May 2017 Update - Cayman Island Property News

A topic point recently came up in one of our regular agents’ meetings that I thought worthy of discussing further. Is the value of a Cayman Islands property only in its rental value? Is Cayman real estate really just a vehicle in which investors can park their money and generate income? I believe the answer to that is very much no.

We are asking a buyer to invest a great deal of money, plus stamp duty costs into a property, so they should really love the place as a home.  Indeed, I believe when investors look at a Cayman property in which to invest, I believe they look further than simply the rate of return and instead look more closely at the property’s underlying value.

There are several reasons for this. One is that although Cayman’s rental market is currently strong, investors understand that this market is cyclical and comes and goes in waves, so, at the end of the day, the underlying value of the property is critical, as it is the fall back.

Why the underlying real estate value is key?

As at 30th September 2018 there were 6,780 tourist rooms (according to the Economics and Statistics Office) available for visitors. That number is going to increase dramatically over a few years, possibly by as much as 20 per cent, with the onset of new hotels and rental accommodations currently in the pipeline. That means a huge amount of inventory must be absorbed. While our tourism industry continues to thrive, with an ever-increasing number of stay-over visitors coming to Cayman, absorption on this scale will take time and will ultimately result in a price correction for properties, in some areas.  The good thing is that some of the properties coming online for purchase are completely new brands to the Cayman Islands and bring with them fresh eyes to the Cayman market. From a historical tourism perspective, when a new large-scale hotel comes on the market, the following 3 years shows an upturn in the real estate market.  The reason for this is that with “new eyes” comes new buyers.

This is all happening at a time when the Eastern Caribbean repairs itself following the devastating hurricanes of 2017, with that product coming back to market bigger and better than ever.  So, price, service, experience and safety, all become more important.

Continued success in Cayman’s property market

One of the driving factors as to whether Cayman’s real estate industry remains buoyant is the North American economy. As at the end of 2018, 83.2 per cent of our air arrivals were from the US (according to the Economics and Statistics Office) and as such, our tourism and our real estate industries are heavily reliant upon the economy of America. At this time, the US economy appears to be stable so we are enjoying a strong tourism and real estate sector, but an economic slowdown in that location will most certainly have a knock-on effect here.

So, with the above-mentioned pressures on our real estate industry, why do investors still make Cayman a top choice for their Caribbean real estate investment?

When one thinks about what they are looking for in a vacation, I believe Cayman does an excellent job in providing the full spectrum of services. Security has to be the number one priority for most people travelling to the Caribbean, especially families. We should always bear in mind that safety has to be at the root of our popularity as it is most definitely an aspect we want to sustain, not just for our visitors but for our local residents as well. Other aspects that make us a top choice are the fact that we are English-speaking, our great connections and proximity to the US and also the creature comforts that we provide. American visitors can pop into any of our grocery stores and see familiar products that they can buy at home. They can enjoy a hospitality industry that is second-to-none, where the quality of the food, the service and the overall experience equals or even betters that which they enjoy at home.

When one goes on holiday it really needs to be a special experience and that’s why CaymanKind is so very important. It’s critical that we WOW our visitors from the moment they step off the plane – when they meet with immigration, the taxi driver or the doorman at their hotel.

All of the above underpin the success of our real estate industry. Let’s keep the momentum going, provide a top-notch service, keep our Islands safe and build on the success we have already earned.

As always, if you have any questions you’d like me to discuss or comments on this or any other article I have written, please do get in touch.

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