Rent prices tumble on Grand Cayman

    Population decline leads to glut of apartments

    TOPlead

    The contraction of Cayman’s population has led to a glut of apartments and a reduction of long-term rental prices of 20 per cent or more.

    Director of Sales at Century 21, Howard McLaughlin explained that though the rental rate decrease was mainly a result of supply and demand, there were other factors at play.

    “There is a vast over supply of rental properties on Island, with over 2,000 available at any given time,” he said. “With a considerable number of the people on work permit returning to their countries of origin, this has saturated the market. Additionally though, what you also have happening is that people who may be building another home and might have sold one house to build the other, aren’t doing so because of the depreciation of property values and are instead opting to rent in order to mitigate any possible loss and choosing to sell later instead – when the market comes around in a year or two.”

    False comfort

    In addition, Mr. McLaughlin said the previous high demand in the rental market gave many landlords a false sense of comfort. As a result, some properties were not taken care of and in a market where the expectations for value are high, that was another factor making filling vacancies difficult.

    “Having said that, it is a good time for renters,” he said. “Instead of renegotiating rent for a property, we are also seeing people just move on. We are also seeing virtually no escalation clauses in contracts, which usually make provisions for rent to increase at the landlord’s discretion.”

    Despite these realities, Mr. McLaughlin said December was the busiest month of last year, something he attributed

    to companies hiring people for the New Year who had come to scout property in December.

    “It’s a good sign and indicates that a turnaround is in sight. But we will end up filling properties and diminishing supply before prices begin to come back to where they were,” he said.

    Monica Hydes, the retail manager at Tessa Hydes Property Management, said owners of properties are getting creative about how they market vacancies and that incentives such as half of the first month’s rent are not an unusual occurrence.

    “People are also asking for fixed agreements at these prices now and with work permit holders down by about 5,000 individuals, owners are often left with no choice,” she said.

    “We are still seeing a high enough volume of business but in terms of revenue, we are easily down 20 per cent as a consequence.”

    She added that the lower prices were also creating new dynamics for some neighbourhoods, as many people could now afford to move closer into George Town or, in some cases, on to the beach.

    Owning a rental property to provide accommodations to expatriate workers has traditionally been a source of investment and income for Caymanians.

    Renting tradition

    Charmaine Lee, an owner of properties for rent in the Savannah area, said she has been running the same ad for a vacancy in the paper for months now.

    “Usually as someone leaves, there are others ready to fill the vacancy, but things really began to change after 2008,” she said.

    “I could rent a two bedroom for $1,600 back then, but now I have come down to $1,000 and still can’t rent it; and this is a two bedroom in an affluent enough area.”

    Ms Lee said she remained hopeful things would improve and shared what she thought was the general consensus of the rental market.

    “The bottom line is that luxury rental accommodations are doing OK because there are a limited amount of them,” she said.

    “Two and three bedroom apartments are down about 30 per cent in rent fees and one bedrooms tend to be just holding.”

    Ms Lee added that she thought it might be a good idea to take a look at instituting a moratorium on the development of apartments in order to regulate the industry and protect those who had already made investments.

    “If this keeps up I don’t know what I will do,” she said.

    “Cayman was one of the few places where rent could have covered the mortgage on the property and maintenance, as well as provide discretionary income, but what we are charging for rent now can barely pay the mortgage and to be honest, to go any lower than where things are at now would be a real liability,”

    In Ms Lee’s opinion, another contributing factor to too many apartments remaining vacant is low wages, causing some people to cohabitate in large numbers and fewer places being rented as a result.

    “I had a two bedroom apartment for rent and was approached by eight individuals who wanted to live there,” she said.

    “I had to say no, as I don’t believe that is what anyone wants for their place or their country.”

