This week we kick off a series of article looking at buying a property in Cayman, from finding the property through getting financing to renovating to create the home of your dreams.
With a very active rental market and good availability, many people living and working in the Cayman Islands never consider buying property as an option. Nevertheless, property has always been seen as one of the better long term investments. However, many people have had their confidence in the property market shaken by the crash of property prices, especially in the US. Is property still the safe investment many imagined it to be, and is this a good time to buy?
The time is now
According to Kim Lund of RE/MAX, this is the best time to buy that we are likely to see in many years.
“Because of the recession, there is a good amount of inventory available due to sales slowing down, so purchasers currently have much more of a choice and overall, a wide variety of properties to choose from,” says Lund.
He also believes that the real estate market in Cayman has bottomed out, so prices are “as low as they will ever be, at least in the foreseeable future.”
The anticipated recovery of the economy means that activity is picking up, and with the stamp duty reduction still in place, as well as a buyer’s rebate on selected properties, there are a number of financial incentives as well.
“Interest rates at banks are at an all time low and expected to stay low for the next year, so mortgage rates are as attractive as we will ever see them,” according to Lund.
With the economic slowdown, development of new properties has also slowed, which should mean that as the property market picks up, there will be fewer properties available to choose from.
The signs in Cayman Brac are also positive, according to Mark Knowlton of Century21.
“In spite of global trends, it is a cause for optimism that land values in Cayman Brac are holding well thus far,” says Knowlton.
“Over the last 30 years I have never experienced a time when land values on Cayman Brac have declined. During past recessions sales may have gone a bit flat, but values held,” he adds.
The same but different
Although property prices in Grand Cayman have mirrored the international trend, the same discounting experienced elsewhere did not hit Cayman’s market.
“We did not have the run up in prices, like other real estate markets, principally because Hurricane Ivan hit us in September 2004, as our real estate market was starting to realise strong capital appreciation,” says Lund.
“This event paused our market for a couple years, which was long enough for the global economy to start slowing down and not allow us to increase prices, as other markets were able.”
The downward trend was more noticeable for Seven Mile Beach properties than elsewhere on the Island.
“The overseas investment market fell off a cliff versus the local residential market, which remained quite active for properties under US$500,000,” says Lund.
Areas on the bubble
When it comes to finding a good investment, there are certain areas that still present good value for money.
The areas to the south and east of George Town, especially new developments and pre-construction sales have proven very popular, but with the downturn in property development the supply is starting to run low, according to Lund.
Although the Seven Mile Beach corridor has suffered most in the property downturn, business is picking up again, with some good deals still available. Another area where some good buys might be available is around Colliers, where developments like Morritt’s, Reef Resort, Compass Point, and the new ultra-luxury development of The Islands Resort and Residences have built the area into a much more recognised spot.
“Because these resort markets have been slow, there are still some very good opportunities, although now that buying has again returned to this market, these opportunities will soon disappear,” says Lund.
In Cayman Brac, buying land still seems to be a good investment.
“Investor consideration to invest in property on the Island now is well-timed. Those wise individuals who are buying now will enjoy excellent potential for value appreciation. The saying, “You do not wait to buy land; you buy land and wait” applies quite well to Cayman Brac at this time,” says Knowlton.
Another area that has changed dramatically over the last couple of years is the Camana Bay development, which recently launched The Terraces; residential units located in the Camana Bay development. These rented out very quickly after launch, indicating that people are very keen to live close to the shopping, businesses and schools that make up the Camana Bay development. This satellite town centre has created a strong demand for property in an area where previously there existed no such demand.
Future developments at Camana Bay is scheduled to include the release of homes and condos in an area closer to Cayman International School.
According to John Hillman, vice president of sales at Camana Bay, the first release will be aimed very much at the local audience.
“We plan to offer a diversity of products for a range of price points,” says Hillman.
The development will aim to present prospective buyers with a number of compelling reasons to invest.
“It is our goal to create a true sense of community by seamlessly connecting our residential neighbourhoods to the town. There will be multiple venues where people can come together through an elaborate network of parks, civic spaces for events and celebrations, pools, the beach and much more. The stage will be set to fully support spontaneous gatherings and activities which will make life interesting and enriching,” he says.
The development will also feature two sets of sidewalks in order to make it a safer environment for children and pets, while the design of the homes will aim to retain a Caymanian and Caribbean influence.
“Camana Bay is about something bigger, being part of a new town and with that comes a sense of pride and enjoyment where people want to share the story of this place and embrace the public nature of this environment,” according to Hillman.
In next week’s article, we will take a look at getting a survey done and determining the amount of work needed on a property.