ROUNDTABLE: BERMUDA’S ECONOMY
Q1: HOW WOULD YOU CHARACTERISE THE HEALTH OF THE BERMUDA ECONOMY IN THE CONTEXT OF THE CHALLENGES OF COVID-19?
“Estimates suggest that maybe 10 percent of the economy has taken a hard hit.”
Dennis Fagundo: I would say that the Bermuda economy is now divided into two distinct sectors. Normally one would think of it in terms of international business and then the domestic economy, but that has shifted. The split is now between businesses that were able to stay open and continue normal operations and those whose demand has been significantly reduced.
Estimates suggest that maybe 10 percent of the economy has taken a hard hit, and the remainder is doing well and stabilising. In that sense, we are in much better shape than most other jurisdictions and are in a strong position from a health perspective.
We believe we are able to maintain that health while continuing to operate and keep the economy moving.
The Chamber of Commerce supports the Work from Bermuda programme and views it as highly successful. We would support the ability to renew those certificates when they expire. We would like those people to become permanent residents and for that process to be smooth and painless.
“The Work from Bermuda One Year Residential Certificate has been successful.”
Roland Andy Burrows
Roland Andy Burrows: I agree. In terms of international business (mainly the financial services sector), there is still growth. Because Bermuda has been open for business during the pandemic, albeit with less face-to-face contact, the insurance sector and others have benefited.
We are seeing a lot of new businesses looking to come to the Island, as well as some startups.
The Work from Bermuda One Year Residential Certificate has been successful and people are using the extended tourism 180-day provision as an opportunity to come to the Island on a long-term basis.
More than 140 applicants for the Work From Bermuda Certificate have come through the BDA’s concierge service directly, while the government has received a total of 557 applications as of the end of October, with 442 of those approved.
Ultimately, we hope that those kinds of moves will translate into permanent domicile on the Island. All in all, many sectors are still doing well.
“Plenty of companies are trying new things before the calendar turns to 2021.”
Jerome Wilson: The government has done a very good job of keeping the Island open and putting in place a system that ensures everyone is kept safe and tested regularly—whether they are visiting or living on the Island.
Work from Bermuda is a brilliant idea that is proving very successful. Our firm has been assisting a few of those individuals with their applications, which is beneficial to the whole community. It is injecting some much-needed economic activity and buzz into Bermuda.
As for the economy itself, we remain busy. We are doing plenty of work including mergers and acquisitions on a large scale. We continue to handle regular financing for our Bermuda clients and haven’t noticed a huge impact from COVID-19—apart from the fact that most of us are working from home most of the time.
The future looks bright. We are very busy and as we head towards the end of the year, plenty of companies are trying new things before the calendar turns to 2021. All indications suggest that we will continue to be busy.
“How does the government encourage increased immigration?”
I agree that there are now two economies: one that’s face to face—hotels, restaurants and so on; the other is business like ourselves which have had a different impact.
Damian Cooper: I agree with most of what has been said, but I think the important thing is looking forward. How does Bermuda capitalise as the world comes out of COVID-19? We are seeing a lot of activity in terms of new startups, re-designations and mergers.
It will be important to have those parts of the economy that are doing well support those parts of the economy that have been struggling. How does the government encourage increased immigration and increased job residencies from new companies so they can support and fuel growth in parts of the economy that have been sidelined?
Targeted efforts in that area will be important if Bermuda is to come out of the pandemic in as strong a place as possible.
“Analysts are predicting a strong, hardening market on the P&C side.”
John Huff: I hope we can capitalise on the next 18 months, because it is a great opportunity—particularly for the P&C global reinsurance market. When there is uncertainty in the world, our industry always does well.
On the positive side, the government has contained COVID-19 and we have probably the strongest record in the world for keeping residents and visitors safe. The question is how to leverage that into new business opportunities.
Work from Bermuda is a fantastic programme, and my slogan is “every dollar counts”. This is all new economic activity for Bermuda, and we should think in terms of being granular enough to count every person that comes to the Island because of that programme. According to the most recent estimates, around 500 have been approved to arrive.
Analysts are predicting a strong, hardening market on the P&C side, which is a great opportunity for us. We are seeing some startup companies, but also a flight to quality with our established Bermuda members being able to go to market and raise capital.
It’s not uncommon for firms to come back with $1 billion of new capital ready to deploy for 2021.
“We have the best of personal freedoms of any country in the world right now.”
