Higher elevation commanding higher prices
NASSAU, BAHAMAS – Climate change is changing what’s valuable in the real estate market, says one of the industry’s top producers.
Monica Knowles, a top producer at Bahamas Realty and winner of several awards, said climate change and the impact of Hurricane Dorian are already changing how buyers view property.
“We may be shifting back to the era in land values that our grandparents had. Rather than having low-lying beachfront properties, more people will want to build high on a hill with a view of the sea,” said Knowles, who holds Realtor™ certification.
“While beachfront will always be desirable for its sheer beauty, greater consideration is already being given to elevation and it could shift even more if sea levels continue to rise and the population decides little by little to move further inland. That could produce a major shift in values.
“The perfect property of the future will be ocean or water view with high elevation or a building method that involves lifting the structure to allow water to flow through.”
When Hurricane Dorian ravaged Grand Bahama and Abaco last year, it struck the real estate sector harder than any other, damaging nearly 9000 homes and costing the sector more than $1 billion according to the Inter-American Development Bank.
With sea level rise projected to push swaths of the country under flood levels in the future if climate change persists, the risk to properties – especially low-lying ones – will be greater than ever.
Assessing risk is pivotal for those in the industry. And with a career that has included selling multi-million luxury waterfront estates, Knowles’ strength is paying attention to details and trends.
She advocates mapping out the physical risks associated with properties to project potential costs and advise clients. Like buyers, she says, the best associates and brokers factor climate risk into their property portfolios. The ones who aren’t will be caught off guard and eventually left behind.
“Identifying vulnerability is important and there are many related to climate change that must be considered. The value of low-lying properties is going to change slowly over a period of time as buyers become more aware of the impact of climate change,” she said.
Insurability will also become increasingly important in property decisions.
Knowles continued: “One thing people have to worry about is the cost of repairing and reconstructing damaged properties. We all prefer to spend money improving and upgrading our houses, not restoring them to previous conditions every so often.
“And with storms intensifying and happening more frequently, insurers in some markets internationally are beginning to raise insurance premium costs. That’s a risk to people in the Bahamas as well.”
Indeed, the shift from coastal properties to higher ground has already began in many vulnerable areas around the world, Knowles said.
She cited data from Attom Data Solutions which showed in 2016 that US home sales in flood-prone areas grew 25 percent less quickly than in counties that do not typically flood.
And in 2018, she said, the First Street Foundation reported that housing values in New York, New Jersey and Connecticut dropped by $6.7 billion from 2007 to 2012 because of floods and sea level rise.
“This is the reality of the age we live in,” Knowles said.
“But with risk comes opportunity. There are mitigation strategies people can embrace like building on stilts and there are ways to adapt their properties to the new threats. Climate change doesn’t have to be a death sentence for some vulnerable properties, but expert planning and careful consideration will be essential in preserving property values moving forward.”