Reading Tameka Lundy’s article in the Bahama Journal the other day:
27th February-PM Predicts ‘Decoupling’ of US And Bahamas Economies
Byline – Prime Minister Hubert Ingraham has introduced the term ‘decoupling’ into the flurry of local commentary on economic prospects for The Bahamas in 2008, suggesting that there will likely be a marked difference in performance between the economy here and that of the United States.
There are several truisms presented by Prime Minister Ingraham that directly affect real estate decisions to be made regarding the Bahamas in the next while.
Of particular interest is the statement that a very large portion of the Bahamian economy is not America-centric.
I agree that the general market place in the Bahamas will be less effected by the current slow down in the US. The Bahamas economy is intimately connected to several world systems, each operating on dynamics quite independent of the recent situation in America.
These include old ties with the British in the form of product and trade agreements, business investment and large holdings by British nationals and expats.
One of the largest port operators in the world – Hutchison Whampoa, operating one of its 45 world-wide ports in Freeport is a large multi-national concern with 220,000 employees world-wide, a number equivalent to approximately two-thirds of the population of the entire Bahamas. They are Hong Kong-based, and a private company. Freeport is its only operation in North America.
Canadian business is active here in the form of banking, investment and operating trusts. The Canadian economy remains buoyant despite its own proximity and interconnections with the American economy.
Businesses from the European Union have become a major player in the Bahamas, with entry of several companies increasing their North American holdings in an environment of favourable taxation and business costs.
Rising from a long history of conservative banking, we also have no banking problems, read bank collapses, problems from involvement in off-market securities, or derivative-based investment programs.
Nassau still remains one of the busiest transit points in the world for international money, due to its banks, trusts and other depositories. It is estimated that a significant portion of these funds – well over half – originate in economies other than American.
The Bahamas is a very good place for an American national to consider as a location for stabilizing value in real estate in particular. So far, land and property values here have stayed on a steady rise, with a continued supply of buyers and sellers from many places in the world.
So, although it is unlikely that there will be no effect felt in the Bahamas relative to the American downturn, it will be found as a pleasant surprise by the more-than-casual observer that America’s woes should not affect us as much.
As they are our nearest and oldest neighbours, we will be sure to keep our eye on things over the next while.