It didn’t take long. Shortly after Hurricane Dorian damaged countless homes and businesses in the northern Bahamas, real estate investors started calling local agents in search of bargains.
“We’ve surprisingly had several calls,” said Colin Lightbourn, who manages real estate company Engel & Volkers’ Bahamas office in Nassau. “People are asking if there is anybody selling properties in any of those cays and to keep them on our list.”
“They say, ‘I don’t want to sound heartless, but if any properties come up, I’m a buyer.’”
While the timing of the phone calls may appear awkward, the inquiries from would-be buyers is not new for a region whose island nations and territories are often roughed up by hurricanes.
In 2017, investors scanned the Caribbean for bargains after Hurricane Maria pounded St. Maarten, Puerto Rico and even Barbuda, the latter of which was declared uninhabitable by its government.
There were discounts to be had. On Dutch St. Maarten, for example, a five-bedroom home with an ocean view was on the market for $3.5 million before the storm, but was reduced to about $1.9 million in damaged condition after the storm passed through, the Wall Street Journal reported at the time.
Some of the would-be buyers include investors in search of profits, foreign nationals seeking vacation homes, or hedge fund operators who see future profits in apartment buildings and hotels.
Overall, agents say, investors are attracted by depressed prices, and a possible upside fueled by government disaster funding and new capital from the private sector.
Still, timing is critical. And so is knowledge of insurance, construction, regulations and local contacts, agents and other experts say.
“I’m not sure I’d rush today,” said Michael Pappas, founder of The Keyes Co. brokerage firm in Miami. “But if you did the homework and started making the connections, there are those (owners) that will get out and sell.”
“There probably are some deals now ... people need the cash,” he added. “These people lost their living. They’re going to take a big discount to be able to liquidate today. There may be good opportunities if you can find the people.”
But there are wild cards in the speculation game, including the extent of damage in the affected islands and the nation’s capacity to recover from disaster. In some places, is it so severe that an investment isn’t worth it?
“My concerns would be what’s going to happen (in islands that had very high levels of devastation),” said Bill Hardin, associate dean of the Chapman graduate School of Business at Florida International University.
PROSPECTS IN GRAND BAHAMA AND ABACOS
Investors with an eye for affected Bahamian properties could be in for a long wait for profits, given the severity of the storm and the widespread damage it caused. In the northern islands, storm waters rose as high as 23 feet, and horizontal tornadoes leveled homes as Dorian dawdled for days over the islands.
The pace of any property turnover is likely to hinge on how quickly homes and business can be repaired or rebuilt, who wants to stay and who wants to leave, and who has insurance and who doesn’t.
For James Sarles, who operates a Coldwell Banker real estate agency in Grand Bahama, the challenge is to get through an immediate relief stage so the area can take advantage of investment commitments made by large corporations.
On Friday, he said he was wearing two hats: one as a Rotary Club member who is helping to arrange and coordinate aid for the community; the other as a real estate agent.
The worst damage was on the northern shore, Sarles said. “The southern shore, where all of the higher end properties are, was virtually untouched.”
He said that he, too, lost a personal home in Marsh Harbour, a popular tourist attraction east of Grand Bahama that was flattened by the storm, along with countless other homes, marinas, the airport and most stores.
“This is a transition period here,” he said.
The Rotary Club has helped build a water plant to mitigate the island’s water shortage, which has been exacerbated by saltwater intrusion into fresh water tables.
“We’ve had a tremendous outpouring of foreign relief,” he said. “Now everyone’s at the building stage. We still need water on the island. It’s going to take a while on the east end to get the salt out of the system.”
Some of the relief is coming from nonprofits such as the Miami-based Global Empowerment Mission, which is shipping building supplies to the outlying islands.
“In this situation, we need 10,000 sheets of plywood,” said Michael Capponi, the founder. “We send them over and the Bahamians build themselves.”
Wearing his agent’s hat, Sarles sees opportunities for renewal and economic growth beyond the destruction.
“Immediately after the storm two people had been looking and called me. We were working on derelict properties,” he said. “The sellers were motivated.”
He said there is an active rental market on Grand Bahama, with “people coming from around the world and buying buildings so they can rent” to those who have lost their homes.
Sarles is also encouraged by multimillion-dollar investment commitments from the cruise line operators Carnival Corp. and Royal Caribbean, which have pledged to support the local port and a resort.
“We’re going to have an influx of capital,” he said. “There are going to be jobs. There’s opportunity.”
In the end, the bet is that the northern islands will pick up on its history of being one of the most active real estate markets in the country.
According to a residential market report by Lightbourn’s firm that covered 2014 to 2018, the Abacos “was one of the strongest markets where Treasure Cay had the highest number of sales,” he said.
“Definitely there is going to be a reset in the market on the values, probably below 2009 recession levels,” Lightbourn said. “But I think it is going to come storming back, particularly in the cays around the Abacos.”