As we welcome in a new year, I thought I’d take this opportunity to provide a recap of the Cayman Islands real estate market for 2022 with respect to volume, transactions, inventory, and overall pricing as well as provide some insight as to where I believe our market will be heading into the new year.
Please note that all figures included in this article are taken from CIREBA and are quoted in US dollars.
A look at sold transactions and volume
In 2022, the total number of sold transactions was 877, which is down from 1,066 in 2021, a 17.7% decrease. With respect to volume, 2022 saw $962,364,858 in sales, which is down from $1,083,517,685 in 2021, a 11% decrease.
At first glance, one could say “the numbers are going down and that’s not good,” but there are several factors contributing to the overall decline that I think are imperative to explore.
It is important to keep in mind that 2021 was a record-breaking year for real estate in the Cayman Islands. It was the first time in our industry’s history that we hit over $1 billion in sales volume. In fact, Cayman was not alone, globally the real estate market started booming beginning early in the pandemic, which only started to slow down later in 2021.
It was unrealistic to think that sale volume could continue to climb at such rates. For example, total sales volume in 2020 was $693,953,572, meaning 2022 numbers are up 36.7% compared to 2020. In 2019, which was our biggest tourism year ever our sales volume was $640,279,158, meaning that 2022 numbers are up 50.3% compared to 2019. So, although our overall volume is down 11% year-over-year our real estate market is still very robust.
When you look at sold transactions, we are seeing an overall decline as well. This is being led by two major factors. One, inventory at the lower end of the market, which I explored in an earlier article, is at an all-time low and new inventory at the lower end of the market is not coming on the market especially with respect to single family homes.
Secondly, new inventory coming on the market is being quickly absorbed. I will go into this further shortly.
The fact that our year-over-year volume is down 11% versus 17.7% for transactions is a clear indicator that prices are continuing to increase across all sectors of the market. Higher end properties especially single family homes are seeing substantial price increases as well as condos especially along Seven Mile Beach. Even at the lower end of the market prices are increasing as inventory levels continue to decrease across the board.
When you look at new listings, we saw a total of 1,523 new listings in 2019. This number dropped to 1,318 in 2020, a 13.5% decrease and rose slightly to 1,353 in 2021, a 2.7% increase. In 2022, 1,587 new listings hit the market, which is a 17.3% year-over-year increase. This increase was spurred mostly by several new developments coming onto the market as well as people continuing the trend that began during the pandemic of people re-examining what home means to them.
Average price per listing – solds and new listings
The average price per sold listing has been increasing year-over-year. In 2019, the average price per listing was $770,492. In 2020, that climbed to $987,131 a 28% year-over-year increase and in 2021, that climbed again to $1,016,433 a 3% year-over-year increase. In 2022, that number has risen to $1,097,337, which is an 8% year-over-year increase and a staggering 42.4% increase in just 3 years.
These substantial jumps in average sale price are not common to the Cayman Islands but something that has been seen on a global basis.
When you look at new listings, we are seeing the same trend with respect to pricing. In 2019, the average price per new listing was $981,687. In 2020, that climbed to $1,119,016 a 14% year-over-year increase and in 2021, that climbed again to $1,528,875 a 37% year-over-year increase. In 2022, that number has risen to $1,830,883, which is an 19.8% year-over-year increase and a huge 86.5% increase in just 3 years.
Inventory is up…but is it?
The average monthly number of active listings at the end of 2021 was 1,444 compared to 1,519 in 2022, which is a 5.2% increase. As of writing this article, there are currently 1,599 active listings of which 403 are pending and 155 are pending/conditional which means only 1,041 are actually available for sale. The inventory numbers are up, but are they?
There are several things which should be taken into consideration when looking at inventory. In 2021 the monthly inventory average was 1,444 for a population of just around 70,000 people. Now that number is 1,587 for a population of pushing over 80,000 people. So, yes, year-over-year, there is slightly more inventory in the market, but the population size is increasing, and we know from experience that many people when they move to Cayman start of as renters and eventually purchase property.
Coupled with that the number of new listings that hit the market in 2021 was 1,353 compared to 1,587 in 2022, a 17% increase. As the number of new listings hitting the market is higher percentage wise compared to the number of active listings, the market is absorbing more of the inventory hitting the market.
Our market, given the substantial population growth we have experienced and will continue to see into future, is still short on inventory. With fewer new developments slated to come on the market than over the past couple of years, as outlined in a previous article, I believe that inventory levels will continue to be low throughout the next year.
The value of existing inventory
Not surprisingly the value of the active listings in the marketplace has continued to rise. In May 2021, the value of active listing inventory hit $2 billion for the first time in our industry’s history. Ever since then this number has been climbing higher and higher and increased to over $3 billion for the first time in November 2022. That’s a 50% increase in just a year and a half.
2023 and beyond
As I’ve mentioned in several articles that focused on the higher and lower ends of the real estate market and a quick snapshot of the market just before the end of the year, there are several factors which are going to impact the real estate market in the Cayman Islands in not only 2023 but beyond. We are entering a challenging time of transition.
Overall inflation, rising construction costs as well as increasing interest rates will all affect the real estate market in the Cayman Islands. It is anticipated that interest rates will go up at least once more in 2023 with hopes to further cool down inflation but some analysts are projecting that by the end of 2023 or early 2024, we could see these interest rates start to slightly come down again.
The real estate market is cooling down in the United States and Canada, as well as many other places globally where they are experiencing a slowdown in transactions like the Cayman Islands but also seeing drops in average sales price, which as outlined above we are not experiencing.
There are several reasons we are not seeing price drops but ultimately it comes down to supply and demand and right now and continuing into the future the demand for property in the Cayman Islands will continue to grow.
As I’ve touched on in several articles, the Cayman Islands has a unique real estate market. We are a very desired location and people are continuing to relocate for numerous reasons but the most common are:
- Our incredible lifestyle.
- Investment opportunity including the relocation of family offices.
- Our tax neutral status.
- Employment opportunities as so many of our cornerstone industries including banking and legal services continue to grow and expand.
The more people who move here, the more demand for housing, but the supply of new housing is slowing down.
As explored in an earlier article, the need for a national development plan for the Cayman Islands is key. We need to decide as a country where we are, where we are heading and where ultimately, we want to be, and a national development plan is key in that respect. The lack of a national development plan has made many developers wary to proceed with potential new developments. This of course will affect new listings coming the market and our overall inventory level.
A potential change that we could see in 2023 would be the increase in building height size in Cayman. In mid-December of last year, parliament supported a motion to raise building heights to 20 storeys. That a 100% increase of the existing maximum height of 10 storeys. Nothing official has been announced but it wouldn’t be unrealistic to see this change happen this year which could impact many new developments and re-developments along Seven Mile Beach such as Aqua Bay and Lacovia.
Like most industries, the real estate industry in the Cayman Islands will go through changes throughout 2023. When buying or selling property, it is important to work with someone you can trust, who is an expert in their field, who has multiple years of experience especially with major economic transition periods like we saw in the early 2000s and are experiencing now. If you have any questions regarding buying or selling property in the Cayman Islands or anything related, please do not hesitate to reach out to the Bovell Team at +1 345 945 4000.