The last two years saw a sizzling hot Cayman Islands real estate market, with property prices setting record highs and a shortage of inventory that could hardly cope with soaring buyer demands.
However, in the last quarter of 2022, industry experts predict an inevitable cooling down period for the red-hot real estate market — not just in the Cayman Islands, but as a foreseeable global trend.
In their recently published paper on Emerging Trends in Real Estate 2023, particularly for the US and Canadian markets, the Urban Land Institute and PWC concurred that “normalizing” would be the buzzword for the real estate industry in 2023 and beyond.
Cautious optimism
A summary of the report states that “the real estate industry is moving beyond what it perceives as cyclical headwinds — i.e., rising interest rates, declining gross domestic product (GDP), sinking deal flows — and taking a long-term approach to real estate assets.”
The report pointed out to two seemingly contradictory property market trends that are expected to be at play. On the one hand, some aspects of the industry will be “normalizing” or reverting to pre-COVID patterns, while on the other hand, there are also factors that appear to have been permanently changed by the pandemic, such as how properties are utilized.
Nevertheless, industry experts are taking the long view, advising that while the short-term risks are real, there is no need to panic. Instead, theirs is a prevailing attitude of “cautious optimism” where the goal is simply to ride out the expected slump, then reposition their business for another period of sustained growth and strong returns.
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Cayman real estate industry remains strong
Echoing these sentiments, Cayman real estate insiders have expressed their faith in the local property market, assuring the public that it is expected to remain strong, especially since it has shown itself to be more resilient than its global counterparts.
Amid recent reports of an expected slowdown in the property sector due to global inflation, Cayman realtors are confident that the market will continue to push back and appreciate. And while the market has been experiencing a shortage in inventory, it is neither volatile nor unpredictable. In short, there are no indications we are headed for disaster.
Historically, the Cayman real estate has remained stable and robust over the last decade, even scoring peak record sales during the height of the pandemic in 2020 and 2021. At the same time, despite a slight decline in total activity moving towards the last quarter of 2022, Cayman’s real estate sector still managed to breach the billion-dollar mark, making this its second most active year on record.
Certainly, rising interest rates would make most buyers extremely cautious. Those who need financing, in particular, are not likely to make rush purchases at the moment — choosing to watch and observe market trends moving forward. But they are not expected to sit on the sidelines for long. Those who are brave enough to buy during recession could find themselves benefitting from bigger inventory, less competition, and more leverage in dealing with sellers and developers, who may be persuaded to offer greater incentives on the negotiation table.
And while higher interest rates are a huge consideration in most transactions, Cayman’s thriving luxury property market is not likely to be adversely affected as most high-net-worth investors purchase in cash.
All things considered, despite the apparent deceleration of activity towards the end of 2022, industry experts remain unperturbed as they see this as an expected phase, where conditions will begin to stabilize and go back to normal after a very intense period of record sales.
While it may take some time for both buyers and financial institutions to fully absorb the impacts of higher interest rates and other post-pandemic impacts, there is a general consensus among industry professionals that the market will continue to grow.
Land — your hottest property in 2023
If you’re in the market for Cayman real estate investment in 2023, here’s a tip from ERA Cayman broker Jeanette Totten: Keep an eye out for great deals on land.
“Land sales — specifically house lots — have been the hottest type of properties for buyers in 2022 and we believe it will continue to be so in 2023,” says Jeanette.
“The only thing that can derail this ongoing trend is the availability of vendors placing their land on the market. Currently, when land properties appear on the market, they sell within a few days with multiple offers. A lot of buyers want to get on the property ladder but single family homes or condos are out of reach for many. They feel that if they at least own a piece of land, they will step onto a rung on this ladder.”
