At the beginning of this year, I provided a comprehensive overview of Cayman’s real estate market for 2020. As projected, the real estate market in the first part of this year is continuing to boom. I thought I’d take this opportunity to provide a Q1 2021 Cayman Islands real estate market report as well as a look into how the market will move forward as the year unfolds.
Inventory
Even with the introduction of numerous new developments including The Watermark, Aqua Bay and Lacovia all on Seven Mile Beach and Serrana and Dolphin Point Club both located oceanfront at North West Point, inventory remains very low. With only an average of 1,484 active listings during the first three months of this year, this number is both lower than last quarter by 3.5% and down 2.6% compared to Q1 2020.
When you look at volume, Q1 2021 is up over 11.2% over Q4 2020 and is up 8.9% compared to Q1 2020 indicating that prices overall are continuing to increase. The average sales price in Q1 2021 was $913,820 which was up 5% year-over-year but down 19% from Q4 2020. The drop compared to Q4 2020 needs to be explained further due to the fact that multiple properties over US$5 million closed at during that time period which contributed to the overly high average per sale during that period.
New Listings
What’s interesting is that new listings are selling faster than ever before. In fact, we saw an increase of new listings in Q1 2021. There was a total of 357 new listings between January and March of this year which is a 25% increase over Q4 2020. This means that new listings are selling almost as soon as they hit the market. In comparison, last year during the same period new listings were down 12%. This is not surprising as COVID brought almost every industry worldwide to a halt beginning in March of last year.
When looking at volume, new listings are up across the board; up 24.1% from Q4 2020 and up 42.9% year-over-year once again indicating that prices are continuing to rise. Owners looking to list their property still need to be cautious that their pricing is accurate for the market at that time as properties that are overpriced still do not turn over.
Solds
Not surprisingly, solds are up as well. Compared to last year at the same time we have seen an increase of 24% when it comes to transactions; also, not surprising given COVID in March of last year. When looking at the end of last year, Q4 2020 transactions were 6% higher than this quarter which is to be expected as we often have an increase in transactions at the end of the year as clients and customers are pushing to close before the end of the year.
Now, when you look at volume, this is where the story continues to support the boom in Cayman real estate. Solds volume was up 24% from Q4 2020 and up 30% year-over-year for the same period.
Pendings
Pending transactions provide a lot of information as they not only give us a window as to what future sold transactions and volumes will show, but also how robust the market is at that time. To put it bluntly, pending numbers are through the roof! For transactions, pending numbers are up 54% over Q4 2020 and up over 313% over Q1 2020.
Turning to volume, the story continues as numbers are up over 225% over Q4 2020 and up 792% over the same period last year. Keep in mind that the market last year effectively came to a grinding halt three week prior to the end of the quarter when our islands were shut down due to COVID. Both figures illustrate a couple of things. One is that the market is continuing to boom and there is little end in sight and two, that prices have continued to increase as we move further and further into the year.
Where are these transactions coming from?
Even though we have not been able to welcome people from overseas who may want to make an investment in Cayman real estate, we have none-the-less seen high volumes of activity, but this has primarily been driven by the local market, which has produced the mainstay of buyers over the past 9 months or so. While this has been extremely helpful in bolstering the market, while we had no tourism, we will need new buyers (via tourism) to continue the success of the industry, moving forward.
We should also bear in mind the underlying reasons for why local residents (i.e., Caymanians, people who have PR including those who may or may not live permanently in Cayman) have taken to invest in the real estate industry. While I believe that the bulk of the transactions were local residents we still have to take note of the Global Citizen Concierge program and other initiatives encouraging new buyers to the Cayman Islands whether it’s for neutral tax reasons, retirement, a desire to leave behind busy city life and lifestyle, among others.
This trend has substantially increased especially this year as many people are realizing that their work situations, which were originally temporary during the outbreak of COVID, are now becoming permanent wherein people can live anywhere and work remotely.
My belief is a lack of opportunity to invest elsewhere in the world because of restrictions on travel has helped local residents look to inward investment, keen to see an appreciation on their money and appreciating that Cayman Islands real state is a very good option. This was additionally spurred by the pension withdrawal program.
As soon as the borders open up once more and we have easier access to the US and elsewhere, local residents may look further afield to invest. However, this will be offset by an increase in new international buyers coming into the Cayman Islands real estate market, who can now travel and are eager to spread their wings from the constraints of their home countries.
As I have mentioned many times in these updates, we really do have something special here in the Cayman Islands and, as the message gets out once more about the incredible location we have to offer, then more people will come and find out for themselves. I see the Cayman Islands very much a part of an overseas investor’s back-up plan, should something like another pandemic, or even political unrest, happen again, perhaps in a year, or five years down the line, as well as being a fantastic investment that themselves and their families can enjoy for the years to come.
The Cayman Islands has proved itself to be a strong and stable jurisdiction, even in the face of a worldwide pandemic, so it is the perfect location in which to escape and sit out any disturbances elsewhere in the world. It is particularly attractive as a jurisdiction for those who can do their jobs remotely, as an increasing number of us are doing, born out of necessity from the pandemic and now seen as simply a normal way of doing business. This makes Cayman even more attractive and another reason to make the Cayman Islands your home.