BY NOW, YOU KNOW WHAT MAKES BERMUDA AN IDEAL VACATION DESTINATION: SPECTACULAR YEAR-ROUND WEATHER, GORGEOUS BEACHES, DELICIOUS DINING AND GOLF BEYOND COMPARE. Like many visitors, you’re likely to be seduced into settling in for a longer stay. And if buying a piece of Bermuda real estate appeals to you, there’s now more reason than ever to stake your claim on a piece of the island. Thanks to new land policy changes enacted in June 2012, buying into the Bermuda real estate dream is more appealing than ever. NEW PATHS TO OWNERSHIP Bermuda has always placed importance on preserving a market share of houses for Bermudians, but changes to government land holding policies that were enacted in June 2012 have opened doors to more home ownership options for non- Bermudians. With the announcement that Bermudians are now being allowed to sell their homes to non-Bermudians, a buzz is being felt all around the island, opening a wider housing market across the board and creating a win-win situation for everyone involved. With more houses now available to international buyers, your choice of where to place your foothold on the Bermudian dream lifestyle has never been more enticing. Essentially, as long as the home for sale has an ARV of more than $177,000, Bermudians are now able to sell their properties to non-Bermudians. Additionally, the land policy was amended to allow non-Bermudian spouses of Bermudians the right to acquire land without the former requirement of an additional licence. This opens the way for non-Bermudian spouses to own a home more easily, now that spousal alien licences are no longer required. “[The change in land laws] effectively doubled the housing inventory we have available to non-Bermudians by virtue of the fact that Bermudians can now sell, that’s the key impact,” says Buddy Rego, president of Rego Sotheby’s International Realty, the island’s oldest real estate company. Rego estimates the policy changes led to an additional 35 percent in whole ownership inventory in Bermuda for non-Bermudians. Bermudians who have been unable to sell their property to non-Bermudians over the past seven years (the period dur- ing which the old laws were in effect) now have an advantage, too, he said. “It puts everyone on equal footing,” says Rego. With more inventory than ever when it comes to where non- Bermudians can buy on Bermuda, deciding which segment of the island lifestyle is the best match with your own might be your biggest dilemma. AFFORDABLE AND PRIVILEGED LIVING It’s fair to say that Bermuda ranks amongst the world’s most prestigious and pleasing places to live. Not quite English, certainly not American and far from Caribbean, Bermuda blends island style, cosmopolitan class and natural beauty. “It’s a place that’s steeped [in] tradition,” explains David Dodwell, a fifth-generation Bermudian and owner of The Reefs Club, one of the island’s most stunning resorts. “We’re one of those conservative British territories, and we’re proud of that. There’s an element of comfort and confidence, there’s a culture and history here.” The Reefs Club is one of three fractional-ownership residences on the island. The chance to buy into the lifestyle enjoyed whilst on vacation is something that has encouraged many past guests to purchase a piece of the islands. “We’ve sold many of our residences to guests of the hotel who came down, took a tour, fell in love with the property and ended up buying,” says Dodwell. Since 2011, The Reefs has been the top-selling luxury residence club in the world, with more than 80 sales. And Dodwell says the benefits of buying into The Reefs lifestyle are self-evident. “This ought to be the ideal purchase or vehicle for someone to have a second home,” says Dodwell. “[Fractional owners] don’t have to buy whole ownership and take on the responsibility of a rental program,” he says, “All those things associated with whole ownership go away and you end up sharing the unit with nine or 10 other people. We run the property for you.” A REBOUNDING MARKET In many ways, Bermuda has always occupied its own privileged niche. Geographically speaking, there is the archipelago’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 United States and Canada (and with direct connections to London, too). This is a destination that offers an absolute escape yet 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 United States and Europe in recent years. And with the land policy changes announced in mid-2012, the ownership options on the islands have only increased for non-Bermudians. “The market is much broader now,” says Rego. “There’s more inventory and choice available to the international market and buyers. They now have wider inventory to choose from because before, those properties were only able to be bought by a Bermudian.” Another benefit of the 2012 policy changes is the fact that non-Bermudians who purchase in Bermuda can now reside on the islands full time, explains Rego. Before, they could only stay up to 90 days at a time. “Now... you can live here full time,” states Rego. And the fact that housing values on the islands have been extremely stable from 2010 to the present only bolsters general confidence in Bermuda as a sound real estate investment, says Rego. “We haven’t seen a huge hit,” he says. “When I look at the luxury market of houses for 2012 compared to 2011 and 2010, they’re really holding firm for the last three years, in the $6 million range.” Amongst the whole ownership properties currently on the market for international buyers are condos from $560,000 and houses from $3.5 to $45 million. “It’s obvious that international purchasers are now looking at Bermuda again as a good buy,” says Rego. “That includes vacation home buyers and those coming to Bermuda for residence purposes. People are seeing Bermuda as a good investment again.” YEAR-ROUND APPEAL 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 Bermuda reads like a who’s who of business, politics and Hollywood, including billionaire H. Ross Perot, actors Michael Douglas and Catherine Zeta-Jones, and New York Mayor Michael Bloomberg. Bermuda’s stable real estate market is proving to be a tempting lure for more overseas buyers. Whilst the world has been plagued by a stormy real estate market, Bermuda’s climate has remained relatively steady by comparison — especially 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. “In keeping with what I am hearing from other real estate agents in luxury markets around the world, we’re seeing a resurgence in real estate interest at the luxury level in Bermuda. “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 per- cent 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. “A lot of people have been waiting for what they see as the bottom of the real estate market,” continues Rego, “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.” GROWING MARKETS 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... [that] this is a good time to get in.” Rego looks forward to seeing what 2013 will bring, adding that recent signs have been encouraging both in interest from international buyers and buzz around the islands regarding the land policy changes and the potential for more changes, continuing to make it more appealing for non-Bermudians to buy. And whilst tight credit and the global recession continue to have their effects, Rego believes “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 United States buyer’s market, in particular, showed signs of rebounding in 2011, says Rego, with predominantly American buyers in the luxury home segment, followed by British and Canadians in equal measure. But 2012 saw mostly European purchasers for houses. The condominium market was dominated by Canadians and South Africans in 2012, Rego reports. 