In many ways, Bermuda has always occupIed Its own prIvIleged nIche. Geographically speaking, there is the island’s isolated position in the Atlantic that is at once delightfully removed from the mainland yet just a short hop from the east coast of the U.S. and Canada (and with direct connections to London, too). This destination offers an absolute escape that is not nearly as remote as it feels. In a similar way, Bermuda has stood pleasantly apart from the chaos of the luxury real estate market that has plagued mainland America and Europe in recent years. And in 2012, things continue to make an encouraging upswing, continuing a trend of good news for both international property owners in Bermuda and the many people abroad who covet their own inroads to the island’s privileged lifestyle. “It’s obvious that international purchasers are now looking at Bermuda again as a good buy in the luxury end of the market,” says Buddy Rego, president of Rego Sotheby’s International Realty, the island’s oldest real estate company, which specialises in luxury properties. “That includes vacation home buyers and those coming to Bermuda for residence purposes. People are seeing Bermuda as a good investment again.” Rego says that activity has been significant in the upper end of the luxury real estate market on the island in late 2011 and early 2012, a “marker which is indicative that those buyers who are discerning enough have determined significant value in the Bermuda real estate market.” For non-Bermudians buying and selling property in Bermuda in 2012, the luxury market has seen both an increase in selling price and an increase in turnover, says Rego, with all signs pointing to greater confidence in the destination. A Privileged Place It’s fair to say that Bermuda ranks right up there with the world’s most prestigious and pleasing places to live. The island’s name inspires images of a life lived well and graciously — and for good reason. Not quite English, not American and far from Caribbean, Bermuda is that rare destination that blends island style, cosmopolitan class and natural beauty. You can meet friends for afternoon high tea with scones and clotted cream in a historic island hotel, follow up with a spot of scuba diving on a historic wreck or snorkelling a crystal-clear bay, and wind down your day with a tropical dinner of sweet spiny lobster overlooking the ocean — such is the diversity of a day in Bermuda. Located 640 miles off the coast of North Carolina in the clear waters of the Atlantic Ocean, this English-flavoured archipelago exudes charm like nowhere else. And whilst Bermuda sports tropical palm trees and warm turquoise waters, it has a temperate side, too. Come January, the cool winter nights even allow for a cosy fire on the hearth. The champagne-pink beaches, emeraldgreen golf courses, deep-sea fishing and limitless recreational opportunities set Bermuda apart from the hectic mainland on either side of the Atlantic. Even the islands’ distinctive architecture — typified by pastel cottages — exudes serenity. Home, Sweet Home If you wish to lay claim to your own piece of paradise, Bermuda is a destination for those who dream big. The list of people who have purchased a piece of Bermudian real estate reads like a who’s who of business, politics and Hollywood, and includes billionaire H. Ross Perot, actors Michael Douglas and Catherine Zeta-Jones, New York Mayor Michael Bloomberg, Italian Prime Minister Silvio Berlusconi and a cache of power players from the world’s major companies. Seductive aesthetics and vibrant culture aside, Bermuda’s stable, healthy real estate market is proving to be a tempting lure for more and more overseas buyers — particularly when it comes to real estate at the upper end of the luxury market open to purchase by non-Bermudians. “I am encouraged,” says Rego. “After a period that was quite flat, from 2008 to 2010, I think we’re back keeping pace,” he says. “There is a general uptick in luxury market activity in the world right now, from what I am hearing from other Sotheby’s agents — and we’re feeling that in Bermuda, too. “The key issue is that Bermuda real estate values can be considered as fairly steady — originally, they probably fell in value to the tune of only about 25 percent of what the North American market suffered,” explains Rego. “Property values here did in fact hold their own, vis-à-vis the rest of the world. And they continue to.” In fact, luxury home and condo sales were so strong in Bermuda in 2011 that there appears to be a pent-up demand at the upper end of the market, making the prospect of owning a multi-million-dollar home in Bermuda more appealing for the segment who can afford it than it’s been in the past several years. “Going into 2012, we actually have buyers now who are waiting for the right property and are ready to purchase — willing and able buyers who are pending purchasing property here,” says Rego. “And in the range of properties now available, we’re looking at a value of $3.5 million to $45 million for homes and between $800,000 and $5.4 million for condominiums.” According to Rego, the 2011 luxury home market saw the number of homes sold increase by 30 percent over the same figures in 2010. At the same time, average sale prices of luxury homes increased by 15 percent in 2011 over 2010, from $6.4 million to $7.5 million. “A lot of people have been waiting for what they see as the bottom