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The Bahamas thrives as a stable economy which is supported by:

  • a strong legal system;
  • sound monetary and fiscal policies;
  • a skilled professional workforce; and
  • sovereign governance.

As a developing nation, foreign direct investment (FDI) remains one of the key catalysts to the Bahamian economy's growth and sustainability. The Bahamas National Investment Policy seeks to boost the economy through investments and provide favourable returns for investors. It encourages FDI in key areas in the real estate market, including:

  • tourist resorts;
  • upscale condominiums, timeshares and second-homes; and
  • marinas.

Impact of FDI

The World Investment Report 2018 refers to The Bahamas as a leading destination for FDI in small island developing states. The impact of FDI in the real estate market can be seen in developments such as Albany, Atlantis, Baha Mar, Harborside Resort at Atlantis, Ocean Club Estates, Ocean Club Residences and Marina, One Cable Beach and The Pointe, as well as the yet to be completed Margaritaville Beach Resort and Marina.

The development of luxury resort communities and condominiums and the acquisition of private islands and cays have made The Bahamas an attractive place to invest in the second-home market. Along with minimal property taxes, foreign investors are eligible for:

  • permanent residency when they invest more than B$500,000 in real estate;
  • fast-tracked permanent residency applications for investments of B$1.5 million and above; and
  • limited restrictions on foreign ownership (eg, tax concessions).

Legislation benefiting foreign investors

The following key pieces of legislation benefit foreign investors in the real estate market:

  • The Hotels Encouragement Act provides for the exemption of customs duties with respect to materials necessary for the construction, furnishing and completion of new hotels. Further, investors are exempted from paying real property taxes for 10 to 20 years. No taxes will be levied against earnings for a period of 20 years for new or existing hotels. A hotel must have at least 10 rooms in New Providence and at least four rooms in the Family Islands.
  • The Family Islands Development Encouragement Act allows exemptions from customs duty and excise tax on building materials and machinery for land clearing on specified Family Islands.
  • The City of Nassau Revitalisation Act encourages the revival of the City of Nassau with respect to the construction, renovation and repair of residential and commercial buildings by providing exemption from customs duty for building materials. Further, the act encourages the exemption of real property taxes.

Comment

The Bahamas Investment Authority (BIA) regulates FDI. It is important that foreign investors that are seeking to acquire property obtain the advice of local legal counsel and provide all required documents for a project proposal to be submitted to the BIA. The legal counsel will also assist with obtaining regulatory approvals and permanent residency for the investor.

There are vast benefits to FDI in the real estate market; therefore, foreigners are encouraged to invest in The Bahamas' developing islands.

For further information on this topic please contact Kendira R Turnquest at at Lennox Paton by telephone (+1 242 502 5000) or email ([email protected]). The Lennox Paton website can be accessed at www.lennoxpaton.com.