Property and Development
Our government recently announced it is about to do away with the key employee provisions of its immigration policy. I believe that this will have a positive knock-on effect on the real estate industry from several different angles.
Allowing immigrants to skip the key employee hurdle to residency is a sensible move because it creates an easier and cleaner way to ensure we allow people to gain permanent residency. After an effective 10-year trial period, it should be fairly evident if an individual is going to fit into Caymanian society or not. Conversely, if it is found that the individual will not fit in, we should stand firmly behind the policy because a country the size of the Cayman Islands simply cannot let immigration continue unchecked.
As far as the real estate market is concerned, this new policy will encourage people who are on the fence about whether to buy to go ahead and make the commitment. Ten years is a long time in which to build up a good amount of equity in a property and a fair time to see market increases, despite the cyclical peaks and troughs associated with the real estate market. Even if the individual does not manage to attain permanent residency, they will have had sufficient time to make a good return on their investment, should they eventually need to sell.
As far as the rental market is concerned, I believe the new policy may well increase the absorption rate of properties sold, so long as the change does not herald an influx of new developers. With the granting of residency, people who previously were renting will then get the go-ahead to purchase property.
Therefore, there will be fewer people needing to rent, so investors will need to balance this drop in demand when creating supply.
I believe it’s important for developers to really know their market and ensure that they have 50 per cent to 60 per cent in pre-sales before construction begins to ensure we don’t have another glut in the market, which would be difficult to absorb.
This is absolutely essential if the project is to be financed.
New boutique hotel
Now that Dart Realty has announced its intention to link with Kimpton Hotels and Restaurants, which will manage their first resort property, I foresee a leap in real estate interest.
The boutique-style hotel will be the first Kimpton property in the Caribbean, a huge bonus for us here in the Cayman Islands because it means a whole new demographic of visitors.
Since our room stock was reduced due to the closure of the Hyatt and Courtyard Marriott hotels, and before that the Sleep Inn, Cayman has badly needed an injection of new room stock. Dart’s new Kimpton hotel, slated for opening in 2016, will come as a welcome addition to Cayman’s tourism offering.
With this upscale brand comes a whole new set of visitors to the island, with those loyal to the Kimpton brand looking to venture further afield than the US. I envisage a chain reaction taking place, with new visitors enjoying their stay in the Cayman Islands and looking to invest in their own property in due course.
Whenever we have had a new hotel established here, we have soon afterward enjoyed the knock-on effect of an upsurge in real estate investment.
This is another positive move for the economy, quite apart from the upswing effect on the economy from the benefits the construction and development of the new property will bring.
In addition, economic activity spreads far and wide into the community as these new visitors eat in restaurants, spend money in shops and undertake all the usual vacation activities.
From a sales perspective, I am delighted to report that 56 individual units will be available in a completely separate development from the main body of the hotel and will be available for purchase for the discerning investor.