of the real estate market,” he explains. “And now they are feeling if we’re not at the bottom, we are close to it. So it gives them more confidence to buy.” On par with the importance of that renewed confidence is Bermuda’s perennial appeal. “Bermuda remains a very good destination for vacation and business,” says Rego. “The appeal of that still remains. For non-Bermudians, it’s still a great vacation destination because of its proximity to Europe and the east coast of the United States. And the quality of the product remains — Bermuda is still an exceptional place to buy.” Indeed, sales to international buyers in 2011 were up 40 percent over 2010, with international buyers representing a total 56 percent of luxury homebuyers in 2011. The country’s condominium market also has been very strong, with an increase in the number of sales and average sale price in 2011 over 2010. In 2011, 69 luxury condominiums were sold to international and Bermudian buyers — up from 64 units sold in 2010. For sellers, the perpetually limited supply of purchasing options for non-Bermudians (a regulation that was put into place to ensure Bermudians can afford home ownership) works in their favour, adding to the exclusivity of ownership. As of press time, there were 16 houses available for non- Bermudians to purchase on the island and 33 condominiums available for full ownership. At the same time last year, there were 20 houses available for purchase. “Those are your only options for buying right now in Bermuda as a non-Bermudian,” says Rego. Growing Market Whilst the real estate market is always vulnerable to upheaval, Rego feels encouraged by Bermuda’s position. “There are people who are generally smart investors in the long term who might consider this to be a great opportunity — people who feel the market has taken enough of a hit, and this is a good time to get in.” Rego says he feels buoyed by recent patterns and looks forward to seeing what 2012 will bring, adding that early signs have been encouraging both in interest from international buyers and buzz around the island. “There is new development potential, too, with hotels that are moving slowly towards the front burner, and all of that will bode well for Bermuda,” he says. “And whilst tight credit and the global recession will continue to have their effects, at the upper end of the market, we’ve had considerable interest.” Much of the buyer interest has come from the east coast of the United States, Canada and the U.K. “The proximity makes Bermuda very attractive. If they haven’t been affected by the market slide, perhaps those buyers are looking at this as an opportunity to get into the market here. Bermuda is still Bermuda.” The U.S. buyer’s market, in particular, showed signs of rebounding in 2011, says Rego, with predominantly American buyers in the luxury home segment, followed by the British and Canadians in equal measure. The condominium market continues to be dominated by the British, says Rego, who accounted for some 60 percent of sales last year, as compared to 25 percent for Americans. Protected Paradise Another strength of Bermuda comes from the island’s conservative development, key to maintaining its upper-crust appeal. “Bermuda was purportedly the inventor of island tourism, as far as this part of the world is concerned,” claims Rego. “We’ve been conservative as far as the development of the island, as opposed to places farther south, and a lot of people would say that’s what added to the charm of Bermuda.” The law of supply and demand helps keep Bermuda healthy, and it remains an elite destination in which to purchase property. In 2005, the government mandated that non-Bermudians are eligible to buy property only from other non-Bermudians, automatically restricting the number of houses available to overseas buyers. By restricting non-Bermudians to purchasing properties at the higher end of the market, the policy’s goal is to keep home ownership within reach of the average Bermudian, Rego explains. According to the law, Bermudians are permitted to buy property from any seller, regardless of nationality, but they can sell only to other Bermudians. By limiting the homes available for purchase by non-Bermudians, owning real estate in Bermuda has automatically evolved into an even more exclusive privilege. “Homeowners can feel pretty good about the intrinsic value of their property,” Rego says. “If you’re a non-Bermudian selling your house for just the right price on the island, it should sell, and we have a demand in Bermuda for just that.” Strong Economy Rego, who was born in Bermuda, also credits the fact that this territory has weathered the real estate storm to the islands’ extremely strong economy, buoyed by international insurance and other interests. The overall success of Bermudian business, he believes, has permeated all aspects of life here. “There was a time when a Bermudian buying a $6 million home here was unheard of,” says Rego, “and now they’re doing it. That’s evidence that the resilience of the Bermudian economy has done well for Bermudians.” That last nod to the native economy is somewhat of an understatement. Bermuda has the third-highest per-capita income in the world, and the moneyed populace enjoys cultural opportunities, dining and recreational activities here at a world-class level. Add to that Bermuda’s reputation as being safer than the Caribbean, and the appeal is only