Despite the global economic crisis, business is good for several of Cayman’s realtors.
Broker Doug Sell of Butler Properties said the high season has brought a flurry of business.
‘I’ve been busier the past two months than I was for the last two or three years,’ he said.
Mr. Sell said he isn’t really surprised by all the activity.
‘During these types of times, historically people go to real estate,’ he said, adding the real estate is seen as a safe investment. ‘Frankly, people want to stay out of the stock market and they don’t really want their money sitting around in banks.’
Sheena Conolly of Sotheby’s Real Estate said her company has also been busy with several offers and purchases in recent weeks. She said conditions are good for first-time local buyers and for those looking to upgrade.
She partially credits dynamic lending from banks and favourable interest rates, with the prime rate at 4 per cent just up from a low of 3.25 per cent, and a wealth of selection on the market for the activity.
‘There is significant price competition and banks are being quite dynamic in their lending,’ she said. ‘Several retail banks are offering credit at rates unheard of before in Cayman.’
Kass Coleman of ReMax points out that the aggressive lending comes with unprecedented perks.
‘They are extending the number of years they will finance and they are accepting much less down.’
For instance, Butterfield’s Lifestyle Mortgage offers the possibility of no prepayment penalty possibility of a 25-year term, flexible payment options and discounted property insurance premiums available on single residential properties.
For first-time buyers who have been in their present Cayman employment for at least two years, Butterfield offers a mortgage with no bank lending fee and a reduced interest rate. Loans are available for up to 85 per cent of the home’s cost or value, repayment over up to 35 years with a variable interest rate of prime +1 per cent, no bank fee and preferential rate insurance for single homes.
And with that kind of credit available, Mrs. Conolly said there is also an unprecedented wealth of selection in Cayman thanks in part to the post-Ivan building boom.
‘There is lots of choice in all categories, from penthouses on Seven Mile Beach, to modest townhomes,’ she said.
Mrs. Conolly agreed that may people find real estate a safer investment in tumultuous economic times.
‘One thing we are noticing is a certain lack of purchaser confidence, which has come about because of general economic uncertainty,’ she said. ‘But when you are buying real estate, you are buying bricks and mortar not stocks or futures. You see the stock market crash but we are bullish in the real estate market. People are cautious, but if they are able to come up with the money, they should buy now.’
Ms Coleman said she is seeing investors, including many retirees, looking to capitalise on the security of real estate.
‘The people buying now are investors; people who would be looking to buy a property down here already,’ said Ms Coleman. ‘They are looking to invest in real estate as it is a safe place to put their money – it will be doing nothing but shrinking otherwise. And it’s money they need to last for the next 30 years.’
Mr. Sell said he’s seeing a good mix of local and overseas investors. Some of those overseas purchasers are investors looking for a safe place to put their money, but said he is also seeing some buyers who have been looking at Cayman real estate for many years and are finally doing it because the prices are better.
‘I wouldn’t say they’re cut-rate or desperate, but the prices are more reasonable.’
In particular, some higher-end properties are available at very attractive prices, Mr. Sell said.
Ms Coleman agreed, saying interest is active in the $700,000 to $1.2 million range.
She says selling properties in South Sound was a hard sell post-2004 Hurricane Ivan, when buyers balked after witnessing the destruction it sustained. However, things seem to have changed. For example, she recently found a buyer for a home that was renting at $13,000 month.
Ms Coleman says now is probably better to buy than before the market bottoms out completely because selection tends to go down as prices drop.
Mrs. Conolly said it also a great time to build because materials rates have dropped.
‘You are getting a much better value to build because the market for materials is oversaturated with the slowdown in home construction in the United States,’ she said.
Ms Coleman says people in Cayman are also finding now is a good time to buy high and dry land they can pass on to their families or build on at a later time.