CIREBA Real Estate Market Update

Real estate sales figures dropped slightly in November and December over the previous months of 2012, yet the total dollar figures are up from 2010 and 2009. The anomaly year of 2011 remains the highest year since 2008 due to the large Dart-Government transaction that skewed normal figures for that year. 2012 finished at $418,104,914 with a total of 1696 transactions on the books.

The monthly average dollar figure for 2012 was $34,842,076.17, down from $52,674,052.08 in 2011 but up significantly from $25,603,096.25 in 2010 and up slightly from $33,084,215.83 in 2009.

The monthly average number of property transactions has stalled over the past three years at 141, 142 and 139 for 2012, 2011 and 2010 respectively, down from highs of 170 and 191 in 2009 and 2008. This means that the average price per transaction is rising, a good sign that recent political changes are not affecting the upper end of the market.

Government statistics for YE 2012 give the average sales price for the following categories: Land – $261,894; Residential – $468,751; Commercial – $577,245; Condo – $1,302,233 and Industrial – $5,017,518.

Market Factors

The drop in sales dollars and number of transactions in November and December may be a result of Government’s announcement in August 2012 that income tax would be levied on foreign workers. A number of sales contracts were cancelled in the wake of the announcement. Although the tax proposal was dropped within a few weeks, the idea may have shaken buyers’ confidence in the Cayman market.

Overall, however, real estate growth has increased slowly but steadily since the world-wide market drop in 2008. Tourism numbers continue to grow, bringing potential buyers to the market, with 2012 figures at an 11-year high.

As the world-wide economy continues to recover, the real estate market continues to look to the large commercial developments to accelerate further growth in Cayman.

The Health City Cayman Islands hospital is expected to begin receiving patients in early 2014. Already planning has been approved for a nearby services and retail development to support the hospital. Residential development is also expected to take shape in the eastern districts to house the large number of foreign workers needed to run the hospital.

The Dart re-development of the hotel and beachfront at the site of the old Courtyard Marriott is progressing and will undoubtedly increase property values at the nearby condos. Easier access to the yacht club and West Bay is also expected to generate new residential and commercial development along the by-pass extension and to raise property values in West Bay.

The Strata Titles law is in the process of revision and the new law will include many needed improvements. As of March 2013, however, several points in the draft law are in conflict with industry and public input. These points affect condo ownership and if they are not brought in line with the recommendations of industry experts they may adversely affect future sales.

Looking further ahead, Government elections will take place in May and the newly elected candidates may reinvigorate the plans for redeveloping the airport and the cruise port.

For more information contact Jeanette Totten, President of CIREBA on [email protected] 

 

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