The tight inventory of existing homes in ocean- and canal-front locations is driving would-be home buyers to build custom homes instead, according to local realtors.
“Lots of people are buying canal-front land,” says Dale Crighton, director of Crighton Properties Ltd. “We’ve already sold around 25 lots in Crystal Harbor in the last year. The last peak we had like this was in 1997. People are gaining confidence in the economy again.
“We definitely see a change in customers. There are a lot of expats investing in homes to gain residency, and more locals buying higher-end properties than ever before,” he said.
The government last year altered the process by which individuals can acquire permanent residency through a points system, which allows applicants to gain extra points through investing in land or owning a property, based on their income.
Mr. Crighton reports that for sellers, the market is ideal at the moment. “It’s not a buyers’ market right now, especially in certain areas. It’s a sellers’ market because there is a high demand and only a limited amount of canal- and ocean-front lots available to develop on right now,” he said.
Prices are competitive. Crighton Properties’ website lists 0.98 acres of canal-front land in Lalique Pointé in Crystal Harbour, West Bay, for US$1,695,000.
Upswing in the market
Neil Rooney, managing partner at Exeter Property Development, has also seen the market peak over the past year. “It’s such a jump, it’s extraordinary, really,” he said, adding that people don’t generally realize that there is a custom home building boom going on.
While he has been in the local housing market for more than 20 years, Mr. Rooney said business has never been this busy.
“Two years ago, we really didn’t have that many projects, and now I’ve got 36 projects on the go, and I know that everybody else is busy too. That’s really significant,” he said.
Exeter Property Development is part of the Phoenix Group, an integrated group of property development professionals who offer a range of services.
Mr. Rooney said his client base is mainly expatriates looking to live in Cayman permanently.
“A lot of professional couples now have confidence in Cayman for the long term. My clients all talk about how the political situation on the island has stabilized and how important that was in their decision to invest significantly in the community,” he said.
Home builders are taking a hands-on approach, as well, he says. “When a typical couple walks into our office, they are more sophisticated, they’ve started a Pinterest profile, they’ve done the research, they know what they want, and they know their budget,” said Mr. Rooney.
The majority of home builders are in the high-end market and are living primarily in Crystal Harbor, Yacht Club and Grand Harbor, he said. “That’s really where we’re seeing the most volume of land purchasing and home building.” Jannette Tootten, president of the Cayman Islands Real Estate Brokers Association, concurs: “Since hurricane Ivan, Crystal Harbor, Grand Harbor and the Yacht Club have really taken off. The market that is recovering there is the higher-end professionals.”
She added that the privacy from traffic has a lot to do with purchasing land in those particular areas, as well as the new underground utilities – for instance, fiber-optic Internet connection.
According to Ms. Tootten, there are still some canal-front homes for sale, priced at around $1.5 million. She said many of the properties for sale are at least five years old, so it is unlikely that buyers would find the energy-efficient amenities of newer homes.
“It’s a buyers’ market everywhere else except Seven Mile Beach,” she said, explaining that many owners along Seven Mile Beach own their property outright, enabling them to sit on their house until the market is good. On the other hand, someone who owns a house in West Bay or Newlands may be put in a financial situation where they have to sell right away, regardless of market conditions.
Building vs. buying
People who consider building a house may incorporate numerous energy-saving elements, from alternative fuel options to specific design elements, Mr. Rooney said.
He added that high-end buyers are becoming more knowledgable about energy efficiency, and, for example, ask about utility costs up front. If they think the utility costs are too high, they turn to building a home that suits their needs, he said.
New homes will often come with high-efficiency ranges, refrigerators, washing machines, water heaters and air conditioning units, all of which can lead to lower operation costs. “When we build a 4,000-square-foot home, I want to see that bill under 4,000 bucks,” said Mr. Rooney.
He added that it can be tricky to buy a home that meets all of the buyer’s specific requirements. “When potential buyers look at what is available, it doesn’t tick the boxes. Most older homes are not effective to operate,” he said. “The cost to make older homes operable from a financial standpoint is a strong reason for going out and building something new.”
But there are also disadvantages to building a new home. In addition to paying for construction costs, buyers have to purchase the land, and the entire process can take more than a year.
“People are afraid to build. By the time you get the architect’s approval, planning done, and building constructed, you’re realistically looking at a year or more. Timing is constricted,” said Ms. Tootten.
On the other hand, that issue doesn’t come up when buying an existing home. “You can buy what you see right then. Sometimes people don’t have the vision [to build]. Some people just need to see the house,” she said.