All categories, from one-bedroom apartments and cottages to family and executive homes, “saw an upsurge in demand”, the luxury residential sales market “saw a significant increase in contracts in 2021” and “the resource Bermuda’s rarest land – land – saw a measurable increase in sales volume and average sale price.
This is according to a review by Rego Sotheby’s International Realty, which said: “This article provides an in-depth discussion of the Bermuda real estate market in 2021 across all sectors, highlighting significant increases, ongoing trends and emerging market trends. and providing insight into what 2022 should bring. Included is Sotheby’s International Realty’s Luxury Outlook Report, which examines global trends and opportunities in the real estate market worldwide.
1. Market overview
Rebound in all sectors
“No one expected the real estate market to rebound the way it did in 2021 in the second year of a global pandemic, declining economies and stay-at-home mentalities. Market confidence was alive and well despite lifestyle changes, low interest rates and pent up consumer demand. With fewer people taking vacations and spending on luxury items like boats, cars and real estate, the market has seen competing bids on properties. Rising average selling prices were the norm in 2021 across all industries. Non-luxury residential properties saw a 17% increase with an average sale price of $1,023,000, while condominiums under $25,800 ARV saw a 30% increase in the average sale price of $322,000 $.
“Most obvious to residential owners and potential tenants was the scarcity of available properties; therefore, resulting in higher rental values. All categories, from 1-bedroom apartments and cottages to family and executive homes, have seen an upsurge in demand from both long-term and short-term tenants. Work participants from Bermuda [AKA “digital nomads”] depleted short-term market inventory and took over some of the long-term rental and sale properties.
“The luxury residential sales market saw a significant increase in contracts in 2021 with a record 73% purchased by Bermudians, RPC holders, BOTCs and trusts. The average sale price in 2021 also increased from the previous year to reach $6,000,000 with Rego Sotheby’s International Realty [Rego SIR] responsible for 50% of these transactions.
“Bermuda’s rarest resource – land – has seen a measurable increase in sales volume and average sale price. The introduction of estate lots in Riddell’s Bay contributed significantly to these increases, pushing the average market sale price of land to over $1,000,000, up from $331,000 in 2020.
2. Rental market
“Despite the decline in overall market supply, Rego SIR has rented the highest volume of properties over the past 5 years, with the average price of residential homes declining by 14%. This reflects the shortage of supply in large family houses in the local market.
Increase in average rental prices for residences and condos
“Average rent prices increased in all areas, for both residences and condominiums, with the exception of T1s which are generally subject to rent control. The most significant increase was the average price of 4+ bedroom family homes, which was up 56% from 2020. This reflects the low supply of large, high-end family homes in 2021. Like residential properties, these were the largest 4-bedroom condominiums and more, which had the highest price increase of 79%.
Significant reduction in market supply of 30%
“The peak in the supply of rental properties in the market was in January 2018 after the America’s Cup and remained stable from 2019 to 2020. Since the pandemic, the rental market has seen a drop in the number of listings of about a third of the inventory was available compared to 2019. This is an extremely significant reduction in supply which has led to an increase in rental prices.
“What we’ve experienced in 2021 is the client’s perceived importance of the agent role. In a tight market, even as real estate technology and public data sharing have advanced, tenants matter more than ever on the expertise, resources and market knowledge of real estate agents to help them find a property and be one of the first to see it Large family homes in good condition, in a good neighborhood and offering extras, including a pool or view, often receive multiple offers above the asking price.
3. Commercial sector
Demand for Class A rental space remains high with minimal inventory
“Following the trend started in 2020, 2021 has seen strong demand for Class A rental space. With Point House now fully let and minimal inventory at the Waterfront Complex, the ability to accommodate tenants at this end of the scale decreases Class A rentals range from $50 PSF to $90 PSF, depending on various factors such as location, views, amenities, building age and parking. per square foot, Class A buildings often reflect higher service charges ranging from $15 PSF to $25 PSF, and these do not necessarily include electricity, Corporation of Hamilton tax and tax The Class A market is dominated by insurance, reinsurance, hedge funds, financial institutions and law firms of existing and new island businesses.
“On the other hand, inventory in the Class B market remains widely available with a smaller audience. Inventory in this bracket has been on the market for over a year. Class B rental rates range from medium PSF of $20 to high PSF of $30 with service charges ranging from $8 PSF to $12 PSF These buildings are generally not in the central business district, may not have all amenities modern such as elevators, generators and often lack water views or parking Most of the interest in these buildings came from the local market and businesses that are not driven by prime locations in West Hamilton.
“The hospitality and tourism sector has been very active as The Loren’s remaining villas in Pink Beach have been sold to international buyers. The Loren Villas, St. Regis Bermuda Residences, and Azura Resort condominiums, with their lockable design and landlord incentives, have proven attractive to investors and homeowners. By the end of the year, the inventory of internationally available condominiums had shrunk to 4 physically ready units between the first phase of St. Regis Bermuda at Jobson’s Cove and Azura. The second phase of St. Regis Bermuda of 15 additional residential condominiums under construction had been sold or reserved at nearly 47% by the end of the year.
Decrease in unit volume and average sale price of commercial buildings
“There were a total of six commercial sales in 2020 with an average market sale price of approx. $1.3M. There was higher demand for warehouse/industrial buildings outside of the city of Hamilton, reflected in the type of inventory that was being traded.
“In comparison, there were a total of four commercial sales in 2021 [to date recorded by the Land Title Registry Office] with the average sale price slightly lower at approx. $1.23 million. Buyer demographics include Bermudians and those who will be homeowners. Rego SIR accounted for 75% of commercial sales in 2021 including 26 Burnaby Street [previously the BMA & Butterfield Bank Private Banking] and 93 Front Street after a total of 141 days on market. Another notable Rego SIR sale in St George’s was the 12,000 square foot Somers Wharf building. Prices per square foot varied widely from $135 PSF to $370 PSF depending on location, attributes, rental income, or potential and existing building conditions.
What to expect in 2022
“In 2022, our observations suggest that renters and buyers will continue to search for value when they are unable to acquire move-in ready accommodation in commercial and residential properties. New and renovated properties will dominate the market. transactional activity and unless more properties come on the market, volume should be subdued this year.
“The health of our economy will be hugely dependent on the health of our citizens this year and, therefore, the tourism industry. We will need all the boats to rise with the tide this year if we are to survive the onslaught of quarantines, curfews and testing.
“2022 will likely be the year of the international shopper with the opening of borders and the rollout of vaccinations and boosters. Sotheby’s International Realty® Luxury Outlook Report 2022 identifies trends likely to shape global high-end real estate markets in the coming year. The full report offers insight into the high-end real estate sector as pandemic reopening starts and stops fueled even stronger demand and stocks struggled to keep pace. Relief from the market frenzy may not come quickly as prices are expected to rise in 2022, the global report reveals. In addition, the shift to a hybrid work model is prompting more buyers to invest in real estate and look for larger houses that can accommodate remote people. work while remaining within transport distance. Read the full report here.”
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