The higher end of the real estate market plus the real inventory story

Buying & Selling, Featured, News

Historically I’ve written a Cayman Islands real estate market review at the end of each quarter, but in addition to the regular statistics about inventory, new listings and solds, there are some additional trends that I am seeing in the market that I thought I’d share. In this article, I’m going to look at residential property in the US $3-5M range and over US $5M and provide a deep dive into inventory levels.

It is important to note that all the figures in this article are from CIREBA only and do not include any off-market listings. Additionally, all dollar figures are quoted in US dollars and numbers for 2022 are from January through October.

Single family home sales – US $3-5M and US $5M+

For the previous 30 years to the end of 2017, there were only 31 single family homes that were sold in the US $3-5M range in the Cayman Islands. In comparison, in less than 5 years, from 2018 to October of this year that number is 63 units, which is a 103% increase in only 1/6 of the time.

When you look at single family homes over US $5M there were only 12 sales in the last 30 years to the end of 2017 and from 2018 to October 2022 that number is 24, which is a 100% increase in only 1/6 of the time.

In fact, when you dig a bit deeper 48 of those 63 single family homes from US $3-5M were sold in just the last 3 years, with 21 sales alone in 2022 year-to-date.

When you look at single family homes from US $5M+ and up, 22 were sold in the last 3 years, with 8 sales alone in 2022 year-to-date. Only 2 homes were sold over US $5M in 2018 and 1 in 2019.

These jumps were driven by two factors. One, many people living on island decided to “upgrade” their homes due to what I like to call the “COVID effect” where people seriously re-evaluated what they needed and wanted out of their home. Instead of spending much of their time out of the house, a home during the pandemic became an office and in many cases a school. People began to purchase homes that fit seamlessly into their lifestyles.

Two, many people off island saw the Cayman Islands as a “safe harbour”. Due to our strict lockdown Cayman was one of the few countries in the world who was able to go back to normal during the global pandemic by being essentially COVID-free. That was very appealing to many international buyers and some even purchased property without being able to see it in person.

Condominium sales US $3-5M and US $5M+

When you look at condominium sales from US $3-5M and US $5M+ the story is a bit different. It is not surprising that most of the condos priced in this range are primarily located along Seven Mile Beach. For that reason alone, there are a lot of properties purchased in this price range as both vacation homes and investment properties.

Since 2018, 70 condominiums have sold in the US $3-5M price range, with over half of those over the last 2 years and 23 of those just in 2022 year-to-date.

When you look at condominiums priced at US $5M+ 95% or more are located along Seven Mile Beach. In fact, as of today, there are 69 condos listed above US $5M in the MLS and all are located along Seven Mile Beach except for the new Mandarin Oriental listings. Since 2018, there have been 55 condominiums sold at this price range with 13 in 2021 and 12 in 2022 year-to-date.

Although the number of condominium sales in both the US $3-5M and US $5+M range are increasing year-over-year the jumps in overall sales were not as high percentage wise compared to single family homes.

It is important to note that there are several condos that are pending, which are deals that have no conditions and will go to sold. As of today, there are 16 condos priced from US $3-5M and 10 priced over US $5M+ that are pending.

Inventory – where we stand today

There has been a lot of talk and speculation with respect to inventory in our market. Historically we know that when there is low inventory, we consider that to be a seller’s market and with more inventory on the market we see a shift towards a buyer’s market.

Yes, inventory is increasing slightly when you look at a year-over-year analysis but it’s important to look at a variety of factors when analyzing those numbers. When you focus on 2021, we saw a substantial drop in inventory by 6% year-over-year. When you compare January to October 2021 to the same period in 2022, we are seeing a 4.2% increase in inventory, but that percentage doesn’t include November and December which are traditionally two of our highest months for sales.

As of November 24, 2022, there are currently 1,589 active listings in CIREBA. 419 of those are pending and 181 are pending/conditional which means there are only 989 actual listings available for sale.

We also must remember that the total number of properties available in the future in the Cayman Islands will be increasing. This is due to pre-construction sales which aren’t yet built. This includes residences at The Watermark, Lacovia, Aqua Bay, Catalina Bay, Grand Hyatt, Kailani Hilton, ONE|GT and Orchard Ecovillage as just a handful of examples.

We also must remember that our population has jumped over the last few years by at least 20,000 new people living on island and this figure will undoubtedly continue to rise. It is common for many of these new arrivals to rent at first before they decide exactly where they’d like to eventually buy.

Are property prices coming down?

The answer to that is no. Across the board prices are continuing to rise. The average price of a new listing is now US $1.773M up 15.9% since last year. When you compare January to October 2021 to 2022, the volume generated by new listing inventory is up 27.9%. These two indicators show us that prices are continuing to go up.

On the sales slide, both transactions and volume have slowed down after 2021 which is not surprising considering 2021 with the biggest year ever for CIREBA for both sold transactions and volume which reached over US $1B for the first time ever.

We anticipate 2022’s volume number could be very close to 2021. Sales transactions are down 19.2% in 2022 (Jan-Oct) compared to the same time period in 2021, but volume is only down 7.6%.

The average price per sold transaction has already increased 13.7% over 2021 with an average sales price of US $1,155,918.

So, what does this all mean?

Overall, this means that Cayman Islands real estate has, is and will continue to be a sound investment.

The housing market is in a state of transition on a global basis and the Cayman Islands is not completely immune to this. There are a lot of factors that are affecting the real estate market globally, which I’ve addressed in previous articles. This is primarily driven by an uncertain economy, inflation, slow economic growth, the war in the Ukraine, increasing interest rates and the uncertainty of when the interest rate increases will slow or stabilize.

But no matter how many things change there are some things that never change…Caymankind. Cayman real estate has always been desirable from our tax neutral status to our high standard of living to being one of the safest countries in the Caribbean to our easily accessibility location from the US, Canada and the UK to our tropical climate and the list goes on and on.

As the years go by more and more people are seeing the overwhelming appeal of our islands and that is not going to change.

This article has primarily focused on the higher end of the market. The next article will be an analysis into what is happening at the lower end of the market to give everyone a full understand of the Cayman Island real estate marketplace.