Tourists buying high-end properties are driving a huge improvement in real estate sales, according to industry experts.
Overall sales jumped by 40 percent in 2014, with the net sales value for property transactions up by US$150 million – more than 50 percent – according to figures from the Cayman Islands Real Estate Association.
J.C. Calhoun, owner of real estate firm Coldwell Banker, said the tide is starting to turn toward a “seller’s market” for the first time since the economic downturn of 2008.
He said the revival of the U.S. economy is fueling increased demand for luxury property in the Cayman Islands.
“We haven’t yet seen the same increase in the local residential sector. Typically, you have to have a couple of good years in the tourism sector before you see a jump in the local market,” he said. Mr. Calhoun added that signs are good that the impacts of the global recession are coming to an end.
“This was the first really good year for us since 2007,” he said.
Michael Day, chairman of CIREBA, cautioned that there are still a number of foreclosures and forced sales in the local residential market.
He said the sale of the WaterColours luxury condo units on Seven Mile Beach likely accounted for a large part of the US$150 million increase in net sales for 2014.
“There is a definite upswing in the high end of the market, and that could well be a sign that our economy is poised to do well in the next few years,” he added.
Kim Lund, owner of estate agent Re/Max, said U.S. customers, who account for some 80 percent of sales on Seven Mile Beach, are becoming less risk averse amid credible signs of a sustained economic recovery in the States.
He said the demographics of the baby boomer generation mean that there is an excess of wealthy buyers looking for retirement homes.
“Right now, sales momentum is good and slowly building,” he said. “As long as development is able to keep ramping up and investors can see progress, it appears that this positive surge in business activity will continue and hopefully accelerate.”
Mr. Lund also cited the investment in new hotels and condominium developments, as well as the long-term plan for Camana Bay, as enticements to would-be property investors.
“Purchasers of real estate see that these improvements will drive value and capital appreciation by making Cayman a more desirable, sought-after place to visit and live,” he said.
In its 2014-2015 market report, Coldwell Banker forecasts “sunny skies” ahead for the industry.
However, the report sounds a note of caution that sellers should not adjust their expectations too quickly.
“While we think the tide is turning to finally favor the seller after seven years of a buyer’s market, this will be the first season where that is the case.
“While we do expect to see more properties listed at increasingly higher prices, we don’t expect the buyers to step up and swallow huge increases with all the worldwide financial uncertainty,” the report states.
Mr. Calhoun believes the overall signs are optimistic, barring a “catastrophe” in the U.S.
“What happens in Cayman is directly linked to the U.S. economy. If the U.S. goes into recession, we go into recession. When the U.S. starts to recover, we recover right afterwards,” he added.