As published in the Cayman Compass, WEDNESDAY SEPTEMBER 3, 2014
by James Bovell
Looking to Cayman's future
September is always a significant month for Cayman Islands residents, and this year it’s particularly poignant as it marks 10 years since the Category Five Hurricane Ivan blasted our shores.
I like to think of Ivan only in terms of what it showed the rest of the world about the Cayman Islands: our resilience to disaster epitomized by the speed at which we as a country picked ourselves up and carried on “business as usual.”
Ivan brought out the very best in the community: We all pitched in to ensure that businesses, schools, shops and homes were in good running order as soon as possible; we shared our homes, shared our food and shared our community spirit and it was this that got us through the storm and back to normality. At the same time, we strengthened even further our resistance to such natural disasters by building to even higher standards and putting in place disaster recovery protocol and plans, making the Cayman Islands one of the most disaster-resilient countries in the region. This is especially evident in the real estate that can be found on the island today, with most new buildings incorporating the lessons learned from this storm.
Many new homes are now built several feet above sea level, using minimal drywall on the ground floor should flooding occur. Some homes even now include hurricane “safe” rooms, generators and water tanks and almost always include hurricane rated windows and doors.
But I feel we should not be dwelling so much on the anniversary of this disaster. Instead we should be thankful for the amazing recovery we showed in the aftermath of the storm. Ivan helped us raise the bar to even higher exacting standards, which have helped us rise to even greater levels in terms of product and service excellence. Ivan was a lesson well-learned.
Upswing in activity
Of particular interest to the real estate industry and the island as a whole has been the pronounced upswing in activity that has been taking place over the summer, a time when traditionally the market tends to ease off in keeping with the impending low season.
Instead, hotels and other tourist targeted businesses are reporting a longer summer season and higher occupancy levels than usual. The upswing in tourism brings with it a surge of interest in our industry, and I can attest to the fact that the requests for real estate showings never softened during the summer, and it looks like we are going to run this way right into the next “high” season.
In June, July and August, there were some 24 beachfront condos sold along Seven Mile Beach, a 71 percent increase compared to the same months last year. Of the 24 units sold this summer, only seven were sold for more than $1 million USD. Whereas last year, seven of the 14 beachfront units sold for more than $1 million USD. (These numbers do not include the sale of the WaterColours luxury condos as these are still considered pending until the occupancy of the development.) This is important because I predict a marked increase in real estate prices come the new year. I urge prospective buyers not to wait but to act now if they are looking for value for money.
In particular, I can see a focus of energy being placed on the lower end of the beachfront condo market (in the US$250,000 to US$800,000 price bracket.) Overseas buyers who would have traditionally invested in such properties have been held back by a recession that hit longer and deeper than anyone could have predicted, having their 401k pension plans and other investments crushed in the market upheaval. Now the markets are becoming more buoyant, and investors are looking once again to diversify and purchase an overseas vacation property in a safe and stable location with solid appreciation possibilities such as the Cayman Islands. Such properties might be older and in need of some modernization, but such additional investment will only lend itself to further appreciation of the property while at the same time providing owners greater enjoyment of their vacation home and strengthening the property’s rental income potential.
Next month read about my predictions for the local market and why Cayman is carving out a niche for itself as the ideal location for families to move here.