Buying or selling a home involves a lot of things, it also raises questions. In this column ‘Ask Bob’, real estate expert/broker Bob Bartikoski of RE/MAX Paradise Homes Bonaire answers a real estate question from a reader. This time:
Question: What are the potential economic impacts of enforcing the zoning ordinance (ROB) in residential areas where vacation rentals are not allowed?
As written last time, for almost 14 years our island government has been turning a blind eye to short-term rentals in areas not intended for this purpose according to the ROB (zoning ordinance). This tacit approval has been the status quo for so long that most people cannot remember otherwise. Many second home buyers have considered these rental options when buying property on Bonaire. If this opportunity expires, I foresee a sharp decline in private investors who help carry our economy.
And what else will happen if OLB enforces this vacation rental ban?
First, many local businesses will take a big hit to their bottom line. Declines in sales and profits of service industries such as property management, cleaning, maintenance companies, laundromats and car rentals are to be expected. However, the impact goes far beyond profits for local business owners.
Jobs are at stake. When there is less demand, there will be less work for cleaners, property managers and maintenance teams, among others. Unemployment rates are bound to rise as a result.
Then there is the concept of Blue Destination and the goal of attracting affluent visitors with deeper pockets, rather than low-value mass tourism. Reducing the private villa supply is not in line with this goal. On the contrary, by taking a minimum of 300 luxury homes off the market, you weather with the known statistics (60% occupancy, average 10 nights, average 4 guests per booking), some 26,000 high-value guests per year! That's almost two monthly averages (14,000) of the number of visitors who stay in Bonaire according to TCB!
Many of our valued visitors with large vacation budgets, come here specifically for the privacy and tranquility that a private home offers them. These visitors rent cars, go to supermarkets, shop at local stores, dine at our many restaurants and seek out the conviviality of our many bars and beach bars. All of these activities stimulate our local economy far more than the "all-inclusive" hotel and resort guests who rarely cross resort boundaries, let alone contribute directly to the local economy as private villa renters do.
The loss of these affluent tourists will directly affect the economy, but the impact will not stop there. If there is no future demand for luxury, second homes, then the construction industry will also see a significant downturn.
Construction is the second largest economic driver on this island, after tourism. Fewer new homes means fewer construction jobs and reduced demand for materials, further damaging Bonaire's overall economy and job market.
If our government persists in its plan to enforce this ban on vacation rentals, I firmly believe that the island's real estate market will end up in a similar scenario to what happened in 2008-2009. If you weren't there to see that downturn then, consider yourself lucky. It took years to recover from declining property values and a very bad economy.
The strangest thing about this situation is that the only people who seem to benefit from enforcement of the ban is a handful of homeowners who are very vocal about not wanting to allow vacationers in their neighborhoods. These homeowners may not realize that if this enforcement initiative is implemented permanently, the value of their own properties could drop by 25% or more.
Perhaps, in retrospect, those vacationers were not so bad to have as short-term neighbors after all.
Please email me directly if you need more information on a specific property at [email protected]. Bonaire: +599-717-7362. Call for free from the US: 1-866-611-7362. See all our listings here.