Greg Wojciechowski: We need to reflect on where Bermuda sits in the world in relation to the continuum of COVID-19. We are in the middle of an increasingly alarming situation currently within the US, Europe and the UK, but for a small country we have handled the pandemic remarkably well.
If you come to Bermuda, the only thing that is amiss—other than daily air traffic—is the fact that we are all walking around with masks on. We have it under control to a point where we have the best of personal freedoms of any country in the world right now. That is exceptional.
Yes, I agree we have a two-track economy. On the one hand, there is the tourism and service economy; on the other is the international business economy. When you pull the plug on cruise ships and visitors coming in to Bermuda, that is bound to send serious shockwaves through the domestic economy.
One of the things that the Bermuda government did early on was to recognise the challenges ahead and stimulate the economy by providing unemployment relief so they could help families that were impacted by job losses. The international business community also received credit for assisting Bermuda during these difficult times. That was phenomenally helpful. >>
“I see many positives coming out of this situation.”
<< Currently, we are in a very interesting position. We are coming out of the darker days of the pandemic, but we are moving into this new situation with massive uncertainty around what will our new business environment look like.
For the Bermuda Stock Exchange (BSX), I am pleased and quite surprised how well Bermuda has held up and how we continue to effectively service our international clients. In terms of ILS we have record numbers of new issuance at the moment. We are busy. Of course, we had to pivot from in-office meetings to a virtual world, but I don’t think we’ve missed a beat.
The interesting question is how we capitalise on that and move forward. Fortunately, it may not be as hard as earlier predictions because an important reason Bermuda continues to be successful is because of the foresight and hard work put in beforehand.
We created a solid infrastructure, a sound regulatory environment, and a reputable product that is respected internationally—whether it’s insurance or financial services. The future is bright, and we must leverage that.
Charles Thresh: I see three recognisable phases: immediate emergency measures, contingency planning, and substantial ongoing fiscal stimulus by the government. Now that we have come out of the dark days, we are trying to claw our way back to normality and create something approaching sustainability.
“The market has not been this active for more than a decade.”
But what does the new normal look like? What is the Bermuda economy going to look like and how many people do we need in Bermuda to sustain us for the long term?
The ideas that we are implementing right now are laying the foundations for what the new normal will look like. Issues such government investment in infrastructure to stimulate jobs in the economy, for example.
There is also the question of the Work from Bermuda certificate initiative. Is it an experiment? Will the public accept an influx of people? Will it have a trickle-down effect on the economy?
That requires an important dialogue between the private sector and the public sector. But I see many positives coming out of this situation.
Penny MacIntyre: As well as my real estate business I am the chair of the Bermuda Hospitals Charitable Foundation so I can see both sides of the COVID-19 equation—the general economy as it relates to real estate, and the health impact. We are all extremely grateful to the doctors, nurses and care providers who continue to keep us safe.
In terms of real estate, we are seeing a huge uplift; if you are not making money right now, you really should not be in real estate. Every single sector is packed. >>
“We are attracting people on an international scale.”
<< The Work from Bermuda programme has taken up all the inventory that was available on the residential side and now we are struggling to find accommodation that manages the expectations of the international visitor.
Tourists are also staying longer, so they want to have a lifestyle component to match their expectations. They want to cook in their own homes and stay up to 180 days. Factor in the Work from Bermuda programme and it is easy to see why a lot of our sales listings are occupied.
People want to be on the water. They also want to have a certain image and are looking for more modern inventory. The hardest part for us is finding furnished properties.
On the sales side, the market has not been this active for more than a decade in terms of local buyers. Bermudians either think their home doesn’t have enough space, or they have too much space and are thinking about selling or upscaling their home. Others are doing renovations.
We are getting a huge cross-section of activity and the international market is also very busy. People who are leaving the cities and seeking a new quality of life see us as an attractive proposition.
“We have seen a continued interest in larger, investment-style properties.”
We are very safe, very civilised and business-orientated. We are attracting people on an international scale because they know that they can settle in, bring their families and potentially do business here.
Our commercial world is also busy. There are several startups, and many people are taking on office space so that they can achieve social distancing in their company. Others, who are continuing to work from home, decide they don’t need as much space and cut costs as a business.
There are also clients who are acquiring commercial properties right now. So, in every aspect, we are flat out.
Fagundo: On the construction side, we are still seeing a fair amount of activity. There was quite a bump, particularly over the summer months when people who had set aside a budget for vacations decided to spend that money on improving their surroundings.
As a result, there was an increase in small renovations and more modest contractor-type work. But we have seen a continued interest in larger, investment-style properties and are bringing them up to speed.
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