Just a short hop from the East Coast of the United States and Canada, the islands remain a world apart from the Americas and the Caribbean. From high tea with scones and clotted cream in a historic island hotel to snorkelling at stunning Church Bay followed by a tropical dinner of sweet spiny lobster overlooking the ocean, few destinations offer the diversity of Bermuda. Just a short hop from the East Coast of the United States and Canada, the islands remain a world apart from the Americas and the Caribbean. This English-flavoured archipelago exudes charm like nowhere else. And while 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. Located 640 miles off the coast of North Carolina in the clear waters of the Atlantic Ocean, Bermuda is easily reached from Europe, North America or South America. Non-stop flights take less than eight hours from London and less than three hours from New York City, Miami, Toronto and Boston. the champagne-pink beaches, seven emerald-green golf courses, deep-sea fishing and limitless recreational opportunities set Bermuda apart from the real world. Even the islands’ distinctive architecture, typified by pastel cottages, is recognisable instantly. If you wish to lay your claim to your own piece of paradise, Bermuda is a destination for those who dream big. The list of privileged property owners who have purchased a piece of Bermudian real estate reads like a who’s who of business, politics and Hollywood, including 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 with an eye on investing in real estate here. While the world — and in particular, the United States — has been plagued by the stormy real estate market of recent years, Bermuda’s climate has remained relatively steady by comparison. “I am encouraged,” says Buddy Rego, president of Rego Sotheby’s International Realty, the islands’ oldest real estate company, which specialises in luxurious properties. Rego reports that while there was less turnover in the real estate market in 2009, Bermuda continued to fare very well compared to the rest of the world. “The key issue is that Bermuda real estate values can be considered as fairly steady — 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 the condominium market, Rego says, “has been very, very strong. “The average price of a condominium sold in 2009 increased by 9 percent, compared to the 2008 figures,” he says. When that statistic is averaged with home values that have decreased only slightly in the past year, the market’s overall real estate values present a healthy front. “Bermuda has held its own as it relates to intrinsic value,” Rego adds. While there was decreased turnover in the very upper end of the housing market, he explains, referring to homes over the $4 million mark, the increased competition among sellers equates to more opportunity for buyers looking for a window into the market. Good news for sellers: Rego has noted a significant increase in interest and inquiries from potential buyers since late 2009 compared to the same timeframe in 2008. “We have seen a lot of shakeout in the financial and real estate markets (since mid-2009),” he says, “and there are people who see this is an opportunity to get into the Bermuda housing market. “While we aren’t saying there isn’t the possibility of more downsides in the real estate market,” Rego qualifies, “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 is hopeful to see what 2010 will bring, adding that early signs have been encouraging. “In the first quarter of 2010, we’re seeing higher turnover than we did at the same period last year,” he reports. “And we feel that’s boding well. 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.” And while tight credit and the global recession will continue to have their effects, he says, “At the upper end of the market, we’ve had considerable interest, which is encouraging. People are definitely coming and looking around now.” Much of the buyer interest has come from the East Coast of the United States and Canada. “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.” Regarding 2009 home sales to non-Bermudians, 50 percent of the homes were sold to U.S. buyers and the other half sold to Canadian buyers. Condominium sales were predominantly to British buyers, followed by Canadians, Americans and French. “Without having forced sales,” says Rego, “there’s not a lot of downward pressure on the market.” He points to this strength as evidence that Bermuda retains a buoyancy and resilience that other markets lack. “Bermuda was purportedly the inventor of island tourism, as far as this part of the world is concerned,” claims Rego. “In the 1940s and ’50s, when island tourism became the thing to do, Bermuda was the first one to market itself as a premier island summertime destination. 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 Bermuda remains an elite destination 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. “As of the end of early 2010, there were only 14 properties ranging in price from $3.45 million to $25 million available for non-Bermudians to purchase,” says Rego. 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, he explains. According to the law, Bermudians are permitted to buy property from any seller, regardless of nationality, but they can only sell to other Bermudians. By limiting the homes available for purchase by non-Bermudians, says Rego, 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.” 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. 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. “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 enjoys the third-highest per-capita income in the world, and its reputation as being safer than the Caribbean only enhances the appeal for foreign buyers. “We’ve just sold a condominium to a couple from the U.K., and they happen to live in the Boston area,” Rego says, “They had searched the Caribbean and just found Bermuda to be not only appealingly close, but a much more attractive place to be with the golf, cleanliness and orderliness of the island. Those factors attracted them significantly.” Bermuda is considered a very safe place to live. “When you step off the plane here, you have the immediate sense that it’s not a run-down Caribbean island,” says Rego, “People always ask, ‘Where’s the poverty?’” “In Bermuda, the air is very clean. It’s a very well-organised island and far more staid than Jamaica or The Bahamas,” he says. “We have a temperate climate, so the weather is fantastic. There’s terrific golf here, and you can be outdoors all yearround. There’s theatre, top restaurants, nightclubs, yacht clubs, cultural clubs — it’s a very social place, a very sophisticated little island.” 