The first two months of 2011 have shown a significant increase of activity in the real estate market, according to the latest Cayman Islands Real Estate Brokers Association’s market update.
The number of land transfers in January and February of 2011 exceeded corresponding 2010 figures by 40 per cent and the first two months of 2009 by 48 per cent. The value of those transactions was more than four times higher than in the first two months of 2010 and more than three times higher than in the same period of 2009.
The massive increase is mainly due to Dart group’s purchase of the Courtyard Marriott and other properties that formerly belonged to Stan Thomas and his companies, including the Cayman Islands Yacht Club and about 1,500 feet of Seven Mile Beach property. However, even if this deal was excluded from the data a significant increase remains, both in terms of the number of land transfers and their value, CIREBA President Jeremy Hurst said.
The pick up in activity followed a very slow year for real estate transactions in 2010.
Chartered Surveyors Charterland, which issued a report on the Cayman Islands property market for 2010 based on the number of all transfers and related values, noted a decline in the volume and value of sales in 2010 compared to the previous year.
A decrease of 30 per cent in the number of sales and a drop of 36 per cent from $404 million in 2009 to $259 million in 2010 are not only sobering figures for 2010, they also constitute a significant fall compared to the market highs for the number of sales in 2005 (62 per cent lower) and 2006 for the value of transfers (57 per cent lower). Both volume and value of sales declined steadily since March 2010. However, this steady decline is not reflected in the average sales price, which remained fairly steady throughout the year.
Charterland therefore concluded that while the market has stagnated as far as sales volume is concerned, the decline in value was not as “dramatic” as many in the real estate business had feared.
“It would seem that sellers are choosing to hold off on selling their properties, where they are able, pending a market recovery, rather than take a loss in the current market,” the report said.
Sixty-four per cent of the overall sales in 2010 were for sales prices of less than $250,000 and just over 20 per cent of the sales fell into the price range between $250,000 and $500,000. Five point six per cent of property sales were transacted for a price between half a million and $1 million and 4.4 per cent of all transactions saw properties change hands for $1 million to $5 million.
In the ultra high end category of more than $5 million there was not a single sale in 2010. Overall this structure was in line with 2009.
The report also concluded that the vast majority (90 per cent) of buyers were based in the Cayman Islands. The picture is slightly different when only Seven Mile Beach is considered where overseas buyers are traditionally dominant. Yet, still 67 per cent of the buyers in this market segment were local.
About two thirds of foreign buyers are coming from the US, followed by Canada. European countries account for less than a quarter of all purchases.
Although the data set is very limited, the report noted increases in purchase prices of between seven and 12 per cent over 2009 for different medium to high end condominium properties on the island.
Lower end condominiums saw a mixed picture of sales prices within a range of 6 per cent increase to 12 per cent decline over 2009.
But the report pointed out that the average sales price comparison is distorted by the small number of sales, which does not allow a comparison like for like. The same applied to the analysis of house prices, where in some areas prices increased considerably but this had to be the ascribed to the properties being substantially superior to those sold in 2009.