From a statistical standpoint, the performance of the Cayman Islands property market has been far from stellar in 2012, but at least it’s been steady through the first nine months of the year.
For the third consecutive quarter, the market has recorded at least 400 freehold property transfers per quarter, according to Lands and Survey Department records. It’s the first time that has happened since 2009. (Most, but not all freehold transfers are sales.)
Concurrently, it was the third consecutive quarter for total freehold transfer values to exceed $100 million. That also happened in the first three quarters of 2011, when values were boosted by a handful of high-dollar real estate transactions, most notably the Dart Group’s acquisition of prime Seven Mile Beach property from developer Stan Thomas. Before that, one has to look back to 2008 to see three consecutive quarters topping the $100 million mark for freehold transfers.
In the first quarter of 2012, there were 425 transfers worth $117 million (average value of $274,000). In the second quarter, there were 400 transfers worth $102 million (average value of $254,000). In the third quarter, there were 475 transfers worth $102 million (average value of $214,000).
The relatively modest average value of transfers in the third quarter, which was punctuated by an average value of $147,000 in September, could be a reflection of affordable homes being bought and built, for example in new developments by Frank Hall Homes and Island Builders in Savannah. Particularly in the third quarter, real estate numbers could also have been skewed by uncertainty over government’s budget and revenue-raising proposals, such as the potential payroll tax on expatriate workers that was floated and suddenly withdrawn.
Additionally, the timing of individual purchases could also be influenced by government’s announcement that stamp duty rates would be hiked to a uniform 7.5 per cent, which is set to go into effect soon. Previously, the rate for prime Seven Mile Beach and George Town property was 7.5 per cent, whereas the rate for property elsewhere was 6 per cent for non-Caymanians and 4 per cent for Caymanians.
However, while increasing the base stamp duty rate, the government is also granting greater concessions on stamp for first-time Caymanian buyers. Under the new programme, first-time Caymanian buyers will pay no stamp on homes valued up to $300,000, or residential land valued up to $100,000. First-time Caymanian buyers will pay 2 per cent stamp on homes between $300,000 and $400,000, or residential land between $100,000 and $150,000.
Previously, first-time Caymanian buyers paid no stamp on homes up to $200,000 or land up to $50,000 in value; and 2 per cent on homes from $200,000 to $300,000 or land from $50,000 to $75,000.
Presumably, the changes to stamp duty might encourage prospective buyers to hurry along transactions before rates are hiked to 7.5 per cent. On the other hand, first-time Caymanian buyers, looking at homes from $200,000 to $400,000 or land from $50,000 to $150,000, might be encouraged to delay transactions until they are assured they will qualify for the new stamp duty concessions.
Through the first nine months of 2012, there have been 1,300 transfers worth $320 million, with an average value of $246,000. The number of transfers is down by 2 per cent compared to the same period in 2011, about even with 2010, down 14 per cent from 2009, down 27 per cent from 2008, down 21 per cent from 2007 and down 40 per cent from 2006.
The total value of transfers so far in 2012 is down 41 per cent from 2011, up 34 per cent from 2010, up 7 per cent from 2009, down 28 per cent from 2008, down 22 per cent from 2007 and down 44 per cent from 2006.
The average value of transfers so far in 2012 is down 65 per cent from 2011, up 33 per cent from 2010, up 24 per cent from 2009, down 2 per cent from 2008, down 2 per cent from 2007 and down 8 per cent from 2006.
Comparing year-to-date totals from 2012 to historical averages from 2006 to 2011, the number of transfers is down 20 per cent; the total value is down 24 per cent; and the average value is down 5 per cent.