The island is now deep in the busy high season and we can tell this, as residents, because the roads are busy, the restaurants are full, there is little inventory in our hotels, and as we drive along the West Bay Road there is a pleasing number of tourists enjoying a stroll and all the amenities this part of Cayman offers.
In addition, we have seen an enormous amount of showings in recent weeks. I’m pleased to report an increasing number of investors are looking to relocate their business to the Cayman Islands, either because of tax pressures in their home jurisdiction or for other reasons. An upswing in inward investment for our island has meant an increase in demand for upscale housing, as these business owners look for accommodation in which to reside and enjoy with their families.
Indeed, from Grand Harbour to the east all the way through Seven Mile Beach to The Shores in the west, canal-front developments have seen strong activity in recent months, in particular for residences at the $1.2 million mark and upward. Homes in this price range that are five years old or less will see increased demand as availability becomes scarce and demand continues to increase.
There is also significant activity in the area of land sales as people look to purchase land to build the home of their dreams, enjoy their own space with a yard and canal access. However, I note that there are fewer buyers who actually end up completing the building process, put off by a number of factors, including the length of time it takes to complete the planning process, as well as the time it takes to complete the financing procedures through Cayman’s banks. Sometimes buyers are not fully aware of the costs involved in building or prepared for the volume of paperwork involved. This sometimes directs would-be land buyers down the route of purchasing a house that is already built.
Beach activity strong
Condos along the Seven Mile Beach corridor show steady improvement in the volume of sales. According to statistics from the Cayman Islands Real Estate Brokers Association, from the beginning of November 2011 until Feb. 21, 2012, there was a 10 percent increase in volume of sales over the preceding time frame. From Nov. 1, 2013, to Feb. 21, 2014, that figure rose to 11 percent year on year. This increase does not take into account pending sales, which pushes the volume of sales up even further. On Feb. 24 this year, there were seven pending units on Seven Mile Beach with a combined list price of over US$7 million. This does not include pending sales on the prestigious WaterColours development, scheduled for opening at the beginning of April.
I believe we are reaching the stage now when it will be difficult to purchase a two-bedroom condo on Seven Mile Beach for less than $500,000.
This time next year, I believe we will be looking at a completely different picture when it comes to real estate in Cayman as various infrastructure projects will have brought with them added energy into the real estate market.
The Cayman Health City hospital will have been up and running for a year, the new Kimpton hotel will have been established, WaterColours, the new luxury development on Seven Mile Beach, will have been open for around nine months and the new hotel to replace the old Hyatt will have broken ground. This new hotel will be particularly exciting as it will be one of two proposed European-style quality hotels, thereby bringing in a whole new client base. In addition, Beach Suites has obtained planning permission to add two floors of suites with work likely to commence in the foreseeable future.
Obstacles to Cayman’s economic outlook
Fidelity’s Cayman Economic Outlook conference was by all accounts a big success last month, bringing some of Cayman’s top business leaders together to hear about the global economic outlook. I would like to mention my own thoughts on the subject, particularly when it comes to the obstacles preventing Cayman’s real estate market from growing. Number one on my list is immigration. Since the new law came into effect, it appears that nobody understands how to deal with it. In my experience, many people are very concerned with the changes in the law and are therefore not even prepared to go through the process, so arduous has it been made.
The second issue, as mentioned above, is the problem developers and investors face when it comes to the process of construction. Obtaining a “Red Card” from the Building Control Unit, which allows someone to begin construction, is becoming an extremely difficult process, as is obtaining financing through the banks. In particular, the process of going through the procedure of borrowing is prohibitive for a lot of buyers. We need to get these issues fixed if we are to progress our economy further.
Infrastructure development
The opening of Health City last week was an exciting new milestone for the Cayman Islands and one of which we can be justifiably proud. This is an excellent new facility which will no doubt boost Cayman’s economy tremendously as the full impact of this new venture filters through to our economy.
In addition, we also received the news last month that the proposed Ironwood development will incorporate an 18-hole golf course designed by the legendary Arnold Palmer. Mr Palmer took the time to visit Cayman at the launch of this new project, and I can confirm he was extremely charming. The Ironwood development is ambitious, with the aim of building a $300 million town center and residential community east of Frank Sound Road, near the Queen Elizabeth II Botanic Park, over a six-year period and spanning 430 acres. The government and the developer will be working together to build a new road from Newlands to East End to help support this venture, an excellent example of a private-public partnership.
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