enhanced for foreign buyers. Lifestyle lures aside, Bermuda’s healthy economy, paired with the weakened U.S. dollar and suffering housing market, generates considerable interest from foreign investors looking to grab a share of the islands’ luxurious real estate. “It’s good value to hold Bermuda real estate, which hasn’t suffered the downward pressure that the U.S. market has endured,” Rego says. “If you’re an insurance executive with an international company here and you’re looking to rent a $5 or $6 million house during your stay, that could be $25,000 per month. So you might think about buying in Bermuda, as opposed to paying rent, if you have long-term goals to be here. “The key to the Bermuda scenario is that it’s just so different here,” he adds. “This is a limited market with limited supply, so it’s a very specialised type of buyer that has an interest in Bermuda — we’re so different from Barbados and the rest of the Caribbean. We’re not selling condos for $199,999. The traveller to Bermuda is generally more affluent than you would get in other nations.” The fact that Bermuda’s currency is pegged to the U.S. dollar has of late made the territory more appealing to Europeans, too, according to Rego. “We have continued interest from European buyers. You get a lot of bang for your buck here now, certainly in the luxury market, due to the sterling and euro power over recent years.” And whilst U.S. citizens are taxed on their worldwide income, says Rego, U.K. citizens who domicile elsewhere are not subject to the same tax regulations as when they live in their home country — a further incentive to call Bermuda home. Ownership Options Rego claims that the option to buy into fractional ownerships of condominiums in Bermuda is an appealing platform for American investors. Some 95 percent of buyers in the niche hail from the United States. “With Bermuda being so close to the U.S., it’s a very easy place to hop over for a week at a time for Americans,” he says. Rego adds that “the market indicators have actually pointed towards the long- to medium-term attractiveness of fractional ownership. With people continuing to be more conscious of their spending and ability to spend in 2012, fractionals are likely to come out quite well.” And that’s a continuing trend, he says, as there was a major resurgence in fractional sales in 2011 due to price adjustments at island properties. Tucker’s Point and The Reefs lowered their prices in 2011 by about 30 percent for fractional ownership, a stimulus that significantly catapulted sales and interest. According to Rego, “fractional condos can now be bought from $80,000 up to $350,000 for a four bedroom,” which is down $20,000 from last year’s numbers. Fractional ownership is well suited for someone who plans to be on the island for only about a month a year, because they offer five weeks of Guaranteed occupancy, plus the option for more. “In Bermuda, fractional ownership is the most affordable way to get involved in home ownership, and it’s the only way to get a good address for under $350,000,” he says. Bermuda’s three fractional-ownership residences are The Reefs Club, which opened in August 2009 adjacent to The Reefs hotel in Southampton; Tucker’s Point Club, in Tucker’s Town; and the Newstead Belmont Hills Golf Resort & Spa, located on Hamilton Harbour in Paget. Buying into Bermuda’s exclusive real estate market at any level allows owners to realise the overall market’s appreciation when it comes time to sell. “The majority of people that have bought [at The Reefs Club] are long-returning hotel guests that want to go to the next level,” says Chrissy Frith, membership director for The Reefs Club. “Instead of just a hotel room, they want to have a two-bedroom or three-bedroom condo on the beach,” she adds. “I know a doctor and his wife who spent their honeymoon here and always loved Bermuda. They came back year after year,” says Frith. “And when the fractional opportunity became available at The Reefs Club, they said, ‘This is it, I want to buy it.’” In 2010, fractional opportunities at The Reefs Club started in the mid-$300,000s. Now, however, fractional ownership starts at $179,500 for a two-bedroom condominium and $229,000 for a three-bedroom. “It’s literally a fraction of the cost of ownership,” says Frith. Stable Environment Further stabilising Bermuda’s housing market is the fact that the islands’ neighbourhoods are long established. “There’s no such thing as a new area in Bermuda,” says Rego. “The island is 21 square miles, and there isn’t a lot of open land, so we have very wellestablished residential areas that have been that way for decades.” Another factor that non-Bermudian buyers should keep in mind is that they may only buy land with an existing building located on it. Non- Bermudians are not permitted to buy vacant land, although once the property is purchased, they are permitted to tear down an existing building to construct a new one. Potential buyers should also be aware that a onetime licence fee, which is not included in the listing price, applies to each purchase. “Whilst there are no taxes or fees that the government applies to the sale of property here — no capital gains tax or transfer fee, for example,” says Rego, “there is a licence fee, which is essentially a licence to own the land.” For a stand-alone house, factor in an additional 25 percent of the selling price. For non-Bermudians considering purchasing a condominium or fractional property, the licensing fee was reduced in 2010 from 18 percent to just 6. 