Property sales exceeded $1B mark in 2021

The Cayman Islands’ current unprecedented scale of development is apparently still not enough to feed the demand for luxury residences from offshore buyers, and there is little sign that the negative impact of development on ordinary people will be addressed anytime soon. As Premier Wayne Panton noted recently in an address to the country, people believe “Cayman gone” and it appears it was the realtors who sold it.

But while Panton has vowed to change things and rode into office following a campaign focused on the need for Cayman to address sustainability and prepare ourselves for the impending climate change, he recently told the Cayman Compass that development would still be a major driver of the country’s economy for several more years.

Despite growing public opposition to development that is focused on overseas investors, which is having a detrimental effect on the community, government is still heavily dependent on the sector that is growing economically.

But because so much real estate is being purchased by overseas owners as investment vehicles rather than homes, property prices are increasing across the board, which creates a shortage of homes for even wealthy residents to buy and pushes rents ever higher. As real estate agents rake in the commission, homelessness is a reality now for more local people than ever before in Cayman’s history.

People who own property already may find it has increased in value, but it can still be a challenge to buy a larger home if they need to. For those wanting to get on the property ladder, the step onto that first rung is almost impossible and often beyond the reach of any but the highest earners in the community.

But the real estate sector is making hay, and given investors’ appetite for more and more condos, they are encouraging the long development boom. Bovell said there are currently 1,408 active listings in CIREBA, of which 403 are pending and 317 are pending or conditional, which means there are only 688 listings available for sale.

“Even with new developments coming on the market especially over the last three years, inventory continues to decline,” he said adding that the overall inventory across the same period has fallen by around 5.7% but its value is growing. Bovell said the average sale price now is $1,575 million, which is $400,000 more than the average sale price in 2019.

Transactions themselves have increased by more than 48% since 2019, when there were 831 deals, with a total of 1,045 last year.

The sale of multi-million-dollar properties to overseas owners is fueling the real estate market, and even during lockdown the rich were doing their best to buy their way out of the pandemic. Until September 2021, Cayman was in the enviable position of being COVID-free and wealthy investors took to buying property here to get away from the virus. In October 2020 alone realtors flogged $100 million worth of Cayman property to rich overseas owners.

Bovell sees little sign of the bubble bursting, even as sales slow due to a shortage of property to sell. The problems of the supply chain and rising costs are slowing down the completion of several of the major condo projects, which realtors are eager to get their hands on, and once the developers readjust their prices to account for the increase in the price of materials, they will be available at an even higher price.

Meanwhile, land will also keep the real estate industry alive and well. There was an increase of almost 400% in land sales in Cayman Brac and Little Cayman last year. Agents are happy to sell to people who have no plans for immediate development but want to snap up a piece of paradise before it is all gone.

“Much like developers who are grabbling with the cost to build, some people may not build right away but want to ensure they purchase the land they want before prices will undoubtedly increase,” Bovell said.

“Throughout 2021, land in the Sister Islands, which is much more reasonably priced compared to Grand Cayman, saw an unprecedented boom. In 2019, there were $3.46 million in land sales in the Sister Islands and in 2020 that jumped to $5.9 million and in 2021 skyrocketed to $29.1 million, which is a 393% year-over-year increase.”

The ReMax owner pointed to what he sees as the concept of buying property, be it raw land or a condo on Seven Mile Beach, not necessarily to own a home but for security. But for most that security is unaffordable, which also means that can’t have a home either. And while interest rates are still low, making it even easier for those with the means to access even more money, they are set to rise, which even Bovell said will make the current situation far worse for all but the privileged few.

“Unfortunately, as interest rates increase and real estate prices continue to rise, the affordability gap will continue,” he said, adding that he still believes the Cayman Islands real estate market will continue to be robust in 2022, even if a little slower. If anything, Bovell predicts that foreign investment will become even more prevalent as the wealthy global nomads seek to relocate.

The Global Citizen Concierge Program in Cayman, introduced by the Department of Tourism during the COVID lockdown, as well as the massive growth in foreigners buying property here is reflected in recent budget figures. These show that residency revenue from “persons of independent means” who have bought their way into the Cayman Islands increased by more than 75% this year over the previous three years, bringing in over CI$8 million for government coffers.

This is just one of a multitude of government policies over the last ten years that have changed the landscape here, including steady closed-door changes to the outdated planning laws favoring development, as well as a development-focused planning board.

As well as not being able to afford to buy a home or move from one to another, Caymanians are also worried about the lack of access to the beach resulting from ocean-front development and the massive detrimental environmental impact of the open-door property sales policy has had.

With no restrictions on who can buy land, it is no surprise that it goes to the highest bidder.

Writing on CPI, the Spanish investigative journalism site, Kayla Young, a former Compass reporter and environmental journalist, takes a deep dive into Cayman’s development landscape and its environmental consequences. She notes that many of the problems that have led Cayman to the current situation in relation to over-development are historic government policies that have effectively failed the ordinary people.