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. 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-cap- ita 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 weak- ened 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 United States 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, kids in school, etc. “The key to the Bermuda scenario is that it’s just so different here,” he adds. “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 United States 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 world- wide 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 The option to buy into fractional ownerships of condominiums in Bermuda is an appealing platform for American investors, says Rego — 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, adding that increased spending consciousness on the behalf of American buyers has made fractional ownership an increasingly popular option. There was a major resurgence in fractional sales in 2011 due to price adjustments at island properties. And whilst that leveled off to some degree in 2012, the market is still healthy. The fractional ownership option is particularly well suited for someone who plans to be on the islands for only about a month a year, says Rego, because it offers 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.” 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 real estate market allows owners to realise the overall market’s appreciation when it comes time to sell. “The majority of people who 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. 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. Tucker’s Point Club offers custom homes in waterfront and golf course locales. In 2012, deposits were taken on eight of the 20 available whole ownership lots. “Tucker’s Point is a unique resort,” says Tom Sleeter, director of sales, “We have 200 acres of open space on the main campus, with championship golf course, tennis courts, a beautiful beach club and lots of open space for walking and jogging. “Our new prices are very attractive,” he says, “Two-bedroom residences start at $199,500, a 44 percent reduction over the all-time high price.” Similarly, three-bedroom residences start at $299,500 for fractional ownership, a 28 percent decrease over all-time high rates, according to Sleeter. “What we’ve seen in terms of prices is that the economi- cal situation has driven prices down, so it’s an excellent time to purchase,” he says. And 2012 was a good year for Tucker’s Point in terms of sales of whole ownership lots, with deposits taken on seven or eight properties, he says. Lot prices for whole ownership in Tucker’s Point start at $1.1 million. STABLE ENVIRONMENT Further stabilising Bermuda’s housing market is the fact that the islands’ neighbourhoods are long established, according to Rego. “There’s no such thing as a new area in Bermuda. The island is 21 square miles, and there isn’t a lot of open land, so we have very well-established residential areas that have been that way for decades.” Non-Bermudian buyers should keep in mind that they may only buy land with an existing building located on it. They are not permitted to buy vacant land, although they are permitted to tear down an existing building to construct a new one. Potential buyers should also be aware that a one-time 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 licencing fee was reduced in 2010 from 18 percent to just 6.5 percent. TIMESHARE APPEAL Another way to buy into the Bermuda lifestyle is through a timeshare. On the eastern end, at the prestigious St. George’s Club, where condominum- style cottages fringe the pink-sand beach- es and crystal-clear waters, self-contained residences are very appealing to those in search of timeshare ownership. The St. George’s Club offers mem- bers the right to use for a period of up To 50 years. Unlike fractional ownership, 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 and 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 roughly $2,400 depending on the size of the unit and the season during which it’s occupied. “A lot of the people who purchase here have childhood memories of coming here with their parents,” she continues, “And they’re continuing to make happy memories.” Timeshares are generally less expensive than staying at a hotel and offer the benefit of a full kitchen as well as access to several on-site restaurants. The appeal in investing in a time- share 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 were up in 2012 over 2011, indicating the niche as a viable vacation option. According to Kyle, guests and timeshare members hail primarily from the East Coast of the U.S. and Canada, with only 10 percent of members coming from the U. K. and other European nations. With such a 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. And remember, deciding which pied- à-terre appeals to you most will be the hardest 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. The Reefs Club 56 South Shore Road, Southampton Tel: 239-0190 / 800-493-0724 (toll-free) Website: reefsclub.com The Reefs Club offers deeded beach- front Bermuda real estate for purchase on a fractional basis. Since the post-recession price adjustment last year, The Reefs Club has been the world’s best-selling Private Residence Club. Overlooking a secluded pink-sand beach, this private 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 main- tenance 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. George’s Membership Office Tel: 297-1222 E-mail: email@example.com Website: stgeorgesclub.com Perched on Rose Hill overlooking the UNESCO World Heritage Old Towne is The St. George’s Club, a cottage hotel and vacation ownership resort. Seventy- one Bermudian-style one- and two- bedroom cottages are set in about 12 acres of landscaped gardens with three swimming pools, three tennis courts and a scooter rental facility. They have two restaurants: Griffin’s Bistro & Bar located in the main Club House and The Beach House located five minutes away across the adjacent golf course at secluded beach Achilles’ Bay. Tucker’s Point Real Estate 60 Tucker’s Point Drive Tel: 298-6915 E-mail: firstname.lastname@example.org Website: tuckerspoint.com Known for its legendary lifestyle, Tucker’s Point spans 200 acres of the island’s most coveted waterfront and golf course property. This worldclass resort community offers partial ownership in exquisite Residence Clubs, starting at $199,500, as well as whole ownership of waterfront or golf course homes, superb town homes and distinctive custom homes and lots, from $299,000 to more than $3 million. Coupled with the prestigious Tucker’s Point Golf, Beach & Tennis Club and the award-winning Rosewood Tucker’s Point Hotel & Spa, homeowners have the finest club and resort amenities close at hand.
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