While real estate activity still remains muted for properties over $500,000, there are some encouraging signs of an improvement in buying interest.
However, it is nothing to throw a party about, but offers are starting to surface for a select few of the better values that had been mostly ignored, until recently.
The only way to get attention in this market is price. If a vendor wants to get an offer, he is going to have to provide an extremely good value – period! Little else is going to move a customer from sitting on the sidelines and preserving their cash. As long as this current level of fear exists about the economy, it is going to take a lot of incentive to get a customer to purchase.
It is estimated that the US economy went into recession in December of 2007. Therefore, April 2009 would be the 17th month that their economy has been in recession. The Cayman economy felt some of that pain from early 2008, but it really did not hit our overseas investment market until the fall of 2008.
Since September 2008, air arrival tourism has also fallen off. Every month since then, tourism has been lower than the same month in the previous year. And this is just as we were starting to see some good improvement to our tourism arrivals. Real estate sales in the resort markets have been correspondingly impacted because air arrival tourism represents the demand element for beach and golf course condominiums, villas, and homes.
It would appear that the spring, summer, and fall of this year will continue to be slow, but with increasing, albeit weak, sales improvement. By winter 2009/2010, with an improving US economy as a backdrop, the Cayman real estate market should see a bit more strength and improvement in activity.
If one could predict the next few years for the Cayman real estate market, an educated guess would be a market bottom by this summer. However, do not expect to see wholesale reductions in price associated with this bottoming. Most of these reductions would have already happened, by now and are reflected in the present real estate market prices.
There will likely be some isolated circumstances of “fire sale” types of bargains. Considering we are now seeing some slight improvement in market conditions and news about the economy versus the constant, unrelenting barrage of negativity, the pricing in the mass market has already lowered and now firmed.
The next move in the market will be a gradual, but consistent, sell down of real estate inventory that will begin to almost unnoticeably pick up speed during the winter season of 2009/2010. A lot more property will likely come on the market in 2010, as well. This will be comprised mostly of vendors who either withdrew their listings or just did not bother to list their property in a weak economy.
During 2010, property sales should continue to slowly accelerate, but the new supply of inventory into this improving market will maintain a good supply. It will not be until 2011 that the balance between supply and demand will probably tilt into a weak buyer’s market. This should accelerate during the following year and increases in property pricing should become more commonplace.
Sometimes one has to step back and not get caught up in a microcosm of our economic and market conditions. The bigger picture over the long term is incredibly positive for the Cayman real estate market.
Over the next five years – not a long time – we can expect to see several more five star hotel/resort brands announced, the town core of Camana Bay fully leased and their residential and resort components developing, The Ritz-Carlton’s long term Dragon Bay development taking shape, a newly expanded airport completed, and many other new developments currently on hold, as well as improvements to our quality of life.
This slowdown has caused pain and hardship. But, when put in perspective and viewed over a long term horizon, it should help us appreciate the opportunities we have ahead.