When people think of reasons to invest in The Bahamas, they might want to add sun, sea and sand to the list.
"We call it following your money. The Bahamas provides a destination, we believe, not only for financial management, but for lifestyle, and we think that in a world under increasing crisis, The Bahamas will become more attractive," says Wendy Warren, CEO and executive director of the Bahamas Financial Services Board (BFSB). In fact, 10 per cent of tourists who visit The Bahamas document in exit polls that they are on business, says Warren.
She believes the actual numbers are higher.
"We have land. We're not in any way impeded by our location. Time zones and accessibility continue to be very attractive, and there are many incentives in The Bahamas for actually moving to the country," says Warren.
Specifically, new legislation has been introduced to reduce property tax rates on homes valued between $250,000 and $500,000 from one per cent to 3?4 per cent, and to one per cent from 11?2 per cent on homes valued over $500,000.
This is of particular significance to investors who want to make The Bahamas their second home, or even their primary domicile, since the government offers incentives to foreigners who buy property valued over $500,000, including accelerated consideration for annual or permanent residence.
Under Bahamian immigration rules and the International Persons Landholding Act, the annual home owner's residence card gives the owner, spouse and any dependent children the right to live in The Bahamas for the duration of the validity of the card, although it does not confer resident status or the right to work.
Ian Fair, a financial expert with extensive experience in private banking and former chairman of the BFSB, says the second home market is an integral part of the financial services sector.
"I have always said the tentacles of the three prongs of our economy - the second home market, tourism and financial services - are all deeply intertwined. I don't think most people realize how much they are intertwined."
If high-tax countries, under the guise of the Organization for Economic Cooperation and Development (OECD), continue to try and stop their wealthy citizens from legitimately employing tax neutral jurisdictions such as The Bahamas to mitigate the impact of high taxation, the real estate industry is set to grow, predicts Fair.
"If the big countries of the OECD succeed in ring fencing their citizens, my view is that they will then start to regulate and tax them to death, their citizens will finally wake up to what this whole exercise is about, and will hopefully, or almost certainly, vote with their feet. And then The Bahamas has an even better opportunity," says Fair.
"We can get people to follow their money here and have a second home here, or have their principal home here. We've seen that already. We have a huge second home market, and a large part of that second home market has its roots in the financial services industry."
Statistics bear him out. According to a Forbes Global report, more than half a million Brits now own homes abroad. And a World Wealth Report released by Merrill Lynch and Cap Gemini Ernst & Young in 2002 revealed that "many high-net worth individuals started moving their money toward hard assets such as real estate, fixed income and alternative investments near the end of 2000." It placed the number of high-net worth individuals at 7.1 million in 2001, with a combined wealth of $26.2 trillion, up three per cent from 2000. The growth was partly attributed to the ability of wealthy individuals to keep their assets in offshore jurisdictions.
In the case of Canadians, who are taxed based on their residency in Canada, The Bahamas has got a lot to offer, says Hywel Jones, president of Britannia Consulting Group. "They spend 180 days here, 120 days in the United States, and wherever else they want to be the rest of the time and not pay tax anywhere and keep their Canadian passport. I think The Bahamas has got a lot to offer those people."
But even for non-Canadians the attractions are obvious, beginning with location, location, location. The Bahamas is a 50-minute flight from the US east coast, in the same time zone as New York and the major markets, and boasts a year-round sunny climate that prompted Columbus to christen the archipelago "the isles of June." Telecommunications are first-rate and there is a strong professional base to serve a wide variety of business needs. To top it all off, The Bahamas boasts first-class hotels, pro golf courses, some of the best diving sites in the world and an abundance of recreational opportunities.
Pascal Hammerer, managing director at Templeton Global Advisors Ltd in Nassau, says that lifestyle is increasingly one of the key attractions for wealthy individuals coming to The Bahamas.
"More people are deciding to retire early, or to semi-retire and continue to do business in a more relaxed way. Many no longer want to live in colder climates and to just take the occasional vacation. Having made enough money they may want to move to The Bahamas and establish their base here - be in semi-retirement whilst traveling to wherever they need."
And the more aggressive and fast-paced the business world becomes, the more people will want to move to places such as The Bahamas, predicts Hammerer. "They think ?Why should I have a heart attack at 55 for my company?'"
Even terrorism fears have had an impact, he notes. "These issues are going to be around for a long time and will not disappear in people's minds. More and more Americans and others are coming here to spend weekends. They come on private jets and yachts and spend time anywhere a plane can land or a boat can anchor. This is increasing quite significantly."
In fact, a World Tourism Organization report in 2002 confirmed that following the Sept 11, 2001, terrorist attacks in the US, nearby destinations "prospered due to widespread apprehension about travelling far from home."
And unlike its neighbours in the Caribbean, The Bahamas has the added attraction of more than 700 islands and cays, many just a short boat ride away from Nassau.
"The beauty and attraction of The Bahamas are unique," says Hammerer. "One can choose to spend each weekend on a different island."
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