The impact of COVID-19 and the restrictions imposed on business to help eradicate this terrible virus will be felt for several months. How Cayman has proactively managed the virus and how it handles the gradual easing of these restrictions will be critical to its future success. Despite the necessary restrictions under which we all have to live and operate, the real estate industry in Cayman is extremely well-poised to not only weather this current storm but will also continue to be the leader of real estate in the Caribbean as well as have the opportunity to move forward with a strong and resilient market.
We can anticipate that more properties will come on the market than we would have seen of late, due to circumstances created by the virus and the knock-on effect of the restrictions in place that surround it. I believe the biggest impact will be felt among the $300,000 to $1,000,000 price range of properties, as I see this market segment shows more susceptibility to these challenges. This is primarily due to financing which is tied to employment. Some people who have bought investment real estate may find themselves now financially stretched especially if they purchased based on revenue and rentals from either AirBNB or long-term tenants.
Likewise, on Seven Mile Beach those who are heavily reliant on the income to offset costs are also susceptible. Many of these properties will have to go from short-term to long-term rentals to offset their losses in the short term (6-9 months) and will now be competing with existing long-term rentals island-wide. With respect to Seven Mile Beach, I see this as being a limited offering, and not a slew of new listings coming to the market.
As a result, the rental market is shifting as more inventory is competing for a smaller piece of the pie. Many tenants now have the ability to change where they are staying currently, and additionally, a number of long-term tenants have left the island.
Those who based their purchase on that income will undoubtedly be affected because they need to reevaluate their financial circumstances. If it’s pre-construction, do I walkway? If I own, do I need to sell?
If you are contemplating putting your property on the market, I would advise that this is a great time for you to do so. If you are interested in selling your property, you should know that the listing process, as always, does not happen overnight. Instead, in this market, the process can take weeks all of which can be done now during this period of lockdown. This also gives you the opportunity to fully prepare your property for presentation.
If you are interested in purchasing a property, waiting around will not do you any good. Monitor. Review. Act. Waiting for the absolute bottom doesn’t happen. Opportunities come in a variety of ways. People do not buy property for a 3-year return. Buying property is a long-term investment and has a proven track record to be one of the absolute best investments through the ups and downs and tribulations of markets.
One of the best reasons now for buyers is the cost of money given the record low-interest rates, which means the perfect environment has been created when it comes to borrowing. Buyers looking to purchase a property in the coming months will, therefore, see a broadening of opportunity as their money will stretch further in this current economic climate.
Another opportunity I anticipate is in the increased availability of choice, which has been extremely low over the last few years particularly along Seven Mile Beach. But I do not anticipate the market is going to have huge price drops across the board. In fact, the industry has not experienced any unusual price drops in any price segment of the market to-date.
Now is a great time to do research about the market and consider how you want to live moving forward. Given the lockdown, many homeowners are reevaluating their current homes for the future with things like space to work from home, as potentially more workers could be working from home permanently, children and the ages of the children, as well as overall size and property location. If you are looking to upgrade but need to sell your existing home, you may get less money for your existing property, if lower prices come into fruition, this will attract more attention to your property. Any potential loss should be offset by the gain as you purchase up the ladder as these properties might have also been reduced in price in addition to factoring in the record low mortgage rates.
As far as pre-construction opportunities are concerned, the nice thing about committing to a pre-construction price now means getting in before prices undoubtedly rise as the construction takes shape and is completed. There are still only limited opportunities as far as Seven Mile Beach projects are concerned, with The Watermark, Grand Hyatt Grand Cayman, and the CURIO Collection by the Hilton being the only real opportunities right now. In the wings is the Lacovia development although not actively on the market as of yet.
My advice is if you were contemplating buying or selling a property before the pandemic, continue with your aims. I and my team are only a call or email away and can help you through the process. Please remember we are #InThisTogetherKY