Property prices have collapsed on the Caribbean island of Bermuda, once a playground for the rich and famous.
There isn’t an official index of property prices for the island, but the Bahamas Real Estate Association says that prices have fallen across the board by as much as 40% and they showing no signs of recovery.
Bermuda is a destination for growing numbers of tourists visiting and economic growth is predicted, but even this financial fillip is expected to leave Bermuda’s property market weak.
The situation wasn’t helped when the government introduced a 2% increase in stamp duty in July 2010 which dampened sales.
Last year, stamp duty for homes worth more than £63,700 was cut by 2% to help revive sales to little effect.
Home values slump 40%
The association has now introduced a new listing system to help monitor prices and they that in addition to the low volume of sales, new house building demand is also weak.
A spokesman for the association said: “House prices in Bermuda dropped by between 30% and 40% from 2007 to 2010.
“Prices haven’t recovered yet but they have stabilised and a market recovery is expected.”
Bermuda is still considered to be a tax haven for foreigners with many choosing to become residents as there is neither tax on income, sales or inheritance nor capital gains tax on real estate.
Homeowners do pay a real estate tax of around 1% of a property’s value each year, which is the country’s only direct tax.
Foreigners are not restricted from buying property in Bermuda, although they do need a government permit before buying undeveloped land of more than five acres.
Billion pound investment
Homeowners are eligible for an annual residency card, but they need to buy properties worth more than £318,400 before becoming resident and even then they are not permitted to work in Bermuda.
One bright spot for property investors is that property rentals are described as being ‘moderate to good’, by global real estate firm Savills.
The capital Nassau commands the highest rents, especially those properties on the waterfront with rents ranging from £1,300 to £3,200 per month.
However, while the new build sector is described as being ‘weak’ it’s not all bad news since there is a megaresort under