Strong defence presence increases investor interest in GO Zone

When Hurricane Katrina hit the Gulf Coast of America back in August 2005 and wrought untold damage to the lives of thousands of citizens in Harrison, Jackson and Hancock counties, fortunately there had been sufficient warning for military bases and defence installations in the area to evacuate all but essential personnel.

This certainly prevented further significant loss of life, but it did not completely help the thousands of families evacuated who returned a short while later to discover that their homes had been lost and their communities devastated.

The effects of Hurricane Katrina are still being felt to this day all along the Gulf Coast; and in Biloxi in Harrison County where a number of strategic defence and aerospace installations are situated, the need for housing for the high numbers of local citizens and military personnel is having a very real effect on the state of the local housing market. 

NASA's Stennis Space Center and Keesler Air Force Base employ 19,500 and 11,200 people respectively, with nearly 7,600 military positions also open which brings at least this many families to the immediate region – and high proportions of these people are still waiting for housing in Biloxi.  With the news that Keesler Air Force Base is one of the shortlisted finalists to become America's headquarters in the fight against cyber-terrorism, this could create 10,000 new jobs in Biloxi and bring even more people to the area creating even further upside pressure on the property market.

Depending on which way you look at it, the intense demand for housing in Biloxi is either an investor's dream come true, or a rental tenant's bad dream…

On the one hand you have the likes of CNN promoting the fact that Biloxi is now one of a limited number of locations in America where the housing boom continues; their findings are backed up by the Office of Federal Housing Enterprise Oversight which has shown that house prices in and around Biloxi continue to climb fuelled by such intense demand.  But on the other hand you have to understand about the plight of those left homeless and still living in Federal Government assisted housing and mobile homes.

In terms of just the housing loss caused by Hurricane Katrina, the loss was almost incomprehensible; in a state where nearly 30% of all residents are rental tenants, 72,116 rental units were damaged or destroyed as well as 65,000 owner occupied homes.  To this day, whilst business has recovered more strongly than ever in Biloxi and an estimated 90% of the pre-Katrina population has returned home to the area, there is a housing shortage to the tune of at least 55,000 properties that will need to be built in the next few years to meet this demand.

The government of America immediately realised that it would need to put incentives and attractive benefits in place to draw in the high levels of constructor commitment required all along the Gulf Coast following Hurricane Katrina. In addition, it realised that it had an obligation to ensure that citizens who rent property such as military families and those who work on defence installations in areas such as Harrison County were also looked after.  As a result, the government created the GO Zone Act – or Gulf Opportunity Zone Act to give tax breaks and financial incentives to encourage property construction and also to encourage property investors to buy up housing to rent to the waiting tenant demand.

In the Biloxi area, GO Zone qualifying developments such as Bayside Park are proving particularly popular with property investors.  Speaking about the development, Danny Silver, Managing Director of Property Direct America explained: "the development sees the construction of single unit family homes which are constructed in an environmentally conscientious yet affordable way. 

"The homes are for sale at well below current market prices because they are constructed on government subsidised land, and because of the tax breaks and fiscal benefits offered to all investors and the attractive mortgages available, these properties are being snapped up. 

"They are just the type of family home in intense demand among the stable base of tenants that springs from the number of military and defence installations in the area, meaning that an investor can not only buy an attractive property with strong potential to enjoy capital appreciation, but within days of the off plan homes being completed investors can make a real difference, house families and be enjoying stable rental income."