The supply of rental properties has surpassed the demand, leading to a glut of available accommodations.
As a result, prices for rentals are dropping, in some case below the owner’s costs.
Steve Hawley owns some apartments on South Church Street, normally a location in high demand for renters because of its proximity to George Town.
‘Recently I’ve noticed a drop in tenancy,’ he said. ‘In fact [tenancy] is 70 per cent down.
‘It’s never been that low in over 25 years of owning apartments,’ he said.
Tony Catalanotto, who handles the rentals at Rainbow Realty, has noticed the downturn as well.
‘The rental market is a bit slow without a question,’ he said. ‘The demand is not what it was four or five months ago.’
Mr. Catalanotto said the price drop of rentals is mostly a response to supply and demand conditions.
‘The rental prices have come down,’ he said. ‘They’re still not where we were pre-[Hurricane] Ivan, but they’re less than post-Ivan.’
Mr. Catalanotto said it was ironic that landlords, who were accused of price gouging in the aftermath of Hurricane Ivan, now have to lower their rents to find tenants.
‘Some landlords are having to accept amounts that do not cover their carrying costs,’ he said. Those carrying costs include mortgage payments, insurance premiums and strata fees. Higher interest rates on mortgages are also raising landlords’ costs.
Some landlords are asking themselves whether it is worth keeping a property when it is losing money, Mr. Catalanotto said.
‘But it’s not a good time to try to sell a two-bedroom, two-bathroom apartment because so many are on the market.’
The time it takes to rent properties has increased as well.
‘There are some [rental properties] on my list for three months now,’ Mr. Catalanotto said. ‘That’s never happened before.’
‘I have one property in Governor’s Harbour that’s been on the market for three months,’ he said. ‘It’s reasonably priced and normally it would rent in a week.’
Paul Aiken of Remax said the downturn in the rental market is affecting many people.
‘Caymanians are hurting,’ he said. ‘I have people coming to me and saying they really need to rent their house or apartment.’
Mr. Hawley, Mr. Catalanotto and Mr. Aiken all think the roll-over policy is playing a role in the situation with the rental market.
Mr. Aiken said a major portion of those who rent the apartments that are now available are expatriates. He said some expatriates are leaving the island even before they reach the seven-year term limit.
‘People are saying ‘why am I going to wait until [the government] says yes or no [to exempted status or permanent residency],’ he said. ‘They’re deciding to leave now.’
Mr. Hawley agreed.
‘There’s no question that we’re seeing an impact from the roll-over policy,’ he said. ‘A lot of people are getting out early. They’re describing their jobs as a dead end.’
Mr. Catalanotto said the uncertainly created by the roll-over policy is affecting expatriate’s decisions.
‘They’re saying that at their age and at this stage in their career they need more certainty in their lives. If an opportunity comes up [somewhere else], they’re taking it.’
Things might not be as bad as they seem, however.
Mr. Catalanotto said that summer is traditionally a slower month for rentals, and that his rental inventory right now is only about 10 per cent higher than it was two years ago at this time, which was right before Hurricane Ivan struck.
He also noted that the end of the summer usually brings in some rentals as some expatriates return from summer holidays and look for new accommodations.
Amanada Brookman of Remax, who deals with a lot of high-end executive rentals, said that while she sees less new people coming to the island, she has nonetheless helped ‘lots of new people’ find apartments in the past couple of months.