The impact of Covid-19 has been felt right across the world when it comes to the detrimental effects it has had on a country’s economy and the Cayman Islands is no exception, with our tourism industry coming to a grinding halt as we shut our borders in a bid to prevent the spread of the virus within our shores. However, Cayman has two very important economic drivers still going for it despite the closure of our borders: our financial services industry, construction and development. It is therefore absolutely crucial for the future of the country that the Islands are allowed to carry on with development as planned, at the market’s desire.
We are one of the more fortunate countries in the world whereby not only do we have strong activity in our real estate sector, we also have a buoyant financial services industry, especially now that the jurisdiction has been taken off the European Union’s blacklist of uncooperative countries (but more on this next time!).
The real estate industry has been one of the most important ways in which we have managed to keep our economy stimulated throughout the entire pandemic, through major projects that have been continuing to progress over the past few months. The real estate industry has demonstrated its importance to the economy because its impact into the economy is the highest out of all business sectors, at a rate of 2.5 times GDP. There is no other sector that generates so much back into the economy as real estate and so, I believe, it is highly important that we recognise the true value of real estate and development to the country as a whole.
There will always be the debate as to whether we are experiencing too much or too little construction and development, however I hope we can reach a balance whereby the community is able to reap the benefits of development without detrimentally impacting our environment also.
As an extension of the above discussion, I would like to touch on a conversation that often reaches my ears: that Cayman is somehow selling off its birthright by selling properties to overseas investors. I would like to say that selling a property is completely within the control of the property owner. No one is forcing anyone to sell; it’s for the property owner to make that decision. What they can then do with the proceeds of the sale is to create a better life for themselves and their families, giving them the means to plan for their future.
I also hear people say the properties in Cayman are unaffordable now, but this is not unique to our islands. Real estate prices in both the United States and Canada have increased every year since 2012. In fact, real estate prices, as a whole, have increased worldwide over the last 10+ years. The reality is what I am hearing today about high real estate prices is the same I heard 10 years ago and even 10 years before that. Most of us start off in the same situation. After school, we start our careers at the bottom of our chosen fields. Many of us either live with our parents or rent until we can get on our feet, build up our savings and grow within our chosen careers. This path to property ownership hasn’t changed in decades. Many of our parents followed that same path.
In fact, one thing to note is real estate as a whole right now is more affordable than it was 10 and even 20 years ago when you take into consideration mortgage interest rates. In 2000, the average prime interest rate was 8.7%. This is compared to 3.25% today. This means that your dollar goes further when purchasing real estate as you aren’t paying as much money in interest. Additionally, we continue to invest in real estate because real estate continues to be a great investment, and this has been proven over time. It is also true that there are still property options at all price points, it just means having to look further afield.
Early in March I participated in a think tank session along with stakeholders from various backgrounds. We were engaged by the Strategic Reforms Implementation Unit, a unit within the Office of the Deputy Governor that operates at an enterprise level providing support for strategic public sector reforms and initiatives. I felt we had just started to get the ball rolling looking at the issue of affordable housing for Caymanians when, of course, Covid-19 hit and that think tank series ground to a halt. I would very much hope that this series can start up again as soon as is practical as I feel this is an extremely worthwhile project that will ultimately help everyone who wants to get a foot on the first rung of the property ladder.