Burchall Report: Bermuda Rental Market in 2010
[Written by Larry Burchall] In March of last year (2009), in the Bermuda Sun “Sun Shopper Real Estate” For Rent section, twenty-two ads for houses and apartments for rent. Twelve months later, the same section had sixty-eight ads. In twelve months, a three hundred percent increase in empty rental units. That doesn’t mean that there are three times as many empty units island-wide. But, it does mean that there are more empty houses and apartments than a year ago.
Government Employment surveys show 40,213 people in Bermuda’s National Workforce in 2008. The National Economic Review 2009 reports only 39,502 people in 2009. That’s 711 fewer people – 711 fewer jobs – in Bermuda’s 2009 National Workforce.
Popular lore says there are hordes of unemployed Bermudians. Government reports indicate fewer people lawfully working on Work Permits. Between lore and report, it is likely that the majority of the 711 people who disappeared from the National Workforce were Permit Workers. Unable to own property in Bermuda, these disappeared workers would have been house and apartment renters.
So a big part of the increase in empty rental units is due to the emptying of apartments and houses as scores of Permit Workers returned home.
How many houses and apartments are seeking tenants now? Probably hundreds. How many Bermudians are seeking houses and apartments to rent – and not finding them? Probably hundreds. But the hundreds of Bermudian seekers are likely having a problem meeting some rent levels. So rather than a housing shortage, there is now a typically unique Bermuda problem in that there are many empty rental units but the price to demand relationship is wrong.
Many apartments available at $3,000 a month, but a shortage of Bermudians who can afford those rent levels. The real problem? A price imbalance. Not a shortage.
If there is further shrinkage in the National Workforce, more apartments and houses will come on the market. Bermuda will then experience significant price adjusting as Virtual Landlords – those with un-rented units – try to become Real Landlords – those with rented units.
In 2010, for the first time in over twenty years, Bermuda has seen an increase in the number of places for rent, increasing competitiveness in rent pricing, and a reduction in overall rental incomes.
Two reasons for this to happen.
First, those landlords still carrying mortgages will be forced to drop their prices until they get paying tenants. Second, renters are now able to shop around and switch accommodation in order to get better value for money.
There is other evidence of change in Bermuda’s rental market. Over the past few months, “For Rent” signs have appeared about the Bermuda countryside. These hitherto unnecessary signs are also signs of change.
Truly a buyers market, and one in which they have – and will continue to have – significant clout.
Four months ago, a colleague of mine, Front Street based CEO (no names), looked at exec 4 bed with waterfront. They wanted $11,500. Rented it at $8000.
More recently, friends looking to change to another 2 bed. Nothing special wanted. Found what they liked, rent was $2950. Got it for $2100 – and could have pushed lower probably, but settled at what they felt was economically realistic.
Only hope of price stabilisation is if some come out of the market and push supply downwards.