By INDERIA SAUNDERS, Guardian Business Desk, Inderia@nasguard.com

A KPMG survey of bankers and developers in the Caribbean argues what some Bahamians may already know: This country could be getting carried away with the size and scope of resort development.

"Nearly 40 percent [of respondents] thought that in jurisdictions, such as Puerto Rico and The Bahamas, product supply could be outpacing demand," reads the new report, authored by the accounting firm's Simon Townend — head of its Nassau finance unit.

He'll release those findings today in Trinidad and before a regional conference on economic prospects for the Caribbean.

The work represents KPMG's fourth annual Regional Banking Survey for the West Indies, and comes on the heels of this government's announcement that it has now approved more than $9 million worth of projects for The Bahamas.

Coincidentally, these projections come at a time when the nation is just starting to re-grow the number of visitor arrivals, although why that's happening is the subject of some debate.

"The increase in air arrivals for New Providence is based simply on the fact that we had more room inventory in January and February of this year versus 2007," Bahamas Hotel Association executive Frank Comito told Guardian Business Monday. "With the opening of The Cove and The Reef at Atlantis, this added over 1,000 rooms.

"The Sheraton is fully operational, which more than counters the lost rooms due to the closing of the Nassau Beach Hotel. While arrivals are up, room occupancies are down for New Providence, which is the real factor to look at.

Comito's comments appear to support the opinions of regional bankers concerned about the growth in room inventory, which they charge has outstripped demand. That's likely to dissuade many potential investors and their bankers worried room revenues will decline as they did in 1989 when the addition of the Crystal Palace bumped up the number of rooms just as the U.S. economy headed into recession.

One saving grace for this nation, however, is its move to embrace the high-end of the market, with premier names like Ritz Carlton and the Four Seasons increasingly part of the inventory.

"It is expected that the impact of the economic downturn and tightening of credit terms will have less of an impact on the high end market," says the survey.

However, almost half of the group of lenders surveyed reported seeing a slowdown in second-home sales, a direct result of the U.S. subprime debacle and its continuing effect on the global economy. They point out that in regions relying heavily on U.S. purchasers, the effect is even more pronounced.

"Over 50 percent of lenders noted that pre-sales on projects with a real estate component are slowing," said the reports. "Most of these respondents indicated that this weakening was more prevalent in markets where the focus is on mid-priced units."

Still, this news comes as no surprise to many Bahamians, deluged with reports of luxury homes in Nassau and elsewhere, many now languishing on the market. The situation has never been more true than in the western area of New Providence, where townhouses average about $500k. That inventory surge is likely to drive down prices and, as it has in years past, the cachet of the destination among second-home buyers.

Financing opportunities are also likely to be effected.

Kerzner International recently delayed its mixed-use Hurricane Hole project, citing market influences.

Still, many surveyed believed the region would fare well during global times of economic hardships. They point specifically to the relative wealth of Europeans, who've seen their own currencies climb against the greenback.

Townend's the survey canvassed senior commercial lending decision-makers across the region, as a group holding an aggregate exposure in the Caribbean of more than $4.5 billion. It also surveyed regional developers of $1.1 billion in projects.