The Bahamas is the third-wealthiest country in North America, behind only Canada and the United States. The country’s wealth, stability and favorable taxation system makes it a popular choice for investors around the world — including those seeking to purchase real estate.
The Bahamas commercial real estate market offers many opportunities for the savvy investor, but as with any major purchase, it’s essential to do your homework first.
In this post, I’ll examine both the benefits of and requirements for purchasing commercial real estate in The Bahamas and offer you some tips on what to look for when you start shopping.
The Benefits of The Bahamas Commercial Real Estate Market
The relative wealth of The Bahamas notwithstanding, there are several factors that make investing in Bahamian commercial real estate an especially attractive prospect.
Solid Returns
Property on New Providence and some of the other more populated islands has showed stable growth, since recovering from the financial crisis, and now provides a healthy regular income to its owners.
In contrast, privately owned islands may offer little in the way of investment income, but have climbed dramatically in value over the past few decades, reaching appreciation rates of 100% per year.
Government Incentives
The Bahamian government is continuously taking steps to encourage foreign citizens to invest and do business within its borders — and that includes finding Bahamas commercial real estate for sale.
- Allowing access to government-owned land
- Concessions on border taxes on some building materials, equipment and supplies
- Property tax exemptions for defined periods
- Unrestricted account transactions and repatriation of profits
- Streamlined licensing processes
Economic Residency
While The Bahamas does not offer citizenship by investment, the government has taken steps to make investing in property a viable step toward legal residency.
“Financially independent individuals or investors who are legitimate owners of a residence in The Bahamas” may apply for permanent residency. Those willing to spend over BS$1.5 million — equivalent to US$1.5 million — will even be fast-tracked through the process.
The tax benefits to gaining permanent resident status in The Bahamas are not insignificant. The country levies no tax on personal income, capital gains, capital transfers or estate inheritance.
What You Should Know About Bahamas Commercial Real Estate
There are, of course, a few caveats you should be aware of before you start searching for Bahamas commercial real estate for sale. While local tax laws and regulations that govern foreign investment may seem relatively lax compared to other countries, that doesn’t mean they are non-existent.
Taxes on Commercial Property
You will be required to pay property taxes to the Bahamian government, and tax rates for commercial real estate are higher than those levied on owner-occupied residential properties.
- The first $500,000 of commercial property (based on current market value) is taxed at 1% per year.
- Commercial property in excess of $500,000 is taxed at 2% of current market value annually.
Business Ownership and Operation Rules
While The Bahamas welcomes foreign property investment, there are some stringent rules that govern who is permitted to operate specific types of business. Non-citizens are barred from operating businesses in the following categories:
- Wholesale or retail
- Public transportation
- Public relations or advertising agencies
- Servicing of automobiles or appliances
- Beauty salons or cosmetic services
- Construction, real estate or property management
- Restaurants, bars or clubs
- Watersports or shallow water fishing
- Import/export agencies
- Newspapers or magazines
- Security services
Renting Out Your Property
Buying land to rent to developers is also an option. Authorities in The Bahamas do not levy any tax on rental income, so this has the potential to be a very lucrative option.
The Bahamas legal system strongly favors landlords, so renting out your property — whether commercial or residential — is a relatively safe option.
You will need to register your purchase with the Office of the Prime Minister (as you would with any large or commercial real estate purchase).
Choosing Commercial Real Estate in The Bahamas
If you’re sold on the benefits and comfortable with the restrictions, you might be ready to start hunting for Bahamas commercial real estate for sale. Here are just a few guidelines to help you narrow down your search:
Price Variation
Prices in the Bahamian real estate market can vary considerably based on location and the return you’ll see on your investment will obviously be tied to the initial purchase price.
When comparing properties of different prices, be sure to consider the location — local infrastructure, proximity to transportation hubs and other local factors that could impact property values.
Value for Money
There are four key elements in determining the potential value of Bahamas commercial real estate:
- Demand
- Utility
- Scarcity
- Transferability
You can never be completely sure what real estate prices will do in the future, but if you ensure your property meets at least some — if not all — of these criteria, your investment is more likely to pay off.
Renting Bahamian Commercial Real Estate
Of course, if you’re not ready to commit to investing in commercial real estate or development, but want to maintain a local presence or operate a business from The Bahamas, then leasing a commercial property is an option.
The majority of commercial properties for rent are on New Providence, and the selection of properties varies widely. Commercial rentals include everything from moderate office spaces, warehouses and storage facilities, to vast office buildings.
Depending on the type of property and its location, rent can start from less than $1000 a month, and surpass $10,000 a month. Spaces are available within the center of the Nassau’s financial district, commercial plazas and areas with plenty of tourist foot traffic, and in more secluded locations.
You’re on Your Way!
Now that you have a reasonable idea of what to expect from The Bahamas commercial real estate market, you’re ready to go. (If you’re planning to relocate to The Bahamas when you invest in commercial property, you might also want to check out these tips for buying a home.)
If I haven’t answered all of your questions about the commercial real estate market in The Bahamas, please get in touch with me to discuss your concerns directly. I’m always happy to help.