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 — kids in school, etc.” When you can afford to buy in, there is fair reason to have confidence in Bermuda’s economy. “When you put $2 million into a property, you want to know that it’s going to be worth at least that two years from now, and the answer in Bermuda seems to be an overwhelming yes,” says Rego. “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. “Last year we had a U.S. buyer in the insurance business who bought a house for over $10 million,” Rego continues. “The house had been on the market before at a higher level, and this buyer saw Bermuda as an opportunity and felt it was a good time to get in.” 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 definitely have 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 while 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. 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. “The market indicators have actually pointed towards the long- to medium-term attractiveness of fractional ownership,” says Rego, “With people continuing to be much more conscious of their spending and ability to spend in 2010, fractionals are likely to come out quite well.” “That’s the diversity of the real estate product in Bermuda,” Rego says. “You can come to Bermuda with the ability to own a freehold, freestanding house. You can buy a whole interest in a condo. Or you can get in with a fractional interest in a condominium. “Fractional ownership makes a lot of sense for someone who plans to be in Bermuda only about a month a year,” explains Rego. “Fractionals have clearly been the most popular vacation purchase in Bermuda — much more so than wholeownership condominiums — because they essentially give you five weeks of guaranteed occupancy, plus the option for more.” 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. “The beauty of fractional ownership in these communities is that, most likely, the condos will rarely ever be 100 percent occupied,” says Rego, “so even though you have an allocated amount of time that you sign on for, you also have the opportunity — on short notice and subject to availability — to spend more time at the property. “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 between $350,000 and $400,000.” 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 who 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.’” Fractional opportunities at The Reefs Club start in the mid-$300,000s, says Frith. “It’s literally a fraction of the cost of ownership.” 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.” Neighbourhoods in Bermuda are not finicky. They do not go hot and cold. All of the islands’ neighbourhoods are considered desirable places to live. 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 one-time licence fee, which is not included in the listing price, applies to each purchase. “While 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 house, factor in an additional 25 percent of the listing price. For condominium purchases, the licence fee is 18 percent. For first-time fractional buyers, just 10 percent. The licence fee applies only to non- Bermudian buyers. Consider it just part of the price of gaining a stake in Bermuda’s excellent sun, sea and sand. 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. As Rego says “To come here and buy real estate has always been more of a sound investment than in most places.” The major difference he sees in 2010 compared to 2009 is increased opportunity — music to every potential purchaser’s ears. “It’s clearly an opportunity now for buyers,” he says. “There is certainly opportunity in the upper-end of the market due to the decrease in turnover, and in some cases the prices are more favourable than they were last year.” Particularly for those vacation home buyers looking for a taste of the tropical good life without travelling very far from home, it’s a notion — and a way of life — that is very attractive, indeed. Coldwell Banker Bermuda Realty 11 Par-la-Ville Road, Hamilton Tel: 292-1793 E-mail: firstname.lastname@example.org Website: www.bermudarealty. com / www.cityliving.bm / www.Vacationhomesbermuda.com Coldwell Banker Bermuda Realty is Bermuda’s largest and most innovative full-service real estate company, offering services in residential and commercial sales and rentals, vacation rentals, property management, appraisals, land surveying, auctioneering and international referrals. Coldwell Banker Bermuda Realty prides itself on professional delivery to meet all of your real estate needs. Check out the specialty websites www. Cityliving.bm for new residential developments and www.vacation homesbermuda.com for unique vacation rentals. Affiliated with the world-renowned Coldwell Banker Corporation since 1998, the firm ranks in the top one percent of the global network, which includes more than 100,000 real estate professionals in 47 countries. Kitson & Company Ltd. Vacation Rentals, Commercial & Residential Properties Kitson Building, 5 Reid St., Hamilton Tel: 295-2525 E-mail: email@example.com Website: www.kitson.bm Kitson & Company Ltd. Is the oldest internationally recognised Bermuda real estate agency. They are leaders in Bermuda real estate sales, rental, vacation rentals and management in the residential and commercial markets. Kitson’s focus on customer service and satisfaction has helped them to maintain a successful position within the Bermuda real estate market. Use the property search facility on their website to find properties for sale and vacation rentals. Rego Sotheby’s International Realty Cavendish House, 2 Cavendish Road, Hamilton Tel: 292-3921 Website: www.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@stgeorges club.com (reservations) firstname.lastname@example.org (vacation ownership) Website: www.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, pink-sand beaches and an on-site grocery adjacent to the golf course, which is currently being updated to championship level.
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