Over the next five to 10 years, the Cayman Islands will change a great deal, due to development of major infrastructure and the arrival of new residents. It is already happening, as there is more positive momentum than we have seen for a long time in our real estate market.
It also helps that the US economy is finally reaching a tipping point where Americans are taking on more risk and investment. Real estate purchases by Americans in Grand Cayman is picking up, as can be seen by the improved activity along Seven Mile Beach. The Americans represent approximately 80 per cent of our foreign investment in real estate, comprised of mostly beach condominiums and residences.
Although, statistically the real estate market is down 8 per cent over last year, in closed sales activity, to date, this will not represent the final statistics at the end of the year. Activity within our RE/MAX office has ramped up over the last few weeks, all during a traditionally slower period after Spring Break, an early Easter and the end of winter season. By the end of this year, we should have one of our best years for real estate sales activity, since the global financial crisis hit in late 2008.
It is hard to pinpoint the exact reason for this improvement, other than a change in investment attitude, both locally and abroad. Whatever the reason, there is definitely more positive energy pervading the real estate market, than we have seen in years. For the first time, activity is also much more broad based than what we have experienced this decade, when we saw limited spurts of activity in some markets, but nothing that was sustained.
Even local banks are now reaching out to real estate companies to offer better lending terms and rates for their purchasers. This has not happened since the global recession. The benefit is that better financing provides support to the activity that we are experiencing. While there is still a ways to go with improving the financing that is being offered, it is better than what was available over the last four to five years and banks are indicating a willingness to lend.
Tourism from air arrivals represents a significant amount of demand in our real estate market, most principally for tourist market properties like beach front condominiums and homes. This demand element has been consistently increasing on a monthly basis over each previous year, which bodes well for improved purchasing activity.
It seems catalysts for a better economy and real estate market are starting to emerge. It has been a long time coming and follows the most severe and extended recession that the Cayman Islands has experienced in a great many years, but key indicators are pointing to a positive change.
We may finally be on solid ground to some better real estate market conditions and a stronger economy.
The best news is that this recovery is starting from a very low price point, in terms of property values, as prices have been beaten down significantly over the last five years. So, there should be a lot of upside ahead.