Emergency pension withdrawals and international buyers boosted the local real estate industry in 2020. Even during the COVID-19 lockdown between March and June of last year, the property market generated US$77 million in sales.
The total sales volume in 2020 increased by 4.3% to US$666.5 million, despite a 17.5% drop in the number of transactions, from 831 to 686, according to an advisory from real estate firm RE/MAX Cayman Islands.
This meant that the value of the average transaction grew significantly last year over 2019, from US$769,289 to US$971,546 – a 26.3% jump year on year.
“2020 has been a stellar year for the Cayman Islands real estate market,” said RE/MAX broker/owner Kim Lund.
He anticipates this trend will continue in 2021 as pending sales are up 91%.
Pending sales at the end of 2020 exceeded US$140.8 million, “with the bulk of these being condominium developments currently under construction”, Lund said.
Overall, there were 206 fewer new properties listed for sale on the market last year than in 2019. The sales volume of these types of properties was down 4.5% and sales transactions declined by 13.6%, RE/MAX reported, based on CIREBA and Lands and Survey Department data.
However, the 12-month average of active listings increased from 1,471 in 2019 to 1,540 last year. Most of these are residential condominiums.
International investors drove some of the market activity in 2020, with many attracted by the way Cayman has been able to deal with the coronavirus pandemic.
James Bovell, broker/owner of RE/MAX Cayman, said: “We have seen an increase in international buyers many of whom are looking for a safe place to either relocate or purchase a second home. In some of these cases, we are working with buyers who have never even been to the Cayman Islands before.”
How Cayman managed COVID-19 has positively impacted both the country and its ongoing desirability for foreign investors, he added.
Locally, changes to the National Pensions Law, designed to stimulate the economy by allowing workers to withdraw some of their pension savings, provided a significant push to real estate sales.
Savers withdrew more than CI$443.5 million. Much of it wound up being reinvested.
“In some cases, the pension withdrawal programme enabled many buyers to enter the market sooner than anticipated while others took the opportunity to use those pension funds to upgrade their current living situation,” RE/MAX noted.
More than US$1.7 billion of new properties are currently in development or about to start construction, RE/MAX said.
Michael Joseph, broker/owner of Property Cayman, noted in his market review that Cayman will continue to be a stable safe harbour for foreign investors as rolling lockdowns throughout the world bolster international demand for Cayman.
He believes even with the vaccine rollout, 2021 will be a transitional year, as tourism is not expected to return quickly.
Joseph predicts that the influx of high-net-worth individuals buying properties in Cayman will continue to decrease the supply of properties in the US$2.4 million or higher range, as this is the investment threshold required to qualify for permanent residency by independent means.
Property Cayman’s data showed that 415 residential units were sold in 2020 at a sales value of US$503.3 million, or US$1.21 million per residential property.
In the luxury real estate segment, Joseph writes, “It is a challenge to secure feasible options for buyers, especially as we are working in an already small sector of a very small marketplace.”
The same is the case in other market segments.
“In the more desirable locations, real estate under the CI$500,000 range will remain hard to come by,” he noted. “Whereas in other areas we may see an oversupply and therefore a new level of affordability for entry-level buyers.”