It will be no surprise to anyone that the real estate market in the Cayman Islands and throughout much of the globe is booming. From the impact of new construction and the related costs for development which I spoke about last week to a record-setting price for a single-family home in the Cayman Islands, the first half of the year has seen some impressive real estate numbers. As the real estate market is changing so rapidly and we are already halfway through 2021, I thought I’d take this opportunity to do a deep dive into the Cayman Islands real estate stats for the first half of the year.
One thing to keep in mind with all these numbers is that we must remember that the Cayman Islands were in lockdown from the end of March until the beginning of June in 2020 (10 weeks) when the real estate, development and construction industry went back to work. This will have an impact on the year-over-year comparisons, but I’ve added in some data from the first six months of 2019 and the 2nd half of 2020 which provides a clearer picture.
For the first six months of the year, active listings are averaging at 1,474 per month. In fact, since January 2021 the number of active listings has remained constant but showing a slight decline month-over-month. In comparison to the same period last year, active listings are down 2.55%.
When we look at volume, the active listings tell much more of an interesting story. The average value of all the active listings from January to June 2020 was $1.7 billion compared to $1.9 billion in 2021, which is a 14.35% increase. In fact, in both May and June of 2021 the active listings have topped over $2 billion. As I’ve touched based in numerous articles, this means real estate prices are continuing to climb in the Cayman Islands. The average cost per listing for the first half of 2020 was $1.2 million compared to $1.4 million this year.
One thing to also keep in mind is that out of the current 1,474 active listings 512 are pending, which means they are guaranteed to close leaving only 964 actual listings. In fact, there are also 384 listings that are pending/conditional which means there are only 568 listings technically for sale.
Since January 1, 2021, 774 new listings have come on market compared to 691 during the same period last year, which is a 12% increase. When you look at both the active listings and new listings transactions you will see that even though more new listings are coming on market they are selling quickly as the inventory levels remain consistent indicating that overall sales transactions are increasing.
In the first half of 2020, the total of those 691 new listings amounted to $651 million compared to $1.3 billion in 2021 which is a 98% year-over-year increase. In the first half of 2020, the average price of a new listing was $942,114 compared to $1,665,662 in 2021 which is a 76% increase.
Not surprising the story is much the same with respect to solds transactions and volume.
For the first half of 2021, 523 properties were sold averaging 87 per month with over 100 deals closing in both March and April. In comparison, there were 255 solds during this same time in 2020 with an average of 43 per month. This is a 105% year-over-year increase. While the 2020 number was obviously impacted by the 10-week lockdown, it’s important to note that in 2019 during the same time, there were 415 solds averaging 69 per month which is means that 2021 saw a 26% increase compared to the same time in 2019.
When we switch to the volume, the story is very similar. From January to June 2020, solds volume came in at $260 million compared to $525 million and thus a 102% year-over-year increase in 2021. When you look at numbers for 2019, we see that the total sales amounted to $350 million which means that 2021 saw a 50.2% increase compared to 2019 for the same time period.
The average per sales transaction for the first half of 2020 was $1,019,585 versus $1,004,075 in the first half of 2021; a 1.5% decrease. But if you look at the last 6 months of 2020 with respect to an average per sales transaction that number is $943,123 which means that the average cost per transaction has increased 6.5% over the last 6 months.
This slight decrease year-over-year is not due to prices declining overall but because we saw over 105% increase in transactions. Additionally, the majority of the deals that fell through during the first half of 2020 were during lockdown and were primarily at the lower end of the market thus bringing up the average.
The next 6 months
Where will the Cayman Islands real estate market go over the next 6 months. In two simple words…up and down.
I believe that prices will continue to rise across all sectors of the market and that we will continue to see transaction numbers at the rate or higher than they currently are. The one area that we may see a decline is in the number of active listings. Although these are only down slightly, I believe we are selling properties quicker than we can produce new listings especially when it comes to new development.
One thing which is impacting sales is the fact that the population of the Cayman Islands was recently increased by approximately 5,000 for a total of 71,000. Many of these people, who make Cayman home part of the year or have newly arrived on the island to live, have come to the island due to our COVID-free environment. The influx is also due to incoming workers in various industries.
It is also not unrealistic to think that development may slow down over the next few months due to both the increase in material costs to build as well as the delays we are currently seeing in the supply chain as discussed in my last article.
People are starting to travel again. Only June 28, 2021, over 2M people passed through TSA checkpoints at US airports. That’s up from 625,000 in on the same day in 2020 and only slightly down from 2.4M in 2019. Many people are ready for a vacation after being home for almost a year and a half and the reality is most people cannot quarantine for 10 days and then begin a vacation. People will look to other destinations with less quarantine requirements, if any, when booking travel.
As of June 22, per Travel Weekly the following Caribbean destinations are open to US travelers – Anguilla, Antigua and Barbuda, Aruba, Bahamas, Barbados, Bermuda, Bonaire, British Virgin Islands, Cuba, Curacao, Dominica, Dominican Republic, Grenada, Guadeloupe, Haiti, Jamaica, Martinique, Puerto Rico, St. Barts, St. Kitts and Nevis, St. Lucia, St. Maarten/St. Martin, Saba, St. Vincent and the Grenadines, Turks and Caicos, and US Virgin Islands. Keep in mind that they all vary on the quarantine requirements, but the fact is the only 2 Caribbean destinations in this article that aren’t open to US travelers are Monserrat and the Cayman Islands.
One aspect that could affect a slowdown in the real estate market in the Cayman Islands is the fact that our borders are still closed. As of today, the government has reduced the quarantine period for fully vaccinated travelers from 10 to 5 days but only for those who were vaccinated in either the Cayman Islands or the United Kingdom. Having just returned from the UK myself, I am currently in my 5-day quarantine as I work on this!
Those who have been fully vaccinated from all other countries must still quarantine for 10 days and those who are not fully vaccinated must quarantine for the full 14 days. In order to allow more visitors to our island, it is imperative that any party who has been fully vaccinated has the benefit of the 5-day quarantine.
The reality is that incoming visitors directly impact the real estate market in the Cayman Islands. As we saw in 2017 after the hurricanes decimated much of the Caribbean visitors started coming to the Cayman Islands when their regular destinations were shut down. Beginning shortly thereafter we saw the real estate market in the Cayman Islands begin to climb upwards and it hasn’t declined since.
As people begin to travel somewhere else it is not unrealistic to see some of those visitors invest in real estate in those countries as the Cayman Islands did beginning in 2017 and maybe even more so now as many people can now work remotely from anywhere as well as looking for a safe haven away for larger metropolitan areas for either their permanent or second residence.
Many countries have published specific re-opening plans that outline specific vaccination targets as well as how they plan to re-open. As of today, the Cayman Islands government has indicated that a re-opening plan is coming in the next few weeks. Many people, especially from the US, which is where the bulk of our visitors come from, are planning their vacations for the rest of the year right now and without a plan to re-open, they will choose somewhere else besides the Cayman Islands.
The longer we are without a plan and the longer we are closed the bigger of an impact this will have not only on the real estate market in the Cayman Islands but on the country as a whole.