It is certainly not a secret that the volume and value of real estate transactions has fallen dramatically over the last two years. Statistics from both Lands & Survey and CIREBA, our real estate association have confirmed that time and time again.

Chasing a down market is no investors delight. Why would anyone buy to lose value? Instead potential real estate owners play the waiting game and watch for the tide to turn and the market to prepare to rise before buying into the Cayman real estate market, which has never really been, at least in recent times, an asset that is easy to liquidate quickly. 

Absorption rates, ‘the rate at which properties are able to be leased or sold in a given area’ must increase in Cayman to give buyers more confidence that someone will be there to sell to – whenever the desire to sell arrives. A greater level of sales activity is undoubtedly required. We need to attract more people who want to live in Cayman and purchase and rent real estate, it is simply that simple.

An unfortunate but staggering statistic shows us that there has only been one residential property sold in the three Cayman Islands over US$2.5 million – since August 2008! (This CIREBA figure does not include those homes that have been owner constructed whose value may be US$2.5 million or greater). During this same period and price point, there were eleven condominiums and eight land acquisitions. 

Cayman has been hit by a triple whammy; the settling down of the boom after the insurance money from Hurricane Ivan exhausted; the contraction of our own resident population by a huge percentage, some say 10-15 per cent ; and to top it off the great worldwide recession with the collapse of the financial markets in the US (traditionally our primary market) and also Europe. All three of these factors have put buying confidence on the fence and anxiety in the air. Rental incomes have reduced with the departure of workers, return on investment has fallen, sales have slowed and a general apathy of decision making to buy real estate emerged in ‘09 and ‘10. This in turn has naturally created more inventory, less urgency to buy, more purchasing power, and now remarkable opportunity, more than I have seen in the last 15 years. 

In some instances asking prices have reduced as much as 30 per cent. I have accompanied this article with actual property examples. This correction may not seem that strange, given the reduction of realty value in markets such as Spain, Ireland, Florida, California and Vegas to name a few, but Cayman has historically been more resilient. Those fortunate enough to own second or third vacation properties in these islands have not normally been affected by the trends. We have now seen property values fall due to financial pressure on overseas vendors who need to sell, pricing more competitively than before when there was no urgency, but merely a desire to sell if they achieved their preferred price. Couple this with the departing resident population who also need and want to liquidate to move on, and who are willing to let go at price points of yesteryear. It is not surprising that a significant price correction across the board has occurred. 

Interestingly, some larger beachfront developers who have been seeking project financing for significant projects have not been able to move forward, and subsequently, unique destination resort land which was rarely before available, can now be snapped up at wholesale rates offering phenomenal opportunity. 

We have also noticed an interesting juxtaposition at the higher end of the market. Those who know they want to reside in Cayman, at least for a reasonable while, are now buying for location and style – and are prepared to pay good price levels for the pleasure of getting what they want, which was not readily available in years gone by. We are also seeing some trading up of the middle market wanting to capitalise on the good realty prices and interest rates of today, but this group may also have to sell first to move on as the banks remain firm with debt/service ratios and are often unwilling to bridge. 

The market is more discerning than ever, but the right quality property with the appropriate location and terms will move. Interesting to note, that when compared with other Caribbean islands and locations such as Jersey, Hong Kong and Bermuda to name a few, our real estate value and selection is very impressive. Cayman can no longer oversell the inflated capital appreciation story, finding the right fit of property for the individual situation offering good value will be our key to success, but we must have a larger audience. We need to promote our abundance of strengths to a globally knowledgeable high net worth clientele. In recent months my office has had success with new incoming residents who love Cayman, and are bringing their families and friends to visit. Let’s hope they share the same view.

SothebysRealty.com is now spanning the globe in many languages with newly forged media relationships with BBC, The Times, The Daily Telegraph, The Globe and Mail, Wall St Journal, NY Times and other powerful partners in Asia. Social Media is also a necessary and strong component of their dynamic new global website. In only five years Sotheby’s International Realty has created over 500 offices that are open across the world, some of the newest being in Moscow, Hong Kong and Singapore. The Sotheby’s Auction results this year have been truly impressive as have the Realty statistics. 

Many of Caymans connoisseur’s are familiar with our island’s wonderful attributes, but when I travel, it never fails to amaze me how undiscovered we are. We require synergistic marketing in all sectors of our economy to dove-tail together. We need to improve our airport and lengthen the runway to welcome more flights, and more executive residents, more hotels and resorts, medical tourism, a world class harbour, more golf and great sustainable development. Surely we can all see this? We live in one of the best small islands in the world and whilst I recognise that there is some sentiment that we don’t want change, we must grow to survive.

Encouraging recent incentives have been established by government which may assist with cash flow and cost of materials and should spur developers and investors into action. New planning regulations offer improved choices. The new immigration residency plan should also welcome more people to our fine shores and impressive infrastructure. 

The good news is that since the turn of the year, there does seem to be less fear and some increase in consumer confidence. The professionals on our islands seem very busy and companies are growing again. Our graphs are showing us that the realty price curve has now bottomed. Closed sales transactions are now starting to trade up in square foot value for like properties, especially on the beach, water and canal front. This surely is a compelling reason to make your move now and not sit on the fence any longer. 

The market is well poised for takeoff. In the past couple of months we have actually set bench mark sales in Governor’s Harbour, the Meridian and the Sovereign, Seven Mile Beach, and we have also moved great value buys in Pease Bay, East End and Heritage Club to name a few.