,000 to $1 million for foreigners wanting to be fast tracked to become permanent residents of the Bahamas.”
Mr Kinsale told Tribune Business that the apparent implementation date had left him lost for words, given the potential negative impact it would have on his projects and the wider market.
“If it is March 1, it’s definitely not enough time, and it’s going to send a few alarm bells into the financial services industry as well, as they need time to advise their clients and make them feel comfortable,” he explained.
“It’s just too soon. It’s not acceptable. I don’t know what to say. It’s just unnecessary, and if we lose one investor because of this it will be one too many.”
The Thirty|Six developer, in particular, questioned what would happen to sales in process – but not completed – by March 1.
Mr Kinsale and leading realtors, such as NAI Bahamas Realty’s Larry Roberts and Damianos Sotheby’s George Damianos, have all previously warned via this newspaper that plans to double the real estate investment threshold for accelerated permanent residency consideration threaten to cost this nation significant investment and business.
The ONE Cable Beach developer estimated that the residency market accounted for 50 per cent of the Bahamas’ current real estate business, with many purchases occurring at price points between $500,000 to $1 million.
And Mr Damianos, Damianos Sotheby’s International Realty’s president, suggested that 60 per cent of active real estate projects would be negatively impacted by the policy change.
This means the Bahamas can ill-afford to destabilise this market segment, which is what the Government’s planned increase to the ‘fast track’ threshold threatens to do.
Markets and investors are always undermined by uncertainty, and the Government’s constant tinkering with the tax code and real estate market – as in this case – frequently impact economic activity responsible for generating its tax revenues.
“You never know what’s next,” Mr Kinsale told Tribune Business of the likely impact on developers and investors.
“We need every possible tool in our tool belt to sell these days. Why make it harder, unless there’s some unknown reason we’re not aware of.”
Mr Kinsale added that there had been no consultation with impacted industries over the proposed change in the permanent residency threshold, which this newspaper revealed is being driven by the Ministry of Financial Services.
“We haven’t got any official confirmation from the Government whatsoever,” he said of the March 1 date. “We’ve written to them and got no response.
“I just don’t know what’s happening. They haven’t made any official announcement of any dates; just nothing.”
Mr Kinsale previously called for the threshold to remain at $500,000, but said that if the Government remained resolute in changing it, there needed “to be a notice period and grandfathering period”.
He added that any notice period should last “at least one year”, with existing projects and developments where sales are already underway allowed to continue marketing under the old policy.
Tribune Business earlier revealed that the proposed change to the permanent residency threshold did not receive unanimous Cabinet support or approval.
Developers and realtors are especially concerned with both the potential change and how it is implemented, given the importance of the second home market to their industries and the wider Bahamian economy.
With the Bahamian segment relatively flat, the second home sector has been one that realtors have been able to rely on to generate sales momentum over the past few years.
With 80 per cent of real estate sales inventory priced below $1 million, they fear that any change - especially one that might be perceived negatively by foreign buyers - could drive a significant chunk of the market to other jurisdictions.
And a ‘drying up’ of such buyers would produce wider ‘ripple effects’ in the Bahamian economy, reducing work for the construction industry and a variety of other trades whose business is tied to the real estate and second home markets.