5 percent. “It’s in the interest of helping to stimulate the development of resort properties, and it applies at fractional and full ownership for condominiums,” Rego says. For houses and condominiums alike, the licence fee applies only to non-Bermudian buyers. Timeshares, Too Another way to buy into the Bermuda lifestyle (without actually owning property) is through a timeshare. The St. George’s Club offers members right to use for a period of up to 50 years. Unlike fractional ownership, the distinction here is that timeshare owners do not actually own a piece of real estate. Winter rates at The St. George’s Club start at $3,000 for a week’s lease in a one-bedroom unit up to $25,000 per week for a two-bedroom cottage in peak season, according to Sally-Ann Kyle, president of The St. George’s Club. Annual assessment fees run an additional $1,200 to $2,300, depending on the size of the unit and the season during which it’s occupied. The appeal in investing in a timeshare property in Bermuda, says Kyle, is value for money. “We provide all the amenities of a hotel, but with a fully fitted kitchen — a great addition for vacationing families,” she says. Occupancy figures at The St. George’s Club in the first quarter of 2012 were up over 2011, indicating that timeshares are a viable vacation option that can be less expensive than hotels and villa rentals. According to Kyle, guests and timeshare members hail primarily from the east coast of the U.S. and Canada, with only 10 percent of membership from the U.K. and Europe. With the variety of options for gaining a foothold in one of the world’s most desirable destinations to live, work and play, there’s a niche for every discerning buyer with an eye on Bermuda. Remember, deciding what pied-à-terre appeals most to you is the hard part. After that, you’ve gained a stake in Bermuda’s enviable and sophisticated mix of sun, sea and sand. And once you’re in, of course, you can breathe easier knowing you’ve invested in one of the most beautiful and desirable destinations on the planet. Century 21 Bermuda Properties The Stables, 91 Reid St., Hamilton Tel: 293-2121 Website: century21bda.com The power of property ownership is yours with Century 21 Bermuda Properties. Whether you are looking to purchase a property in Bermuda or another part of the world, the firm has the people and technology to help you achieve your dreams. Backed by the expertise and global reach of Century 21 International, they have a team who can meet your needs in home ownership, property management, sales, rentals, legal advice, planning and building consultation, mortgage consultation, and personal financial advice. Kitson Real Estate Kitson Building, 5 Reid St., Hamilton Tel: 295-2525 E-mail: email@example.com Website: kitson.bm Kitson & Company Ltd. Is the oldest internationally recognised Bermuda real-estate agency, a leader in Bermuda real estate sales, rental, and management in the residential and commercial markets. Kitson’s focus on customer service and satisfaction has helped it to maintain a successful position within the Bermuda real estate market. Use the property-search facility on the website to find properties for sale and vacation rentals. The Reefs Club 56 South Shore Rd., Southampton Tel: 239-0190 (Local) 800- 493-0724 (Toll-free) Website: Reefsclub.com The Reefs Club offers beachfront Bermuda real estate for Purchase on a fractional basis. Overlooking a secluded pink sand beach, this enclave of 19 condominiums offers elegantly appointed two- and three-bedroom residences just steps from the water, infinity-edge pool, spa, fitness centre and three acclaimed restaurants. Owning at The Reefs Club enables you to own the ultimate beach getaway at a remarkable price, and since The Club handles all upkeep and maintenance of your Bermuda residence, you can enjoy all the benefits of ownership without the hassles. Rego Sotheby’s International Realty Cavendish House, 2 Cavendish Rd., Hamilton Tel: 292-3921 Website:regosothebysrealty.com Rego Sotheby’s International Realty has been a major provider of real estate services in Bermuda since 1949, handling all aspects of sales, rentals, property management, auctions and valuations. The firm offers the luxury residential market a high standard of expertise and exposure. Rego Sotheby’s International Realty belongs to the United States National Association of Realtors and the Bermuda Chamber of Commerce’s real estate division. The St. George’s Club 6 Rose Hill St., St. George’s Tel: 297-1200 (Reservations) / 297-1222 (Vacation Ownership) E-mail: reservations@stgeorgesclub. com (Reservations) firstname.lastname@example.org (Vacation Ownership Inquiries) Website: stgeorgesclub.com Nestled on top of Rose Hill, with spectacular views of St. George’s Harbour, is The St. George’s Club, Bermuda’s premier cottage colony and vacation ownership resort, with one- and two-bedroom cottages in the Bermudian architectural style. Guests enjoy beautifully manicured gardens, three swimming pools, tennis courts, restaurant and bar, cycle livery, onsite grocery adjacent to the golf course — currently being updated to championship level — and pink-sand beaches, overlooking the UNESCO World Heritage Town of St. George and its pristine harbour.
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