In the not too distant past, the process for a resort development in the Caribbean in general, and in The Bahamas in particular, would consist of the developer identifying the property, applying to a bank to arrange financing (signified by way of a commitment letter) and finally, approaching the relevant government authorities for approval of the project and permission to begin construction and or renovations.

Invariably, the developer was a hotel operator with sufficient years of experience under the belt to provide a certain level of comfort to both the government and the banker, since it was anticipated that this trio would be in for a long-term relationship; stretching at least 10 or 20 years, consistent with the terms of the mortgage on the property. That was yesteryear. Today circumstances are different. To

begin with , the proposed project is unlikely to be a stand along hotel. Instead, the proposal is likely to also include on or more golf courses; a number of condominium complexes and time share units; high-end single family residential units surrounding the golf course; a marina, shopping centre and possibly, a club house.

The resort investor himself is more likely than not to be a real estate developer who is more interested in the non-hotel properties; those properties that could be pre-sold to provide rapid cash flows to settle short-term, non-bank financing. And the non-bank financing used in the development would

most likely come from an equity-fund or a hedge-fund which, by definition, would expect above average returns on their investments over a relatively short period. Given those changes in project scope, ownership and financing there are now some fundamental change in the dynamics of resort development in the Caribbean region and of course in The Bahamas. To begin with, the multi-faceted projects are essentially mega projects in the billion dollar range requiring hundreds of acres for development. Moreover, the developers would expect to obtain title to the land in order to conduct advance sales to generate the necessary cash flow to retire any bridge financing.

In these circumstances therefore, only those countries that are prepared to cede large tracts of land to these developers will be considered as potential targets for foreign direct investment of this type. It is advisable for the authorities to develop policies in advance regarding land ownership, usage and above all, to obtain a buy-in from the community at large regarding environmental, economic and social suitability of the project. The funding of these mega projects, particularly in the Caribbean by equity and hedge funds is perhaps the most innovative and at the same time, the most politically and economically sensitive element of the new changes in resort developments in this hemisphere. These funds, by their very nature, have a primary objective of getting the best return in the shortest possible

period of time for their shareholders and then on to the next

deal.

Unlike the earlier project developers, they are not in for the long haul nor are they particularly interested in assimilating into the local environment and they are likely to pack up and leave at any

sign that their expected returns will not materialize. These funds, collectively, control an enormous amount of global savings, estimated to be in the trillions of dollars and are, fortunately or unfortunately, likely to be the main source of funding of foreign direct investments into the Caribbean and other parts of the world for many years to come. Going forward, we will have to learn to live with them, understand how they operate and adjust our expectations to the new realities. Many of the mega-projects proposed for The Bahamas are likely to be funded in one way or the other by these investment vehicles and therefore our recent experience with the BahaMar affair is unlikely to be our last.