I don’t know about you but it’s hard to believe we are already a quarter of the way through 2023. I thought I’d take this opportunity to dive into a market overview for the first quarter of the year looking at solds, pendings and new listings as well as changes in the price per listing in these three categories and how inventory levels are all affecting the Cayman Islands real estate market.
Solds Transactions and Volume
For the first three months of 2023, we saw 160 sold transactions. This is down from 235 in Q4 2022, a decrease of 32% and down compared to Q1 2022 which saw 227 solds, a 42% decrease.
The story is slightly different when you look at the value of these transactions. For the first three months of 2023, we saw $189,617,278 in sold volume. This is down from $230,020,559 in Q4 2022, a decrease of 17.5% and down compared to Q1 2022 which saw $267,780,257 in sold volume, a 29% decrease.
It is key to remember that at the beginning of 2022, the Cayman Islands real estate market was still on fire. In March 2022 alone we saw more than $131 million sold transactions close, which was a CIREBA record. In comparison, in March this year we had $57,812,699 in sold volume.
It is also important to remember that although these numbers are down, the percentage decreases especially when you look at a quarter over quarter basis are down less on the volume side as compared to the transaction side indicating that property prices are continuing to increase in the Cayman Islands.
Average Price Per Sold Transaction
The average sales price per sold transaction in Q1 2023 was $1,185,107. This is up from $978,810 in Q4 2022, a 21% increase and up from $1,179,648 in Q1 2022, a 0.46% increase.
Pending Transactions and Volume
Although sold transactions and volume are down both quarter over quarter and year over year, the Cayman Islands real estate market is still robust as you can see from the pending transactions and volume.
For the first three months of 2023, we saw 150 pending transactions. This is up from 132 in Q4 2022, an increase of 13.6% but down compared to Q1 2022 which saw 203 pending transactions, a 26% decrease.
When you look at the value of these transactions, for the first three months of 2023, we saw $212,277,425 in pending volume. This is up from $157,778,950 in Q4 2022, an increase of 34.5% but down compared to Q1 2022 from $268,128,057 in pending volume, a 21% decrease.
As with the sold transactions and volume, it is not at all surprising to see a year over year decrease. March 2022 was such an outlier for our industry, which saw over 101 listings go pending worth more than $173 million in sales. In fact, the $173 million in pending volume was yet another record. This cannot be taken as standard and obviously impacts the numbers when you compare them on a year over year basis.
You can tell a lot about the overall health of the Cayman Islands real estate market when you look at pending transactions and volume. People are continuing to buy property in the Cayman Islands and the value of the properties being purchased are increasing, percentage wise, at a higher level compared to the transactions showing that overall prices are continuing to increase.
Average Price Per Pending Transaction
The average price per pending transaction in Q1 2023 was $1,415,182. This is up from $1,195,295 in Q4 2022, an 18% increase and up from $1,320,827 in Q1 2022, a 7% increase.
For the first three months of 2023, we saw 411 new listings hit the market. This is up from 375 in Q4 2022, an increase of 9.6% but down compared to Q1 2022 which saw 453 new listings hit the market, a 9.3% decrease.
When you look at the value of these new listings, the 411 new listings in Q1 2023 are $795,499,188. This is up from $730,501,253 for the 375 new listings in Q1 2022, an 8.9% increase and up from $690,662,759 for 453 new listings in Q1 2022, a 15.2% increase.
Average Price Per New Listing
The average price per new listing in Q1 2023 was $1,935,521. This is down very slightly from $1,948,003 in Q4 2022, an 0.64% decrease and up from $1,524,641 in Q1 2022, a 27% increase.
Now, don’t get me wrong, the Cayman Islands real estate market is definitely not booming at the level it has been since the Fall of 2020 and overall, the market is seeing some slowdowns especially when you look at solds on a month by month basis but we are definitely not moving into a buyer’s market.
As you know, it all comes down to supply and demand. Even though 411 new properties hit the market in the first three months of this year, that inventory is being quickly absorbed by the market. In December 2022 we had 1,519 active listings which has jumped to 1,585 today which is only 66 more active listings.
As we continue through the rest of 2023, I believe we will continue to see the Cayman Islands real estate market continue to normalize. Overall sold transactions have cooled down and the average price per new listing quarter over quarter is relatively flat. On the flip side, overall prices are continuing to increase as seen by both the quarter over quarter and year over year increases on a per listing basis for both solds and pending transactions.
As I discussed in my previous article, inflation and increasing interest rates are impacting the Cayman Islands real estate market like all others especially for many non-cash buyers. Right now, interest rates in the Cayman Islands for a mortgage is at 8%. Our interest rates are pegged to the US and after the latest bump in March of this year there is hope that the end may be in sight for the global rate-hike cycle as inflation numbers are continuing to come down.
Many non-cash buyers may pause momentarily to consider but they are ultimately moving forward as the opportunity won’t be there tomorrow. This is a small market and what the volume numbers are definitely showing us is that a sale today is higher than the price paid yesterday. People who are in a position to buy are continuing to move forward be it for buying land to build on, purchase a second home for investment or buy their dream home.
As tourism continues to boom and there is discussion by Cayman Airways to add more routes to Cayman, stayover visitors will continue to increase as the year continues. It wouldn’t be surprising if our stayover visitors in 2023 get close and possibly exceed the record year we had in 2019 prior to the pandemic.
Coupled with that our population is continuing to grow and will do so for the next few years if not more. Numerous, if not all areas of business are expanding in our islands but if you look at just one area such as the new hotels – Grand Hyatt, the Hilton, Indigo, and the Mandarin Oriental – we know that thousands of employees will be required for just these four hotels to operate.
With all of this said, I believe that real estate in the Cayman Islands remains and will remain a sound investment into the near and far future. If you have any questions or would like more information on real estate in the Cayman Islands, please do not hesitate to reach out to me or my team at +1 345 945 4000.