The Bermuda Real Estate Market - 2020 Year in ReviewPress Release by Rego Sotheby's International Realty
9 March 2021: An in-depth review of how an unprecedented year impacted the Bermuda Real Estate Market. 2020 saw a substantial increase in the number of luxury market sales, increase in average prices, higher commercial rental demand and short- term rental supply challenges.
2020 surprised us all
What was anticipated to be a depressed year turned out to be the complete opposite. Bermuda real estate in 2020 was on target to follow 2019’s lackluster number of property sales, rentals and total market dollar volume.
Along came COVID-19 at the end of the 1st quarter, enhancing the expectation that market buoyancy and recovery would be non-existent. However, post shelter-in-place, buyer and seller priorities injected much needed momentum into the property market. Those priorities ranged from:
Flight-to-safety/quality of life by international prospects and locals returning to Bermuda to get out of congested gateway cities struggling with the outbreak exposure;
Residents needing either more spacious homes to accommodate work-from-home and/or home-schooling needs;
Concerns over job-security and potential loss wages driving need for smaller or less costly properties; and
First-time home buyers with more disposable income in the absence of traveling and vacation spends seeking to buy on the heels of a depressed market.
Buddy Rego, President of Rego Sotheby’s International Realty lauded last year’s outcomes stating, “The trends of 2020 spurred the rejuvenation in virtually every segment of our industry with increases in volume of transactions in the last quarter of 2020.” Mr. Rego added, “The market has not experienced this level of consumer confidence in over 5 years.”Mr. Rego summed up 2020 market activity stating, “We were virtually equal year-over-year in dollar and unit volume in spite of not being able to leave our homes at times nor travel as freely.”
Luxury residential home sales with an ARV greater than $126,000 saw a remarkable recovery with an increase of almost 150% over 2019 sales in the number of internationally available homes sold. In 2020, 42% of the internationally available homes were bought by Bermudians at an average price of $4,500,000, an increase from $3,365,000 in 2019. The notable increase of 34% in the average price is a result of more homes sold at higher price points with the highest being $11,000,000.
Available to Bermudians Only
Fewer homes available only to Bermudians were bought last year based on the 15% decline in unit volume compared to 2019. The average sale price also dropped to $885,000 in 2020 from $960,000 in 2019. Bermudians were getting more value in the market place as Sellers adjusted expectations to more reasonable market levels amidst the uncertainty of the pandemic.
Ups and downs of condominiums
The “every man’s” condo sees rebound in 2020. Bargain hunters were out in force for condominiums with an ARV below $25,800 sparking a resurgence of 60% in sales volume over 2019 though average prices dropped 6% to $244,000 in 2020. This marks the first time in the last 4 years that condominiums have seen an increase in volume sales over the previous year.
The number of 2020 luxury condominium sales with an ARV over $25,800 were down 22% over 2019 as was the average price of $830,000 in 2020 versus $930,000 in 2019.
Market confidence and better buying opportunities encouraged Bermudians to purchase over 90% of the condominiums sold - a level we have not seen since 2012.
Steady confidence in land sales
2020 saw a marginal decrease in volume of land sales by 14% compared to 2019. Subdivision of notable lots of land at Riddell’s Bay and White Crest Hill created more inventory for this year and next.
Commercial properties bound for another year
6 commercial properties sold in 2020 compared to 7 in 2019. Recorded sales in commercial may not necessarily reflect all of the actual commercial property trades as corporate transactions occur where shares of companies are transferred to a new company holding the asset.
2020 ended with an uptick in demand from owner occupiers seeking to purchase move-in ready or near move-in ready condition properties to properties with potential for repurposing or retrofitting in both prime areas and economic development zones across the City of Hamilton.
High demand for newly constructed Class A office space to rent
During Q4 2020 as Point House construction progressed, demand for newly constructed Class A / A+ office space increased causing a lack of inventory for high end office rentals. Searches ranged from 1,000 SF up to 30,000 SF users who either were relocating locally or international companies establishing a Bermuda presence in the re/insurance sector. Class A base asking rents varied widely from $45 PSF to $90 PSF depending on amenities, parking, location and views.
Normal rental trends go out the window
The start of the year was full of uncertainty. Many tenants unable to work struggled to meet their rental payment obligations. Others delayed moving plans or had no choice but to stay in place regardless after leases expired due to the island wide shelter-in-place conditions.
Once the shelter-in-place was lifted, the pent-up demand became very apparent. This combined with the start-up of new companies and people being able to travel and move to the island turned the ordinarily quiet fourth quarter into the busiest quarter in the past 5 years. The number of rental transactions completed by our agents and the average monthly rental rates achieved both increased over 2019 activity – replicating a pattern last observed in 2016 during the lead up to America’s Cup.
Now is the ideal time to rent your property
Currently demand is high and supply is low in almost all property categories presenting a potentially advantageous time to place your property on market for rent. Evidence of bidding wars with properties renting quickly and in some instances for higher than the market asking price occurred particularly for newer or modern properties in excellent condition.
‘Work From Bermuda’ Programme challenges market inventory
The incoming ‘Work From Bermuda’ certificate holders who received up to 1-year permission to reside in Bermuda took up practically all available fully furnished properties. Properties sought after by individuals, couples and families ranged from $3,000 to $400,000 per month asking rates.
Silver Lining or Dark Cloud
Bermuda’s recognition as one of the safest places in the world during the ongoing pandemic continues to attract interest from local and international lifestyle seekers. Buying opportunities and lower mortgage interest rates have helped stimulate renewed confidence in the property market.
Mr. Rego anticipated the coming year’s performance summarizing, “The buoyancy of the 2021 Real Estate Market will depend highly on Bermuda’s continued success in managing the pandemic and the Government’s effective real estate taxation and land holding policies.”
Report Based on Figures as at 18 February 2021