Several years ago, the real estate industry perceived a proliferation of “high net worth” individuals (HNWs) seeking second or third homes, and the development industry geared up to build 5-star vacation resorts with expensive villas or lots to prepare for the onslaught of the latest nouveau riche.
Then the Global Financial Crisis happened, creating the dual adverse effects of lessening the ranks and solvency of the nouveau riche and also leaving behind partially completed resorts that had no hopes of being completed according to their original scale because of a steep drop-off in sales. Buyers became much more hesitant to provide cash down payments when they questioned whether the resort would not be completed or else completed without the promised amenities.
Tourism has been seriously affected by the crisis, too, which has resulted in less eyeballs exposed to these resorts under construction.
This situation has resulted in my traveling to many tourist destinations to appraise failed resorts in places such as Fiji , Mexico , Costa Rica , Puerto Rico , Brazil , and Barbados
Normally, when I see sales stop for a year or more, I never see a recovery. New buyers are scared off, thinking that the resort might never be finished and they would be left holding overpriced raw land in a wilderness lacking services and amenities.
Against this backdrop I was sent to look at a waterfront lot sales program at a struggling resort in Bimini. There were 41 lots sales initiated in 2012, but only one in 2013, although a previous phase of development produced a deepwater marina and over 350 condos and villas. These lots were typically sold as pairs, creating “sea-to-sea” parcels with a beachfront lot paired with a bayfront lot suitable for a dock. Sales prices were each over $1 million (USD or Bahamian dollars, which are equivalent).
Normally I would perceive the sudden drop-off in sales in 2013 as an indicator of another moribund resort, but these developers were able to find a savvy, deep-pocketed partner to bring back confidence and hope, and that partner was the Genting Group, the successful Malaysian casino and resort operator. For those unfamiliar with the Genting Group, their largest casino operation is their casino on
They already built a casino in this resort and it is now operational. Gamblers are ferried in from Miami (only 48 nautical miles west), where gambling starts on the boat when entering international waters and can proceed to the Bimini casino, which was built to showcase gorgeous views of the Caribbean rather than to shut out the outside world, as most casinos do.
There are many people who would not care to live near a casino, but the new casino is allowing the addition of more amenities, such as enhanced food and beverage operations, and a 300-room hotel which is currently under construction. A tourist hotel can be a nuisance, but it can also offer management services for those who own high-end villas on their beach lots and need maintenance, security and domestic services while they are away. A typical service might include the provision of fresh groceries and flowers in anticipation of the owner’s return.
Predicting the sale of these lots, and at what prices, is still a guessing game, but the shot in the arm by the Genting Group at least gave me hope that the lots could be sold as the number of visitors and amenities increase, and my assignment was to estimate a bulk sale value achievable within one year. Without the fortunate game change for this resort, I might have had to value the remaining unsold lots as raw land, particularly since there were 106 more unsold lots that were not part of the collateral.
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