The erosion of Seven Mile Beach will affect each and every single person living in the Cayman Islands. It is not just a tourism issue. It is not just a wealthy landowner issue. It is an everyone issue. Whether directly or indirectly we are all impacted by the quality of Seven Mile Beach. It is that simple.
In this part of my article on the erosion of Seven Mile Beach, I’d like to explore the direct impact on the Cayman Islands real estate market, as well as look at the new report commissioned by Dart Enterprises and explore some erosion solutions.
The impact on real estate
The impact of the disappearing beach has already had a substantial impact on real estate along certain portions of Seven Mile Beach.
As I’ve stated in numerous articles, real estate prices across the Cayman Islands have been increasing year-over-year.
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 rose to $1,097,337, which is an 8% year-over-year increase and a staggering 42.4% increase in just 3 years. In 2023, the average price per sold listing was $1,313,128 a 19.7% increase over 2022.
Let’s look at one specific development. Between January 1, 2019, and July 31, 2024, there were 18 units sold at Villas of the Galleon on Seven Mile Beach. The first two bedroom, two bathroom, 1,173 sq. ft. unit sold for US $1,770,000 in September 2019. That same unit then sold again in March 2021 for US $2,100,000, an 18.6% increase, and then sold again in March 2023 for US $2,300,000 a 9.5% increase or for a total increase of 30%. This works out to US $2,053 per sq. ft.
In comparison, let’s look at Tamarind Bay. As of right now there is minimal beach in front of Tamarind Bay, and this has had a tremendous impact on the value of these properties. In June 2019, a three bedroom, 2 bathroom, 1,444 sq. ft. residence at Tamarind Bay sold for US $1,100,000.
The latest sale of Tamarind Bay was for a larger, Penthouse residence with a rooftop terrace, which sold for US $1,275,000, a 16% increase and spent over 250 days on the market. It’s important to note that the last residence that sold was 1,764 sq. ft. and only one of two residences that feature this beachfront terrace. This works out to US $722 per sq. ft. which is 65% lower than the $/sq. ft. for Villas of the Galleon noted above.
There are currently 4 listings in the MLS for Tamarind Bay ranging from US $1,195,000 to US $1,495,000 (a Penthouse unit with rooftop terrace) and none of these units are selling primarily due to the lack of beachfront. These 4 listings have been on the market for a minimum of 188 days up to 534 days and they have been reduced over that time.
The lack of beachfront at developments such as Tamarind Bay impacts property value for the owners but has a direct impact on revenue for the Caymanian government. Stamp duty is 7.5% on the purchase price or market value of property and is collected on all transactions along Seven Mile Beach.
Let’s do some math. If the 4 current listings at Tamarind Bay sold for their listing price that would total US $5,464,000 and generate US $409,800 in stamp duty.
Currently, there are two 2 bedroom, 2 bathrooms listings at Villas of the Galleon, but with less square footage than Tamarind Bay. If those 2 units at Villas of the Galleon sold for their listing price that would total $5,690,000 and generate US $426,750 in stamp duty. In comparison, these two listings have only been on the market for between 65 and 77 days. The last Villas of the Galleon residence sold at the end of August for $2,500,000.
So, one could argue that for properties affected by the lack of beachfront on Seven Mile Beach the government should expect to receive potentially up to 50% less in stamp duty from these properties versus properties that haven’t been impacted to date.
When property owners have no other option, they may feel they have no other way to go other than legal action. For example, “Laguna del Mar applied to build a 360-foot concrete sea wall in 2023 to replace a previous wall, which was damaged during Hurricane Ian in 2022, but has yet to receive the necessary planning permission.”[i]
Seven Mile Beach: A billion-dollar problem
“Seven Mile Beach contributes $1 billion annually to the Cayman Islands economy, according to a new report that makes the case for immediate action to replenish sand lost to erosion at the iconic attraction.”[ii]
It’s not just hotels and vacation rentals at the southern end of Seven Mile Beach, it’s all restaurants, real estate agencies, banks, appraisers, construction firms, homeowners, government revenues, work permit fees, and more. It’s a domino effect that impacts everyone from someone working as one of the cleaners at these condos on the beach to major developers and everyone in between.
