Cayman Islands real estate market report for 2020 – A record-shattering year

The real estate industry in the Cayman Islands had a record-shattering year in 2020, but we were not alone. Like Cayman, real estate across much of the globe, particularly in the US and Canada, saw increases in both sales volume as well as overall prices. Additionally, homes are also selling much faster too.

With respect to the Cayman Islands and our 2020 data, we are seeing several trends.

Sales volume is increasing

At the end of 2020, total sales volume was up from US$639,279,161 to US$666,480,657, which is a 4.18% increase year-over-year. This is remarkable when you take into account that our industry was basically shut down between March 22 to June 3 due to COVID-19. We were working from home and couldn’t do any showings but even during that close down our industry did more than US$77 million in sales during that time based on CIREBA (Cayman Islands Real Estate Brokers Association) stats.

Real estate prices are soaring

When you look at the actual numbers, real estate prices, as a whole, are rapidly increasing in the Cayman Islands. In 2020, the average US$ per transaction was US$971,546 up from US$769,289 in 2019, which is a huge increase of 26.3% year-over-year or US$202,257 per transaction. But this data can be misleading and deserves some additional explanation.

Yes, prices, across most segments of the market, are increasing but not at such a staggering rate. The sheer number of high-end, higher value listings that sold for more than US$5 million are bringing all of the numbers up.

Last year, Cayman saw astounding figures with respect to sales over US$5 million. In fact, Cayman has never seen this level of activity at these prices in its lifetime. In 2020, 25 sales transactions were over US$5 million with combined sales of over US$214 million: 92.30% more than in 2019 and 127.27% more than in 2018. In comparison, only 13 deals (amounting to just over US$100 million) were completed that were over US$5 million in 2019 and in 2018, which was a very successful year and one in which RE/MAX Cayman Islands was the #1 Office in Top Sales Volume Single Office Global, only 11 transactions were over US$5 million (amounting to just over US$71 million). In fact, more than half of the 102 US$5+ million transactions in CIREBA’s 35-year history were generated in the last 3 years.

Sales avoid seasonal drop-off

We traditionally see August and September as our slower months of the year with respect to overall sales transactions but this was not the case in 2020. In August and September of 2019, 126 properties were sold but in 2020 during those same months 151 properties were sold, which is a 19.84% increase year-over-year.

Sales transactions were down in 2020 but pending sales are way up

Sales volume for new-to-market listings for the year was down 4.5% but sales transactions for new-to-market listings were down more than 13.57%. But, when you look at overall sales transactions, 2020 was down over 17.45%. In 2020, 686 properties sold in the Cayman Islands versus 831 in 2019. Pending sales (transactions that have no conditions pending and thus will go to final sale) are up over 114.8% year-over-year. Pending sales as of the end of 2020 exceed US$140,847,733 up from US$65,584,178 in 2019 with the bulk of these being condominium developments currently under construction. These pending transactions will have a huge impact in sales in 2021 and beyond.

Overall active listings were up but year-end trend shows decline in 2021

Overall, active listings increased by 4.69%. The 12-month average for active listings was 1,540 in 2020 versus 1,471 in 2019. The majority of active listings in 2020, as was also the case in 2019, were residential properties with 80% of those being condominiums. The number of active listings peeked in August of this year but have slowly been declining ever since. In fact, in December active listings were down to only 1,477 indicating that the availability of properties for sale is declining. Even with several new developments coming on the market at the beginning of this year including Aqua Bay and Lacovia, both on Seven Mile Beach, I anticipate property availability to continue to decline as the year progresses.

In conclusion

All-in-all 2020 was an incredible year for the real estate market in the Cayman Islands. The importance of the strong real estate market has a substantial impact to the Cayman Islands as a whole. Historically, construction/development is the key industry in re-starting the economy and was the first industry to re-open after our COVID lockdown. Additionally, real estate has the highest spread within the GDP. Every dollar spent in construction/development goes 2.5X further to spread the economy compared to other industries. Similarly, the revenues generated from stamp duty during this high-volume year has helped the overall economy by providing much needed funds to the government when traditional revenue sources were substantially reduced. This includes revenues from air arrivals, which in 2019 was 502,739 and generated over US$10,000,000 in airport passenger facility fees and the 13% Tourism Accommodation Tax generated on overnight stay visitors.