As recently as October 2015 I wrote how I saw the $2 million-plus area of the residential homes market as remaining a difficult one for buyers to sell their properties in the short term. “These properties are not moving anywhere near to the degree of other inventory,” I wrote. Indeed, only 10 homes of $3 million and above had been sold over the past three years.
However, I also noted that I felt the market was about to change: “Going forward, however, I see this becoming less of an issue. This is because desirable parcels of land are becoming increasingly less available.” I went on to say that “I believe as a result there will be a shift in the coming months and properties in the $2.5 million region will become a lot more appealing.”
Now, writing in March 2016, I am pleased to report that my predictions have become a reality. There has been remarkable recent activity in the $3 million and higher market in high-end residential homes (of which there are currently 34 on the market) which are offering great views, high-class amenities, beautiful finishing and spacious accommodation ranging between 3,500 and 48,000 square feet in quality living space.
Driving factors for the recent progress in this sector of the market include, as mentioned last October, the dwindling number of attractive sites available across Cayman that could accommodate the building of such spacious residences. As time goes on, I see real value built into buying a high-end home rather than building from scratch, as these properties begin to appreciate to their full potential.
Another crucial driver is increasing building costs. Ultimately, when one decides to build a home rather than buy an existing property, the costs end up being higher than first budgeted. This can be caused by a variety of factors, such as the changing price of building products and other costs of building that might not have been initially factored into the budget at the start, such as planning fees and permits.
While people often cite the cost of stamp duty as an important consideration when they decide to build rather than buy, the fact is that government costs do add up even when you build, and invariably take up a large chunk of whatever stamp duty saving you would have had.
We have seen important movement in the $3 million-$4 million and even up to around $10 million condominium market on Seven Mile Beach in recent years and this continues today, with a $10 million WaterColours residence currently under contract as I write. But it is really good to see that the high-end residential homes market is also gearing up as well, so much so that I would say that the industry has seen many more showings of such properties in the first few months of 2016 than I have the entire time such properties have been on the market, which is a very encouraging sign for the market moving forward.
The market in this case appears to be made up of both local buyers and those from overseas looking to have their own space while they live here, either temporarily for a few months of the year, or permanently. A home offers more space and, more specifically, the ability to house staff, an important consideration for clients of such luxury properties.
On a separate note, but one which will be of interest to anyone looking to spend some time here in our beautiful islands, I note with satisfaction the rise in land being converted into farm land by Cayman’s industrious farmers. There has been a definite shift in recent years to living a healthier lifestyle as we see the benefits to our health of eating well and organically. This has meant an increase in the number of farmers selling their locally grown produce and thereby a proliferation of successful farmers markets, making their local produce, such as kale, callaloo, carrots, tomatoes, limes, papayas and much, much more, accessible to all. I think it is vitally important that Cayman retain its farmland and, because of a growing demand for the products grown on such land, it should be recognized that such land has great value to the islands.