Throughout most of Grand Cayman, Cayman Islands, you will see new developments popping up all over. From Seven Mile Beach to West Bay to South Sound and everywhere in between there are new developments offering everything from prestigious multi-million-dollar residences to gated, family friendly communities. I thought I’d focus this article on some of the many benefits of buying new construction along with some downsides that buyers should take into consideration.
New construction pricing
Pricing for new developments especially at the launch of a new community and particularly during pre-construction is always less expensive than at any other time of a development’s phase especially when a development contains multiple phases.
Developers want to get as many buyers signed up early as it not only shows how desirable their community will be to consumers, but also helps with securing financing for construction if required and moving the development forward.
It is not uncommon for prices to increase 20 to 40%, if not more, during the building phase of a new development. Depending on how the initial launch goes, prices could in fact increase within weeks if not months after being announced to the public.
Additionally, most developers launch with the lowest prices available. Given that, and as prices increase, you will build equity in your new home before it’s even built.
Deposit
In the Cayman Islands, initial deposits regardless of the price or size of the actual unit, range from as low as 10% to an average of 15-20% upon signing of the purchase agreement. This is great for first-time home buyers. If you are looking at a unit that’s priced at $400,000 that means you only need to put down $40,000 to secure your new home that requires only 10% down.
Other deposits ranging for 5-15% are often payable at various stages through construction from at the beginning of construction, which could be months down the road, through building cap (completing construction to the very top of the building) and then the final payment is due at closing.
Of course, every development is different and it’s important to know exactly when and how much each deposit is required.
Customizable
One of the most attractive benefits of buying new construction is that many of the features and fixtures within your own unit are customizable. Some developments offer more customizable options than others, but most offer the choice of several options that are included in the purchase price while also offering many upgrades that you can chose to purchase. These can include everything from flooring, to kitchen appliances, to cabinetry, to countertops, to backsplash tiles, to paint on the walls and with some residences even furniture packages.
Everything is brand new
When you walk into your new residence absolutely everything is brand new. This means new appliances that are not only more energy efficient but will come with warrantees. Many, if not most, new developments also come with warrantees on the structure itself giving you additional piece of mind. Of course, with anything new there shouldn’t be any unexpected maintenance costs for quite some time.
Buying in early gives you more choices
Buying in early into a new development also has some huge benefits. If you are one of the first people to commit to a new development, you will get to pick exactly where in the complex your unit is located.
But…there are some downsides
I would be remiss not to mention that there are some downsides to new construction. The first is you will need patience. Unlike buying a completed unit or resale, new construction takes time.
For example, sales at The Watermark started in late 2018 and completion is estimated for next year. Of course, 48 months is probably the longest you’d have to wait due to delays impacted by the pandemic and supply chain/materials issue which started in 2020, as a large development would take, in normal circumstances, 32 to 36 months. The Watermark will undoubtedly be the preeminent development along Seven Mile Beach.
If you decide to buy into a redevelopment project such as Aqua Bay on Seven Mile Beach, there are additional factors you will need to be aware of. Unlike new construction, which is driven by the developer, redevelopments also involve the input of all current owners. This is particularly important to note with respect to when the original building will be demolished and thus when new construction will begin, which also involves government approval.
Although each development is different, I would estimate that a minimum of 24 months from the beginning of construction to completion should be expected.
During and because of the pandemic, unexpected delays became the norm. Although supply chain slowdowns are getting back up to speed and materials are becoming more available, unexpected delays can happen that are outside of the developer’s control including labour issues, material issues, and hold ups with the required government approvals.
Another downside that has been impacted by inflation is that everything costs more. Therefore, most new construction developments are more expensive than buying existing residences just by the fact that the cost to build is more expensive today.
Unlike buying an existing residence, buying new construction limits your negotiating power. The price is the price especially at the lower end of the market. There is less room to negotiate but it’s not impossible. It ultimately depends on the development, how much inventory remains to be sold, what the developer’s goals are with respect to pre-sales and other factors that come into play.
In conclusion
In conclusion there are tremendous benefits of buying new construction especially at the launch of a new development, but there are also some downsides to be aware of. This is where our expertise can help.
We have been directly involved not only in the selling of landmark developments in the Cayman Islands but have participated in the entire redevelopment and/or development process from conception to completion.
Keep your eyes on this space for an exciting announcement about a new development we will be bringing to market shortly and of course, do not hesitate to contact myself or my team with any questions at +1 345 945 4000.