July 2015 Market Update

News

The "Why": high end condominium vs. high end home

While condominiums in the Seven Mile Beach corridor are considerably higher in price per square footage in comparison to single family homes in highly sought after places such as beachfront/canal front/waterfront locations, I believe the pricing differential will become increasingly smaller.

In theory, condos ought to be cheaper than single stand-alone residences on a per sq.ft. basis with the cost efficiencies that arise from building multiple dwellings under one roof. However the cost of land along Seven Mile Beach overlooking the beach itself is as much as 40 to 100 times higher than even beach, canal and water front and other popular locations. This makes any newly built Seven Mile Beach condo at a high price already, even before building costs. In addition, even though the build costs are divided by the number of units in the case of condos, the overall cost of raising such a property is enormous.

Yes, condominiums make a lot of sense for those who are looking to buy for the continuance of locking and leaving with not having the maintenance headaches as management takes care of this aspect especially when they might only be there a few weeks a year. Yet I believe increasingly buyers are looking to buy a second home they can enjoy for longer periods of time. To date, the market place has not given true value to what it actually costs to build a really beautiful stand-alone home. Looking ahead, the market place is changing and buyers will be prepared to look at standalone homes with new interest as finding quality sites to build on is going to be more and more difficult.

Increasing numbers of both local and foreign residents have benefitted from the growth of the island as a whole. Both are able to invest in and build high end homes, as the inventory that was needed was not available. Coupled with the fact that the perception to build verses buy ready-built is badly misrepresented as the market has not been able to truly distinguish the difference in the cost to build an amazing home.

In the future, demand for high end homes will increase in highly sought after areas and buyers will be forced further out of town, or possibly they may buy older homes on desirable sites and rebuild to their specifications. At the moment there are a number of lovely homes under construction, which is very encouraging as this market will have more opportunities of choice and quality ready-built properties in this market segment.

The true benefit of a well-built home

However, we need to change the mindset to ensure proper appreciation of a truly well-built home that has had thoughtful design and construction built into it from underground, all the way to its roof top. There is a vast difference between a $200 per square foot home and a $600 per square foot home, but the mind sometimes only sees perhaps a difference between $200 and $300 per square foot. This has been a common issue that we as real estate brokers constantly need to convey to buyers. But I do see the market coming around in time. Stunning homes, which are very well built, are currently good value, but they will appreciate in time as pricing of these type of homes are now starting to sell over US$600 per sq.ft.

A word on press freedom of speech

Our market is effected by global prospective and as such this type of issue can really effect Cayman and our house market in a very negative way, due to the perception of us being viewed as a non-sophisticated market. Cayman has its fair share of problems just like anywhere else. For the most part, however, we have a lot of good people here who mean well. I may be naïve to think that most people’s intentions are well meant, but the fact is that Cayman is still a small island that runs on close-knit relationships and we should not forget that. I believe we should all support each other rather than pull each other down, as the local saying goes, like "crabs in a bucket". If we are going to allow freedom of speech then all parties should be allowed to enjoy that freedom. As always, inevitably the facts will eventually come out.