    TOPstory

    Rental signs abound. – Photo: File
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    14 COMMENTS

    1. OK, lets be clear here. The rental market is finally correcting itself after having been too high. What is too high? Its when the majority of the people on the island outside of finance sector and other high paying jobs cannot afford a decent place to live. Not necessarily nice, or large, just decent. What is decent? Its when the fixtures work, when the plumbing doesnt brake all the time, and the place is insulated enough so CUC wont be as high as 500-600.

      Six months ago a rental agent took me to a place on South Church Street. Upon entering the premises I was met with a foul smell and I could visually see green mold all over the ceiling. Other place had mold too. The apartment was a health hazard, and they wanted 1600/month for it. I offered 1400 if they would could produce a document that proved that the place had been sanitized. I was scoffed at with the explanation that these places used to rent for 2200. I guess I was supposed to be grateful that I was offered an over priced mold infested apartment for my wife and child. Even though there certainly are good landlords out there, this is an attitude that is not unusual. At the end of the day, good landlords will prevail, and greed will punish itself.

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    2. All I can say is, way to go for the roll over policy!

      without that, we would still be paying 2k or more for a 2 bedroom house.

      Not any more *wide grin

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    3. A 20% reduction in the population creates a 20% drop in rentals.Makes sense to me. Im sure that there is also a 20% drop in grocery sales and the duty thereon.
      The same for many other things. But the wind is now at our backs; lets raise the work permit fees again and rid the country of ex-pats completely. Then we can return to the life we had 100 years ago! or maybe we dont really want to do that.

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    4. Curious, Can someone explain what life was like 100 years ago without expats ? And how Cayman would be better if they were all gone..

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    5. Here is some of the evidence that we knew was coming. A reduction in the ex-pat population has directly affected the rental market. Caymanian landlords are going to suffer and it wont improve quickly as more and more are leaving.
      Will the Caymanian anti-expat movement still bang on about getting ex-pats out, or will they go strangely quiet now we can see the direct results?
      On this forum, when ex-pats have explained that these kinds of negative things will happen to Cayman if we all depart, weve been met with a lot of scoffing from those who feel infallible. Well, here it is, the times they are a changing!
      Peace.

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    6. Great news rent prices have tumbled ,but what Cayman needs is some type of Governing Body to protect tenants and agree that the rents being asked are fair and property is infact safe for rental as there are so many Greedy Despicable landlords who happily take hard sometimes not easily earned cash and who will do nothing to ensure property is a safe environment.

      And as for these so called landlords who refuse to give back security deposits,they get the money before you can begin to live in them so have the decency to give the money back when tenant leaves.

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    7. Rents have been ridiculously high on Cayman — landlords were greedy and they got away with it. On top of that you had to pay for your electricity and other expenses. I looked at a lot of places renting for 1700-1900 a month that werent fit for a dog. Dumps that smelt moldy, worn out furniture, desperately needing a coat of paint, stained carpeting, etc. It was very discouraging. So now, I am happy to hear that they are coming down to reasonable rates. Reasonable Rents — not a phrase you ever hear in Cayman.

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    8. Any renter will love to see rent prices drop… i for one is surely happy about it..
      As for landlords go… I just want to inform people that be careful with landlords because a lot of them want to take your deposits…I believe there are some landlords on Cayman who take advantage of expats by cleverly taking a good part or if not all of their deposit…
      It almost happened to me and Ive known of a few other instances of it occurring. So be careful people and read over your contracts. Also, remember real estate agents also just care about making money. Mine agent was a waste of time when my landlord wanted to take my deposit. I left my place in a good condition and I honestly believe that renters are sometimes being taken advantage of in Cayman when it comes to deposits being refunded. It was just frustrating and disrespectful of my Landlord…..As the saying goes, what goes around comes around…

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    9. About time, for awhile now most rental property is a dump not fit for animals. Before the slow down came, all you hear on the radio from Caymanian is send home all the expats. See what happen when you do. to all you so call rental owner why dont you rental your properties yourself, you cant have it both ways.

