Real Estate Market Insights
Highlights:
- Cayman Islands real estate market is robust and attractive as all travel restrictions have been lifted and the country continues to be one of the safest places in the world
- Real estate and the finance sectors continue to be major drivers in Cayman economy
- Suburban and low-density residential areas are becoming more popular with property buyers
As the Cayman Islands real estate industry prepares for a fresh new year, there are strong indications that a return to sustained growth is likely in the cards.
While it has been predicted that the Cayman Islands property market may be taking a relative breather after its second best year in a row, it is likely to mirror global trends in the real estate industry by taking a long-term approach to managing assets and focusing on strong returns.
The global property market is normalizing
According to the latest PwC-ULI report on Emerging Trends in Real Estate 2023, the real estate industry is moving beyond what it perceives as cyclical headwinds ( i.e., rising interest rates)— and taking a long-term approach to real estate assets.
The report further states that the mood among real estate professionals is “cautious optimism” with the intention of riding out the current slump and repositioning their businesses for another period of sustained growth and strong returns.
While interest rates continue to rise and transaction flows begin to flounder because buyers and sellers cannot agree on pricing, the report points out that the commercial real estate professionals interviewed for the report remained reasonably upbeat about longer-term prospects.
“The whopping growth and profits property investors and managers enjoyed post-pandemic have fallen back to earth and are ‘normalizing’,” says the report.
Describing the trend as more of a lull than a crash, the report affirms that many global investors and developers have shown their willingness to look beyond the short-term turbulence to focus on longer-term opportunities.
Real estate continues to drive Cayman economy
In its economic and financial forecasts for 2022-2024, the Cayman government reveals its confidence that operating revenues over this period will continue to be driven by the strong performance of both the financial services sector and the local real estate market, as well as the newly revived tourism industry.
(As of August 2022, all COVID-related restrictions for anyone traveling to or within the Cayman Islands have been repealed. This means travelers are no longer required to apply to travel via the Travel Cayman portal, to quarantine or isolate upon arrival, or be vaccinated prior to arriving in the Cayman Islands.)
On its recent yearend report, CIREBA registered a total of 877 properties sold from January to December 2022, amounting to US$ 992,364,863.08 — the second highest sales on record by the real estate sector, following its US$ 1-billion milestone in 2021.
Despite the predicted slowdown, this is a sure indicator that the real estate sector will remain robust and continue to be one of the dominant contributors to the national economy.
What types of property are people buying?
What types of Cayman property are buyers most interested in acquiring at the moment? “Everything really,” says ERA Cayman Islands broker and six-term CIREBA president Jeanette Totten. “Some of the very wealthy are buying expensive condominiums or luxury homes by the ocean. Meanwhile, others are buying properties to rent out. Homes under US $1-million sell very quickly.”
Expectedly, residential properties make up the lion’s share of sales in 2022, with condominiums leading the pack at 420 units sold and a contribution of over US $500-million to total transactions.
Living through lockdowns and work-from-home set ups continue to shape the tastes and preferences of home buyers, seeking living spaces where they can not only dwell comfortably, but also work and play at the same time. This could mean bigger backyards, more flexible floor planning, more square footage, and closer proximity to natural, outdoor spaces following trends that experts have called “adaptive living.”
Meanwhile, purchasing raw land has also shown brisk activity with 250 properties sold out of an available 347 listed last year, contributing close to US$ 126-million to total property sales in 2022. Almost 65% of land parcels sold were located in low density residential areas, while some 19% were bought on Little Cayman/ Cayman Brac, showing increased interest in the tranquil environs of the sister islands.
Where are the most popular areas to buy?
While the Seven Mile Beach area continues to dominate the market for luxury condominiums and residences, a growing interest in suburban and low-density areas has become an observable trend worldwide over the last two years.
In Cayman alone, reports indicate that homes and residential land on Cayman Brac and Little Cayman are being bought up at an unprecedented rate since the pandemic began. With a dwindling inventory in Grand Cayman, residential buyers and property investors have started buying up lots and homes in the sister islands in “unprecedented rates” especially since restrictions on travel between the islands were lifted last year.
Mobility has also become a growing concern among urban dwellers and Jeanette has seen a growing demand for that areas that provide quicker access to the city. “Any part of the island that is within a 30-minute drive to George Town during rush hour is desirable,” she says, adding that residences around George Town, West Bay, and Spotts have been particularly appealing to new buyers.
“Due to the traffic situation, living east can cause people to spend up to two hours a day on the road as they drive to and from home. On a small island this is simply unacceptable.”
Who are buying?
Most buyers still come from North America but there continues to be an upsurge of interest from European clients as well. If the pandemic had an impact on Cayman real estate, it has been generally a positive one. As Jeanette observes: “Many people have decided to move to Cayman because it’s known to be a safe haven. They buy homes and put their children in school here.”
“The positive trends in the real estate market will continue with overseas buyers looking at either investment properties that they will either rent out or for homes they can move to the island and live in,” she opines. “Local clients are buying mid-range and low-end properties with the idea that once the island opens up, they will be able to rent them to workers coming back on the island.”
What should buyers look for when investing in real property?
Being an industry expert of four decades and counting, Jeanette likes to keep it simple and to the point when advising clients, both local and foreign, who are looking to acquire property in the Cayman Islands.
“First of all, I ask them to decide what is important to them,” she relates. “For instance, do they have children attending school? Do they want a canal which would allow them to have their boat in their backyard or do they want only beachfront? The more we as realtors know what is important to our customers, the better we can point them in the right direction.”
