BHC warned Govt against Grand Atlantic
Bermuda Housing Corporation warned Cabinet against building the Grand Atlantic development in Warwick, Community Minister Wayne Scott told MPs yesterday.The Minister said in a statement to the House of Assembly that BHC was informed of the plan for a hotel and housing development on the South Shore in 2009.“The Grand Atlantic project was a Cabinet directive, which the Corporation cautioned against,” he said. “At that time, the data regarding the real estate market supported the case that the cost of housing was falling and the demand was not there.”He said it was agreed that BHC would buy 78 of the 125 units and offer them for resale, with an option to buy the additional 47 units “if the market supported the purchase”.But “sluggish” sales, resulting in just one person buying a unit, meant the quango could not “afford the financial strain” of Grand Atlantic.In 2009, Major Glenn Brangman was general manager of the BHC. The organisation last night declined to comment on the matter.However, former Public Works Minister Michael Weeks confirmed Mr Scott's statement.Mr Weeks told The Royal Gazette: “Back in 2008 to 2009, before I became Minister, the BHC cautioned the then Minister from building those units.“The Minister, [David] Burch, at the time, reasoned that these units would not target low income earners but rather first time homeowners.”If not for the “drastic downturn” of the recession, Mr Weeks added, “this could have been a good target market as this is a prime piece of property”.In earlier statements, he charged that the One Bermuda Alliance's “scaremongering” on Grand Atlantic had driven away buyers.An OBA spokesman last night said Mr Weeks was “skating on very thin ice” by pinning responsibility on the former Opposition.“The Grand Atlantic project has not worked, and the new Government's decision to consider new uses for the site reflects that sad fact.”Government announced last week that the development would be marketed here and abroad and could be turned into something other than a housing complex.Yesterday in the House, Mr Scott said sales of the remaining units had been suspended and a request for information (RFI) would be published inviting expressions of interest in the development from investors.Potential buyers will be given six weeks to respond to the RFI.Mr Scott added: “After significant review and assessment of the financial status of the Grand Atlantic project, the Government has concluded that the only responsible thing to do is to take a step back before any further decisions are made as regards the 77 units within the development.“Government also considered the consequences of putting 77 units onto a housing market which already has a surplus of empty apartments.”Useful website: www.parliament.bm.
Bermuda's real estate market was sinking by the time Grand Atlantic units were under construction.
Penny MacIntyre of Rego Sotheby's said the condo complex's prices were favourable at a time when new condominiums weren't going for less than $650,000.
But its prices weren't reflective of the market chill that had settled in by 2009.
The units' values today would likely be “at least 30 percent less than the 2009 figures”, Said Ms MacIntyre, executive vice president at Rego Sotheby's.
Grand Atlantic, which was subsidised by Government, offered entry-level housing units ranging from $495,000 to $645,000.
Government subsidised housing built earlier had come out at lower prices: Harbour View at Southside in St George's had offered units for $275,000 in 2011 and the Loughlands estate marketed two- to three-bedroom units between $470,000 and $530,000 in 2010.
“The selling price [for Loughlands] ended up being $427,000 to 475,000,” Ms MacIntyre said. “That didn't really even cover the cost of building them. It didn't factor in the land price, which was not disclosed.”
She said that condos are real estate's hardest-hit sector and today sell for less than it cost to build them.
“There are units that were on the open market across from Grand Atlantic that were approximately $650,000 in 2008 to 2009 — then Grand Atlantic went up and blocked views,” Ms MacIntyre said. “A condo [there] recently traded for just $360,000.”
She added: “We hope the new land policies will stimulate activity for the existing inventory, but with respect to subsidised homes at the lower end of the values, this is adding to choices for buyers, and, as I said, you have to take into consideration that the values are likely to be impacted at 30 percent less than 2009 figures.
“And is that even covering the cost of construction? The more important question is, is that something that's financially responsible to undertake?”
