Charterland sees slow uplift in property market

Property & Development

One local property firm sees reason for cautious optimism in reviewing last year’s statistics from the Cayman Islands property market.

“[T]he market for 2012 does appear to show a continuing, albeit slow, uplift in total and average values per year, since the low point of 2010,” according to Charterland Ltd.’s Cayman Property Review 2012. “However, the drop in the total number of transfers from even the adjusted figures for 2011 shows us that the market is still considered to be stagnant compared with the ‘boom’ years of 2005 and 2006, and that any perceived recovery in the property market can still be considered a fragile one.”

Generally speaking, the total number, total value, and average value of property transfers in 2012 were all greater than in 2010. Conversely, each of those measures declined in 2012 when compared to 2011, when the market was dominated by major land deals by the Dart Group.

Charterland’s report is based on a review of each property transaction and lease registered with the government’s Land Registry.

“Based on our analysis, we assessed that [Dart’s] acquisitions represented just over 6 per cent of the total number of transfers for [2011] and, more significantly, 28 per cent of the total value of all transfers registered in 2011,” according to the report.

After adjusting the 2011 figures for Dart-related transfers, the firm found that the number of transfers decreased slightly in 2012 from 2011, but the total value increased by 3 per cent and the average value increased by 8 per cent.

Regarding the fragility of the possible slow recovery, the report notes, “[W]hereas in 2011 there were nine sales of properties valued for in excess of $5 million, of which five exceeded $10 million, there were only four such sales in 2012, of which only two exceeded the $10 million mark.”

High-dollar sales

According to the report, the highest value sale of the year was $13.02 million for the “development site previously known as ‘Impulse Bay’ and located with North Sound frontage to the north of the George Town industrial estate and south of the Camana Bay properties”.

The site has multiple planning zones, including Hotel/Tourism, General Commercial and Marine Commercial.

Other high value sales were $12.936 million for the former ‘Crown Jewel’ condo development site on Seven Mile Beach, about $6.408 million for 77 units at the Grand Caymanian resort on North Sound, and $5.67 million for Picadilly Centre in central George Town.

The highest value residential property sold in 2012 was a roughly $4.692 million home on Boggy Sand Road. Additionally, a home on North Sound in the Mangrove Point community in Newlands sold for about $4.489 million.

High value condo sales included $3.024 million for a unit at The Caribbean Club, $2.628 million for a unit at Water’s Edge, and $2.580 million for a penthouse unit at The Meridian.

Expat tax, stamp duty

Looking at the number of property transfers on a month-by-month basis, the firm notes that sales peaked in July but “fell off dramatically for the remainder of the year”.

According to the report, “This pattern is consistent with concerns expressed by some realtors that the announcement of the ‘expat tax’ in July 2012 negatively impacted demand from this area of the market, notwithstanding that this proposed revenue measure was dropped by the Government during August.”

The firm also saw a slight rise in the value of sales in October and November. “[T]his may be attributable to purchasers trying to register their transfers in advance of the increase in Stamp Duty on property transfers” to a uniform rate of 7.5 per cent, which took effect 11 December.

Where buyers are from

The firm analysed the domicile of property purchasers during the year, finding that, similar to 2011, 90 per cent of Cayman Islands property purchasers were registered with Cayman Islands addresses. Meanwhile, 6 per cent were from the United States, 1 per cent from Canada, 1 per cent from the United Kingdom and 0.56 per cent from the rest of Europe. On Seven Mile Beach, 83 per cent of purchasers had Cayman Islands addresses; 12 per cent had US addresses; 3 per cent were from Canada and 2 per cent were from the UK.

While the domiciles of purchasers remained relatively constant in 2012 for the country as a whole, there was some fluctuation in the Sister Islands.

In 2011 in Little Cayman, 52 per cent of purchasers were registered in Cayman, 18 per cent in the US, 3 per cent in the UK, 6 per cent in the rest of Europe and 21 percent in ‘other’.

In 2012 in Little Cayman, 66 per cent of purchasers were registered in Cayman, 11 per cent in the US, 13 per cent in the UK, 2 per cent in the rest of Europe and 9 per cent in ‘other’.

The report highlights the increase in UK-domiciled purchasers from 3 per cent to 13 per cent.

“From closer examination of the Transfer of Land documents, this increase in the number of purchasers of properties on Little Cayman from the United Kingdom appears to be entirely due to sales by Crown Acquisitions Worldwide Ltd. This developer has been very active in recent years acquiring large tracts of undeveloped land in all three of the islands and targeting sales of sub-divided lots on these properties directly to United Kingdom residents,” according to the report.

In 2011 in Cayman Brac, 84 per cent of purchasers were registered in Cayman, 6 per cent in the US and 5 per cent in the UK.

In 2012 in Cayman Brac, 66 per cent were registered in Cayman, 20 per cent in the US and 8 per cent in the UK.

Construction

The report also contains a new section dealing with the construction market.

“Given that the Cayman Islands’ economy grew by just 1.2 per cent in the first half of 2012 compared to 1.3 per cent growth recorded a year earlier, it should not be a surprise to learn that when compared with 2011 the total value of the construction workload on Grand Cayman fell by 26 per cent in 2012,” according to the report.

The report notes that the workloads in the residential sector fell by 17 per cent and in the commercial sector by 59 per cent. “Combined these two sectors account for approximately 80 per cent of all workload and the combined value of these two falls equates to a reduction of approximately $41.6 million in the total value of construction work being undertaken in 2012,” according to the report.

On a district-by-district basis, workloads decreased in all areas of Grand Cayman except West Bay, which increased by 22 per cent.

Charterland is a chartered surveying practice providing a range of professional property-related services. View the entire report – which also includes sections on specific residential and commercial developments, and a poll of property firms – on its website, www.charterland.ky.

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