Big moves in sales, but not at the higher end of the market
This year there has been a significant increase in sales of water-front homes, whether on the beach or on canals. – Photo: Chris Court
An analysis of the Cayman Islands Real Estate Brokers Association figures comparing sales for the first three quarters of this year (Jan. 1 to Sept. 30), versus last year for the same time frame, makes for interesting reading. While the market shows the total number of listings down from last year, the number of properties sold year-to-date increased by an incredible 41 percent, equating to a dollar volume increase of 29 percent.
Looking just at residential houses, there have been significant increases across the board. Sales of homes in the US$500,000 to US$1 million price range increased by 93 percent. The only segment not showing any increases are those in the $2 million and over price range. It is also worth noting that only six houses have sold for more than US$5 million since 2002, with the highest being for US$7.5 million in 2007.
For property on the water, whether it is beach or canal, again we see very large increases in sales this year, with a more than 75 percent increase in water-, beach- or canal-front homes, and a 67 percent increase in water-, beach- and canal-front residential land. I believe that as much of this type of property is being bought up, there will be price increases in the coming year as the law of supply and demand kicks in.
Of particular interest is the Seven Mile Beach area, especially as an indicator of the health of our tourism industry and ability to attract overseas investors. Year to date, there have been significant increases in the number of units sold in all price segments along Seven Mile Beach: more than 146 percent increase in condos under US$500,000, more than 133 percent in condos US$500,000 to $1 million, more than 89 percent in condos US$1 million to $2 million, and more than 25 percent for condos over US$2 million.
For condominiums sold in the rest of the island, there have been increases in most segments, with a 28 percent increase in condos sold for under $500,000, and a 31 percent increase for condos $500,000 to $1 million. There have been very few sales of condos sold for more than US$1 million, as there are few condos listed at this price range in areas other than Seven Mile Beach.
These statistics are extremely encouraging and show significant progress in the sales markets right now. But I believe the very high end market needs further analysis. Only six residential homes between US$2 million to US$3 million were sold in the first three quarters of both 2013 and 2014, and just two between US$3 million and US$4 million in 2014 (one in 2103) and none over US$4 million in 2014 were sold (just one was sold in 2013).
The fact that very few homes listed for more than $2 million have been sold in the last nine months leads me to question whether Cayman is able to attract the customer with this level of wealth. Or is it that they are not finding exactly what they are looking for?
The answer I believe is yes, Cayman does attract buyers in this $2 million-plus price range, but they have been primarily purchasing beach-front condominiums. Is it then simply that they prefer to be on the beach, or is it that they prefer the hassle-free option of being able to lock up a condo and have the onsite management take care of it while they are away? Perhaps, we need more promotion to overseas buyers that there are services on island that will manage and maintain residential homes in their absence.
How to sell your high-end home
Buyers appear to have more money to spend, yet don’t seem to be able to find what they are looking for, in particular when it comes to the very high-end ocean and canal-front properties.
One reason for this slow movement in sales is that there really isn’t a huge selection of canal-front properties available and only a finite amount of beach-front homes available. In addition, when I show people high-end properties, buyers from traditionally expensive markets such as the U.K., Europe and certain parts of the U.S. often find it hard to evaluate the value of the property based on the surroundings or comparable sales, as there are so few. They come to the Cayman Islands expecting their money to go a lot further in some cases, but such buyers are generally risk averse and are looking to purchase a property in a safe and secure environment with a high-class infrastructure, such as the Cayman Islands. And that comes at a price, especially for high-end properties with a view.
In this way, I find that they bring their own preconceptions about the market, derived from their home countries, to Cayman’s market. In truth, I believe that Cayman’s market is actually under-valued and that prices could increase considerably when compared to other markets, but only time will tell.
Such preconceptions often motivate buyers to attempt to pummel prices even lower as buyers feel they need to compromise when purchasing a home that’s not quite right for their needs. Historically, we have frequently seen quite large movements between the list price and the sale price, as a consequence.
My recommendations for sellers are therefore as follows:
- A high-end home has to look its absolute best when it’s up for sale.
- Don’t give picky buyers anything at all to negatively comment on.
- Ensure your home presents exceptionally well. It should be neat, clean and tidy. This is especially pertinent advice for owners who do not reside in their Cayman home all year round and who ought to make periodic inspections on their property here if it is up for sale. It’s essential that you keep regular maintenance issues in check.
- Don’t give a buyer any reason to discount what your property is listed for.