How is the market doing in general? SLOW – is the short answer. 2010 will, I am sure, show much lower sales volume both in dollars and units than 2009 – all across the board. Why? Because the tourist air arrival figures are down, and those tourists that have come have not been spending as freely or buying real estate to any large degree.
The local market, which has provided the bulk of the activity in our industry since Ivan, is thankfully still active. But many local businesses are suffering and so there is less money to spend by locals as well. Locals have a nose for a good deal, and properties which are exceptionally well priced and/or hard to get are selling. We have 20 property owners offering a 7.5 per cent cash rebate to the buyer. As of this writing four of them are under contract and at least two more will likely join them before the programme expires. Nevertheless, as I said, the overall sales numbers are down.
What do we expect in 2011? In brief, more of the same. The recent US elections give hope for a US economic comeback, but with power split between the two parties don’t expect any major improvement right away. However, due to those election results, a complete disaster for the US may have been averted and that is cause for celebration. It might mean a little more economic confidence for the travelling American, which might translate into more spending here – but don’t expect a large increase.
It will be the local market which will have to continue to sustain us, and that will only happen if the announced Capital projects actually get going. We have been writing about them for some time now and yet all are delayed. There are horror stories out there about people with competing special interests holding up the process. I sincerely hope those stories are not true – but … It is high time politicians in all countries started thinking more about their country and the majority of their constituents, than staying in power and or making money out of it.
Without these projects and the spin-offs, our local economy cannot possibly prosper while completely surrounded by economies in recession. The new hospital is a good example. This can have a huge positive effect on our country and they still have not been given the “go ahead”. And what about the lengthening of the airport runway? Another crucial project. We hear that is being held up because someone also wants a new airport building. Whoever is holding these projects up needs to get out of the way ASAP.
In other current news, you may have heard of the real estate auction which was recently aborted in Old Prospect? With customers flying in from distances as great as Dubai, they all went away unhappy and frustrated when the auction with “no reserve” eventually required an US$8.5 million opening bid. We are surprised nobody got sued. I have witnessed many real estate auctions here in my 30 years and none of them ever did anything positive, either for the owner, or for the reputation of the Cayman Islands.
If real estate auctions are to be allowed here, I think there needs to be a legal procedure in place which will avoid another “black-eye” for our country, and our property market. A good starting point would be to simply prohibit the owners from bidding. That is illegal in most other jurisdictions.
Did you know that there are properties out there whose title cannot be transferred and yet there is nothing on the Land Register which would indicate that? As you can imagine this situation has led to serious embarrassment as we have all been led to believe the Cayman Title document to be the inviolate. That is simply not the case I am afraid. The Lands Registry has a list of these properties but it is not public information and is not noted anywhere on the title. Closing without a Stay of Registration is riskier than anyone thought. The Credit Union especially should take note.
Here we go again – maybe another change in the stamp duty rate? Our government’s income is raised by indirect taxation. Stamp duty has always been a publicly acceptable method of raising money as long as the rate was at a palatable level. The level it is at now is palatable. Reducing it further will not generate enough new business to make up for the loss in revenue on each deal. The sensible thing is to just leave it alone.
This is my last article for 2010. I hope you have enjoyed them. Have a Merry Christmas!