Real estate statistics for the month of August were rather pedestrian; however, July data were powered by high-dollar deals, which continue to buoy overall numbers for 2011.
The bottom line, according to Jeremy Hurst, president of the Cayman Islands Real Estate Brokers Association, is that year-to-date sales are up by more than 100 per cent compared to the first eight months of 2010.
“We’ve already sold more property in 2011 than we did in the whole of 2009 or the whole of 2010,” said Mr. Hurst, who is broker/owner of IRG. “We’re on track to be on par or probably better than 2008.”
According to Land & Survey Department data, from January-August 2011 there were 1,171 freehold land and property transfers, for a total consideration of about $495 million. In the first eight months of 2010 there were 1,173 transfers worth $208 million, compared to 1,350 transfers worth $255 million from January-August 2009 and 1,602 transfers worth $404 million from January-August 2008.
There were 1,619 transfers worth $307 million in all of 2010; 2,045 transfers worth $397 million in 2009; and 2,289 transfers worth $558 million in 2008.
Concern
Mr. Hurst’s concern is that higher-value transfers are dominating the market, while the lower and middle sections continue to lag, specifically in apartment and condo sales. He attributed that weakness to high rental vacancies due to the dwindling population, a trend exacerbated by Cayman’s work permit rollover policy.
“The big issue very much remains the falling population of the island and how that ties into the apartment and condo market in the $200,000-$400,000 level,” he said. “That’s made up of two types of investor: predominately locals and expats buying for their own use, and investors buying for investment purposes. Due to the drop in rentals and high vacancies, investors are less likely to purchase. That’s directly linked to the drop in population and negative effects of the rollover policy.”
According to Land & Survey statistics, in July, there were 126 transfers worth $70 million, an average of nearly $560,000 per transfer. The number of transfers for July ranks in the bottom 10 for a month, looking back to the beginning of 2006. (Four months in 2011 have ranked in the bottom 10 for number of transfers.) Conversely, the total value of transfers for July ranks in the top 10 for a month since 2006. (Four months in 2011 have ranked in the top 10 for total value of transfers.)
Likewise, the average value of transfers for July also ranked in the top 10 for a month since 2006. (Five months in 2011 have ranked in the top 10 for average value of transfers.) Meanwhile, in August, there were 166 transfers worth $30 million – both of which are about average for any month since 2006. The average value per transfer in August was $178,000. From 2006-2010, the average value per transfer declined from $249,000 in 2006 to $190,000 in 2010. So far in 2011, the average value per transfer has been $423,000.
The Dart Group’s acquisition of the land holdings of embattled developer Stan Thomas, including the former Courtyard by Marriott and prime Seven Mile Beach real estate, has had a significant impact on the data for 2011.
In August, there were 58 land transactions with an average sales price of $124,000; two commercial property transactions with an average price of $25,000; 62 condo transactions with an average price of $213,000; and 22 residential property transactions with an average price of $364,000.
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Am I understanding that Mr. Hurst contends that we would have a more attractive real estate market in the condo sector if 6,000 or so unemployed (largely construction) workers were still here? I find it hard to believe that would create either a more vibrant economy or a more attractive real estate investment environment.
Not having a rollover policy ultimately means that such persons can remain indefinitely even if there is no work for them. They would only leave if conditions are better where they originally came from. I’m happy with that if realtor’s and economists can explain that’s good for business and the Islands.
The decline in population (and it remains to be seen to what an extent there is one) is almost certainly a reflection of a decline in overall economic activity and not to any significant degree because of rollover (which applies generally to the occupants of non managerial positions and not the positions themselves).
CIREBA should ask itself whether (just maybe) the issue arises in significant part because we we overbuilt after Ivan not taking into account a temporary and artificial and rapid expansion in our economy as a result of thousands of workers being needed to assist with the rebuilding effort and spending all that lovely free insurance money?
What did realtor’s expect those people to do when their very important work was completed and the insurance money spent?
In addition to overbuilding, crime, commission rates, a global (and local) economic downturn, stamp duties, increased permit fees, and perceptions of reduction of quality of life are all factors that are negatively affecting the real estate industry.
If rollover is to be counted at all amongst the reasons, it is the least of them.