Rising Prospects

Echoing its isolated position in the Atlantic, Bermuda's real estate market robustly stands a world apart from the challenges felt in the rest of the world.

Not quite English, certainly not American and far from Caribbean, Bermuda is that rare destination that blends island style, cosmopolitan class and natural beauty. When you add proximity and ease of arrival to the equation, this Atlantic paradise is more appealing than ever as both a vacation destination and a more permanent address.

Located 640 miles off the coast of North Carolina in 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. Once you’ve landed, the good life begins. 

Few destinations offer the recreational and cultural diversity of this English-flavoured archipelago that is home to residents from all over the world. The champagne-pink beaches, 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 instantly recognisable.

In the course of a single day in Bermuda, you can relax with afternoon tea and scones at a historic hotel dating to the 19th century, play golf on one of the island’s seven excellent courses, and still make it to Elbow Beach Bermuda in time for sunset and a meal of spiny lobster under the stars.

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, 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 island’s oldest real estate company, which specialises in luxury properties. Rego reports that while there was less turnover in the real estate market in 2010, Bermuda continued to fare very well compared to the rest of the world. Most importantly, the value of Bermuda’s real estate did not decline.

There’s good news for sellers, too: Rego has noted a ­significant increase in interest and inquiries from potential buyers in late 2010 compared to 2009. “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.”

For sellers, the perpetually limited supply of purchasing options for non-Bermudians (a regulation that was put into place to ensure Bermudians can afford homeownership) works in their favour, adding to the exclusivity of ownership. As of the first ­quarter of 2011, there were only 20 houses available for ­purchase by non-Bermudians, says Rego. “That’s all you can buy in Bermuda as a non-Bermudian.” The condominium market had a few more options for buyers, with some 29 properties available to non-Bermudians.

Growing Market

While the real estate market is always vulnerable to upheaval, Rego feels encouraged by Bermuda’s position. “We aren’t saying there isn’t the possibility of more downsides in the real estate market,” he says. “But 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 2011 will bring, adding that early signs have been encouraging. For starters, 2010 showed a whopping 300 ­percent increase in houses put under contract versus 2009. “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.

“The initial effect of the market prices has softened as far as the upper end of the market,” he says. “It’s still good news for sellers, but it’s better news for buyers.” 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.”

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 2010, says Rego. “In 2010, based on closed sales, 100 percent of the non-Bermudian purchasers of houses in Bermuda were American.” The condominium market, dominated by British buyers in 2009, also showed increased American interest in 2010, with about half of the condominiums sold to non-Bermudians in 2010 going to Americans and the other half to British nationals. Rego reports ­continued interest from Canadian and French potential buyers, too.

Protected Paradise

Another strength of Bermuda comes in the island’s conservative development, key to maintaining the island’s 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 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 early 2011, there were only 20 properties ranging in price from $3.75 million to $25 million available for ­non-Bermudians to purchase,” says Rego. Condominiums were available for purchase during the same ­period from $925,000, with ­opportunities for ­fractional ownership ­starting at $100,000.

By restricting non-Bermudians to ­purchasing properties at the higher end of the market, the policy’s goal is to keep homeownership 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 sell only 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.”

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, kids in school, etc.”

“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 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 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

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 more conscious of their spending and ability to spend in 2011, fractionals are likely to come out quite well.”

According to Rego, 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 between $350,000 and $400,000.” One bedroom fractional ownership starts as low as $100,000.

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 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.’”

Fractional opportunities at The Reefs Club start in the mid-$300,000s, says Frith. “It’s literally a fraction of the cost of ownership.”

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.”

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 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. 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.

Buyer's Fees

In addition to the home purchase price, non-Bermudians should keep in mind a few fees when buying their dream property on the islands.

• Licence to Acquire fee. For freestanding homes, it is 25 percent of the purchase price. For condos, it is 6.5 percent.
• Stamp duties also apply and are split with the seller. They range on a sliding scale from 2.5 to 6 percent.
• Legal fees are minimal — less than percent — and also split with the seller.

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 in 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 can meet your needs in home ownership, property management, sales and rentals, and can provide mortgage consultation and legal advice.

Coldwell Banker Bermuda Realty
11 Par-la-Ville Road, Hamilton
Tel: 292-1793
E-mail: kmello@brcl.bm
Website: bermudarealty.com

Kitson & Company Ltd.
Kitson Building, 5 Reid St., Hamilton
Tel: 295-2525
E-mail: realestate@kitson.bm
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.

Rego Sotheby’s International Realty
Cavendish House, 2 Cavendish Road, 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@stgeorges club.com (reservations)
sales@stgeorgesclub.com (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.

Tucker’s Point Hotel & Spa
60 Tucker’s Point Drive, Tucker's Town
Hamilton, HS 02
Tel: 441-298-4000
Toll Free: 1-866-604-3764
Website: tuckerspoint.com

Tucker’s Point Hotel & Spa, the centerpiece of Tucker’s Point Club - Bermuda’s most exclusive resort and residential community. The Club sits on 200-acres of private waterfront property close to the neighboring estates of Tucker’s Town. Guests enjoy breathtaking panoramic views of Castle Harbour, Harrington Sound and the Atlantic Ocean.

DID YOU KNOW? Architects in Bermuda must be Bermudian or work for a Bermudian architectural firm.

DID YOU KNOW? Until recently, houses in Bermuda were identified only by names. Now they are issued numbers.

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Top Main Photo Courtesy of Tuckers Point Club

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