      Oh no, what happen to IM A CAYMAINIAN oh yea time is too hard for that.

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    10. Surely with so many Vacant Apartments and homes on the island, no one is forced to live in or rent a place that is in deplorable condition. If a landlord keeps his place like crap thats all he will be able to rent too. Im not sure what most folks generally consider a fair rent is but as a landlord myself, If I pay a mortgage of 1200.00 a month for a home its reasonable to expect 2000.00 a month in rent. Some tenants dont realize how much overhead there is in owning a home such as Insurance, upkeep and repairs. These costs are almost always passed on to the owners of the home. Utilities should be paid for by the tenants since they are the ones using the energy. There are always two sides to the tenant landlord argument but the fact is if you dont like the place you dont have to rent it, you can simply say no. Believe it or not Rental Properties are actually a business and people start business to make money. If anyone has an issue renting they always have the option of buying a home themselves. As for security deposits, leases protect both the tenant and the landlord, if you live up to the requirements of the lease you signed your landlord is required by law to return your security deposit, if on the other hand you break your lease or do not return the place to the landlord in the condition that it was in when you got it. He can legally retain your deposit. I recommend to all renters, make sure you read your lease carefully and if the place is not in good condition do not rent it.

      Ive seen both sides to this story, folks who rent a place and do not take care of it, then expect the owner to fix it up for them. Then there are plenty of owners who will rent a piece of crap to anyone wholl take it, then complain that the place is not being taken care of. Id recommend just leaving folks like this alone. I take pride in all my rentals and would not rent a place to someone that I would not live in myself and I have never had anyone complain about the rents I charge which is probably a little higher than most, but you get what you pay for. I have also always had great tenants that really take care of the units I rent them, because they appreciate that they are in top notch condition.

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    11. It is sobering and very realistic to read the comments above. Location, Location, Location. There has been an influx of new workers to this island over the last couple of months and as the internet allows them are informed before they get here to bargain for prices before they reach cayman. SMB, South Sound are filling up with new tenants because of location and whats left as mentioned in one comment above is dumps landlords whom have simply gotten away with it for years. The nice places are virtually gone.

      Find me a nice place on the beach..you cant prices are coming back up on SMB simply because of lack of supply. 5 months ago thats when the deals were on SMB.

      My heart goes out to owners past Grand Harbour. They simply have to lower their rents to attract potential tenants because that CI1600 condo past Grand Harbour can now be gotten in South Sound or if your lucky SMB but they are gone now.

      Cayman get regulation on rentals for landlords and protection for tenants. A new trend Ive noticed is families requesting short term rentals rather than booking hotel rooms…do you want these people seeing beautiful pictures of their vacation home only to move into mold..again rentals is a branding element of Cayman…Landlords if you havent spent money to renovate your rental then do because the expectations of renters have increased..its worth the effort and a little creativity…

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    12. The market will set the price and pace. That is it. Please don’t ask goverment to step in because people playing with other people’s money that have no skin in the game is a bad idea. Save your money in the good times so you can make it through the bad times. Help the people around you. Give without expectations and life will blossom all aroud you. This is a fact I have learned over a many years. If you don’t believe me then try it out. That is how I found out. Life is about the people the rest is just stuff. Truly, Honestly.

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    13. It’s simple economics, supply and demand. When I arrived a year ago I was pleased to see that there were condos on SMB with beach views that maybe I could afford. Then I viewed maybe 50 of them and got a shock. Time warp sprung to mind, mirrored ceilings, wet bars in the middle of the lounge and **** wicker furniture as far as the eye could see. That’s the sign that the landlords have had it good. Now the market has turned its time for them to get out their cheque books and get the builders in!

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    14. This is also the case in the US now. We may have a rollover policy but it’s not enforced.

      Moreover this is due to the same causes. Over abundance of properties, and sluggish employment.

      A rising tide will lift all boats.

      The tide change however is a few years off…

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