After being dealt the hammer blow of a Category Five hurricane in September 2004, the real estate market in the Cayman Islands has enjoyed a full recovery. As international buyers recognise the value in Cayman property and enjoy the freedom to invest, with few restrictions on ownership, confidence is flowing and realtors expect plenty of action this winter.
“Prior to the summer (2006) the market was moving in the right direction, with prices and the number of transactions rising,” said James Bovell, broker/owner at RE/MAX in the Cayman Islands. “Major chunks of some big developments were sold and everyone wanted to be closed out before the changes in stamp duty took effect.”
Among the many new developments that have sprung up in the past year was The Residences at The Ritz-Carlton, which brought 69 oceanfront homes onto the market in the first phase of the overall five-year development which will cost US$1.6 billion. Nine months after the opening, nearly all of the beachfront units have been sold, which is a story being played out right along Cayman’s famous Seven Mile Beach. “There is not much inventory left on Seven Mile Beach and there are no additional new developments to be launched this season,” Bovell said. Soon to be completed on the same strip, are The Beachcomber and Renaissance luxury developments and at the time of writing, just eight units remained unsold in the two developments.
“I expect the market to rise in high season,” Bovell said, pointing to the high hotel occupancy levels anticipated this winter, with many hotels now booked up until April. The relationship between a busy tourist season and an upbeat housing market is a strong one, as the high-end visitors that come to Cayman on vacation are mature and sophisticated, often with a family and looking for that ideal home in the sun that will provide the safety, security and lifestyle that they crave, Bovell adds. “Living costs might be high, but we are not Cancun and the baby boomers have the required income,” he said. “Seven Mile Beach has been nearly all developed and there is limited supply, so you know it will be a good investment,” he continued. “Cayman is a desirable market. It is quiet and makes a good escape.”
Cayman, however, is not just about Seven Mile Beach and many potential purchasers are also looking at Cayman Kai. Six miles of beachfront on the quieter, north side of Grand Cayman, Cayman Kai is worlds away form the bustle of Seven Mile Beach or George Town. “Cayman Kai is a nice residential area and has some condos with management,” Bovell said. “There is a planned development of approximately 80 low density units, with high end finishes. All will have ocean-front views and prices will be some 40% below Seven Mile Beach.”
South Sound, just on the outskirts of George Town and also on the water front, has a nice, executive type feeling and the inland homes are now being joined by condo developments, which as well as offering good value are close to schools and Seven Mile Beach.
As for potential price appreciation, RE/MAX’s Bovell commented that Cayman has offered good, stable and consistent increases in property values over the years, with prices generally stable even when transactions numbers drop. This is in contrast to the huge jumps and more recent falls in the US, where we are talking about a different type of buyer and one that is certainly higher levered, while the levels of financing in the US have created a huge second home market.
The speedy recovery that the housing market exhibited from the devastation of Hurricane Ivan is good news for the realtors on the ground, just as it was for the country as a whole, helped in no small part by the quick recovery of both the financial services and tourism sectors. “As Ivan hit, we were just coming off of a good market,” Bovell said. “Ivan kicked us on September 11 2004 and there was no trading for four to six months, but after that, things started ramping up very quickly.”
The natural disaster which impacted the Cayman Islands to the tune of some $3.4 billion, actually resulted in a mere blip on housing market activity, which showed an increase in 2004 on 2003 and an increase in 2005 on 2004. “Although some areas are still reeling, I was very impressed with how Cayman residents all pulled together and worked hard,” Bovell said. “People didn’t stop, working seven days a week. We have not just fully recovered, but the whole product line has been updated.”
The relatively simple process in Cayman for international property buyers – who are welcomed with open arms, unlike other islands such as Bermuda – has also helped keep the real estate market well supported. Among the current trends, private residence clubs, which are a combination between a hotel level of service and a condo are proving popular. The five-star Waterford Private Residence Club will feature 50 two and three bedroom villas and four estate homes on a ten acre site and owners buying fractional shares will also have access to a variety of cars and boats, as well as a 24-hour concierge to help with shopping or golf and dinner reservations.