As we get gear up for high season for the Cayman Islands real estate market, I thought I’d take this opportunity to dive into a market overview for Q3 2024 looking at solds, pendings and new listings as well as changes in the price per listing in these three categories and how inventory levels are all affecting the Cayman Islands real estate market.
Please note that all dollar figures are in USD and all stats are pulled from CIREBA.
Solds Transactions and Volume
When you look at sold transactions on a quarter-by-quarter basis, for Q3 2024 we saw 181 sold transactions. This is down from 247 in Q2 2024, a decrease of 26.7%.
The story is similar on the sold volume side on a quarter-by-quarter basis. For Q3 2024 we saw $203,470,376 in sold volume. This is down from $297,553,191 in Q2 2024, a decrease of 31.6%.
On the surface these number would indicate that sales are going down and sold volume is going down even further, but it’s important to understand what is impacting these numbers.
For both sold transactions and sold volume, we must look at how the closing of 73 units that I listed at Lakeside have impacted the overall statistics for Q2 and Q3 2023. Please note that not all 73 units closed in these two quarters.
In Q2 2024, 26 units at Lakeside closed amounting to CI $7,172,653 or approximately US $12,910,775. In Q3 2024, 7 units at Lakeside closed amounting to CI $2,003,900 or approximately US $2,404,680.
Average Price Per Sold Transaction
The average sales price per sold transaction in Q3 2024 was $1,124,145. This is down from $1,204,668 in Q2 2024, which is a 3.7% decrease quarter-over-quarter.
Pending Transactions and Volume
For Q3 2024, we saw 157 pending transactions. This is down from 205 in Q2 2024, a decrease of 23%.
When you look at the value of these transactions, for Q3 2024, we saw $211,014,908 in pending volume. This is down from $393,919,299 in Q2 2024, a decrease of 46%.
As with the Lakeside explanation above, it’s important to dig further into these numbers and what is impacting them.
In April of 2024, 88 listings went pending totalling $266,590,565 which is more than any month previously noted in CIREBA. This number clearly has a huge impact on the quarter-over-quarter analysis. In fact, 15 residences at Lacovia went pending in April 2024 amounting to more than $69 million. This was due to the fact that these listings went from pending/conditional into pending in the system at the start of construction.
Average Price Per Pending Transaction
The average price per pending transaction in Q3 2024 was $1,344,044. This is down from $1,921,557 in Q2 2024, a 30% decrease.
As you can see the percentage of the average price per pending transaction is down. This does not mean that prices are dropping. The Lacovia effect, as noted above, has a huge impact on the average price per pending transaction. The average price per Lacovia pending transaction is over $4.6 million.
New Listings
For Q3 2024, we saw 335 new listings hit the market. This is down from 430 in Q2 2024, a decrease of 22%.
When you look at the value of these new listings, the 335 new listings in Q3 2024 are $497,150,840. This is down from $696,561,128 for the 430 new listings in Q2 2024, a 28.6% decrease.
As the year continues to progress, we are seeing less and less new listings coming on the market. In fact, the 335 for Q3 2024 is the lowest we’ve seen on a quarterly basis since Q3 2022.
Average Price Per New Listing
The average price per new listing in Q3 2023 was $1,484,032. This is down from $1,619,909 in Q2 2024, an 8.4% decrease.
Inventory
In the first three quarters of 2024, we’ve seen 1,216 new listings come into the marketplace and had 664 solds, which means inventory levels are climbing. As of today, there are 1,841 properties for sale in CIREBA but of those 377 are pending, which means there are only 1,464 properties available for sale.
In Conclusion
Inventory and Population Growth
After several years of a booming real estate market in the Cayman Islands, it is safe to say that we are back to normal with respect to the peaks and valleys we have traditionally seen throughout the year. As you can see from the numbers above, we had a traditional summer slowdown this year, which was typical pre-COVID.
Inventory levels are up but this is a good thing. It’s important to keep in mind that we need more inventory for our ever-growing market. Back in 2019 the monthly average for active listings was 1,470. For 2024 year-to-date, that number is 1,838. That equates to only 368 more listings or a 25% increase.
According to an article in the Cayman Compass in November 2023 the population in the Cayman Islands was 69,914 in 2019 and in 2022 this jumped to 81,546, which is a 16% increase and 11,632 more people living on island. We know that that number has been increasing since although nothing official has been publicized. It’s also not unrealistic to think this number will increase over the next several years beyond what is currently estimated to be north of 85,000.
There are numerous factors that will directly impact population growth, but let’s look at tourism as just one example and hotels in particular. We have 3 major hotels opening in the next two years which will require hundreds of employees. Kailani and the Grand Hyatt will open next year, the Westin is expanding and there will be the new Mandarin Oriental sometime in the future as well. More hotels equal more employees, and more employees equals more properties for people to live in.
Tourism and Real Estate
As we continue through the last quarter of 2024, I believe the Cayman Islands real estate market will see a jump due to high season kicking into full gear.
With respect to travel, we are seeing new routes and additional flights that have been added as we ramp up into high season. This will bring more visitors and thus more buyers. In fact, we could have a record tourism season this year.
As we move into 2025 and 2026, I believe we will see even more new routes and flights added to accommodate all the new hotel rooms that will be added to our inventory.
The US Election and Wars in the Middle East and Ukraine
Although not as impactful as other factors such as population growth, tourism, inflation and interest rates, it would be remiss to think that the upcoming US election, the ongoing war in the Ukraine and the growing conflict in the Middle East do not impact the Cayman Islands real estate market. They create a sense of unrest and uncertainty especially when making one of the biggest financial decisions one makes when purchasing real estate.
Inflation, Interest Rates and Real Estate
In September the US Federal Reserve handed down a half of a percentage point reduction in interest rates, which was higher than many analysts projected.
“By the end of 2024, interest rates will fall nearly another half of a percentage point from their current level of between 4.75% and 5%, according to FOMC projections. Interest rates will drop another percentage point over the course of 2025, the projections indicated.”[i]
As interest rates and thus mortgage rates in the Cayman Islands are pegged to US rates, this is great news for buyers. I am already seeing an increase in buyers who have been waiting for these rate drops. Having said that and knowing that more rate drops are expected later this year and into 2025, some people are deciding to wait just a little bit longer.
With all of this said, it’s important to keep in mind that what is on the market today may not be available tomorrow or into the near future. It is also important to note that real estate prices tend to increase when rates go down as buyers can afford more compared to what they could with a higher interest rate.
As always, I believe that real estate in the Cayman Islands remains and will remain a sound investment into the near and far future. If you have any questions or would like more information on real estate in the Cayman Islands, please do not hesitate to reach out to me or my team at +1 345 945 4000.
[i] ABC News, September 18, 2024