May 2015 Market Update


Mid-market scarcity on the beach

Last month we looked at the dwindling numbers of high end opportunities along the Seven Mile Beach corridor. This month we focus on another section of the market in the same location, the mid-market sector that includes properties from $600,000 to $2,000,000. This sector, too, is seeing a reduction in inventory. At present, there are only 27 units listed by the Cayman Islands Real Estate Brokers Association (CIREBA) available in this price range and location, and four of them are under contract.

Breaking down this figure further, we can see that 21 of the 27 are three bedroomed condos, the remainder being two beds. Out of the 21 three beds, four units do not allow rentals, so the choice is quite limited for investors. A look at the statistics over the past five years proves to be illuminating (figures show total number of annual sales of two bedroom condos (in blue) and the total number of sales (in red) and are at year end except for 2015 which is to 20th April):

It is clear from this graph there is considerably more movement in this sector now as opposed to five years ago, when the market was at its slowest for some time. Also, it is interesting to note that this mid-market price range is becoming increasingly smaller when viewed against the higher priced properties in the same location. For example, 21 mid-market condos were sold in 2010 out of a total of 42 (or 50%), while 38 were sold out of 118 in 2014 (32.2%). This scarcity in inventory means increases in prices are due to follow. As a result, I believe that the mid-market sector will now be required to start from $700,000, such is the increasing demand for these types of property.

Immigration to focus on wooing the wealthy
From a real estate stand point I was heartened to read the recent article which spoke of how the Cayman Islands Government was preparing to make changes to immigration policies that would make it easier for wealthy individuals to reside in Cayman.

I welcome this move by Government to soften immigration controls and make the process easier for any individual. Immigration is probably one of the most important and impacting controls of the real estate market in the Cayman Islands and has been for the past 20 years or so. I don’t think Government has necessarily grasped how much of an impact their decisions – good or bad – have on the real estate industry. This decision to ease immigration for wealthy individuals will have positive repercussions not just for the real estate industry, as construction will also be positively affected and more importantly, it will mean more bodies on the ground, spending time here which means more money into the community as a whole. This also means more community involvement as I have seen over the years when people become residents they not only spend their money but also get involved in the community in many ways, like the arts, supporting charity or donating their time. All of this helps to perpetuate a ‘paying it forward’ type of environment, which I feel has always been so important in the Cayman Islands. While Caymanians have always been warmly welcome to people coming into the community, those who have chosen to make Cayman their home, or holiday home, have likewise reciprocated.

A word on Cuba

Following on from my recent discussion on the opening up of Cuba, which caused a number of comments, there are still huge mountains to climb before America and Cuba become full on trading and investment partners. It is estimated there is still around $6 billion worth of property and assets owed to more than 6,000 American individuals and businesses from whom these were taken when Castro took control of Cuba in 1959. Coca Cola, Exxon, Texaco, Hilton Hotels make up some of the big named companies still waiting for compensation, but the vast majority of those who lost homes, possessions, bank accounts and more are individuals, (around 88% of the $6 billion figure.) I believe this point will be fought long and hard before Cuba opens up fully to American investors and allows for good title on property.