“Protecting the shorelines of the Cayman Islands could be one of the most important capital investment priorities to ensure the long-term wellbeing and continued prosperity of the people of the Cayman Islands.”[iii]
Given the government has pulled the previously $21 million in funding amid uncertainty over how to proceed and now with the Cayman Islands running with a minority government until the next election in April, it is safe assume that nothing will be decided or implemented on this issue within at least the next six months and presumably longer.
We cannot rely on the government to fix this problem on its own. A partnership between private-sector interests and the government should be officially created to not only get input from hotels, landowners and other relevant parties, but to hopefully speed this process along at a much faster pace. The reality is we don’t have time to wait.
Beach renourishment: what is it and who pays for it
It is unrealistic to think that the current properties on Seven Mile Beach should all be taken down and moved further away from the coastline.
The Department of Environment advises that properties should be set back at a minimum of 130 feet from the high-water mark but argues that greater setbacks are appropriate in some areas. However, many properties have already been built in that zone.
Unlike structural projects, nature-based or “green infrastructure” protection measures enhance the natural ability of the shorelines to absorb and dissipate storm energy without interfering with natural coastal processes. The more space we can create between the sea and structures protects structures during hurricanes.
One common strategy for dealing with coastal erosion is beach nourishment—replacing sand on a beach to serve as a buffer against erosion or to enhance the recreational value of the beach. Adding sand to a beach does not guarantee that it will stay there. Some communities bring in huge volumes of sand repeatedly, only to see it wash out to sea in the next season’s storms.
Beach nourishment projects have occurred in many places throughout the world including the Gold Coast Beach in Australia and Sand Key in Florida. In Sanibel, Florida, Hurricane Ian’s landfall flattened the island’s beach and dune areas. As the storm surge from Ian receded, significant erosion occurred resulting in the creation of channeled gullies along Sanibel’s coastline. This beach replenishment project placed approximately 400,000 tons of sand to restore the beach berm (dune) and fill gullies created by the receding storm surge.
The Dart report bolsters the case for beach renourishment and indicates the expense would pay for itself in improved room rates, property values and government taxes. It also indicates that the expenditure – estimated at an initial $21 million, with further anticipated costs of around $5 million every five years – would provide a buffer against further losses by protecting the rest of Seven Mile Beach and the businesses and workers that rely on its spin-off benefits from further impact.[iv]
“The cost of beach nourishment pales in comparison to the potential losses associated with a do-nothing scenario,” the report concludes.
In conclusion
Seven Mile Beach is Cayman’s golden egg. We have to rebuild and protect our country’s biggest asset. It is no longer a question of if but when. We need to act quickly as the domino effect will be too catastrophic to recover from.
Tourists will go elsewhere and not come back. Buyers will buy residences on beaches in other countries they know won’t disappear and never return. Due to the slowdown of tourism as a result, restaurants, almost half of which are along Seven Mile Beach and the corridor, will reduce staff or potentially close. Seven Mile beach re-developments would also be impacted due to the uncertainty of the landscape which will in turn affect the entire construction industry. The negative impact goes on and on.
It is really concerning that this country as a whole, me included, has enjoyed an appreciation it has never seen before over the last 5 years including two of our major financial pillars: real estate and development industries, tourism industry and a knock on effect to the financial services pillar – and yet not one dollar has gone back to the protecting Seven Mile Beach, The Golden Egg.
I think it’s important to close with that no matter who you are or where you live in the Cayman Islands, the survival of Seven Mile Beach affects each and every one of us.
[i] Cayman Compass, October 10, 2024
[ii] Cayman Compass, October 21, 2024
[iii] Cayman Compass, October 21, 2024
[iv] Cayman Compass, October 21, 2024