Cayman is in a major recession! Our residential and resort real estate markets are languishing – and it is extreme. Just take a look at these statistics to get a blunt, clear picture of how our current 2010 sales compare to previous years:
SOLDS TO DATE
(Market was still recovering from Ivan)
(Global financial crisis hits in September)
(Recession in USA)
(Severe recession in Cayman)
To say that the 2010 “sold” numbers are pathetic is an understatement. Our market is down 49 per cent from last year… and that was a bad year. It is down 59 per cent from 2007, a more normal year for real estate sales.
As horrible as this is for our real estate industry, it affects the whole economy and everyone in Cayman, as well. Our economy has lost approximately US$138,000,000 in sales, this year – money that spreads through every aspect of our community – compared to the same period, last year.
This fall off in real estate sales has a huge ripple effect through Cayman. Government is receiving much less in Stamp Duties to pay for new schools, new government buildings, new roads, and fund their many other programmes.
All those who work directly or indirectly within the real estate industry (architects, realtors, attorneys, all the various trades, furniture store staff, household/appliance retailers, appraisers, surveyors, etc) are not making money to spend in the community. Even government import duties are way down, as construction materials, furnishings, appliances, and related items are not being imported.
My customers are telling me the following, as to why they are not investing in Cayman:
There is no sense of urgency to invest here. They see very little happening, other than lots of talk, for years, in terms of new development and infrastructural improvements. Previous governments have completely ignored what drives this economy and brings money into this country to provide a better life for its citizens and residents.
And guess what? We are losing our residents, tourists, and investors, in droves, now to our competition, who are doing many of the necessary improvements that we are not doing. These people leaving Cayman, or not coming back, are the ones who fuel our economy. They are certainly not being made to feel welcome, while we continue to delay any new opportunities that could bring in business. How embarrassing for us;
Travelling to get here has become a hassle. Since most of our tourists are generally well travelled, they are aware of other destinations. With more and more airport security measures, flight delays, lost baggage, and difficulties with connections, we are losing our customers to the increasing number of destinations where they can fly direct. So, instead of taking a few trips to Cayman, a year and spending enough time here where they will decide to invest, they are now going to other destinations that are more accessible, where they feel more welcome, and not investing here;
The US economy and outlook is still murky and unclear. Many of our customers are Americans and as long as there is uncertainty for them in regards to taxes, economic recovery, and politics, then they become very cautious with where they invest. With no compelling reasons to invest in Cayman, they look at other options that offer better opportunities.
Our real estate industry can revive. Our economy can recover. Most of these issues can be resolved. But, politics needs to be taken out of the equation, for a change. If we do not take action and make decisions with a business mentality, not only will the real estate industry not come back, neither will any other business that survives on tourist and resident spending within the Cayman Islands.
We need to build the new cruise ship berthing facility. It is good for the country.
We need to move the cargo port out of George Town. It is good for the country.
We need to cut through the bureaucracy and finalise Dr. Shetty’s hospital. It is good for the country.
We need to dredge a deep water channel for private mega and super yachts. It is good for the country. We need to extend the airport runway and get long haul flights from Europe and the East. It is good for the country.
We need to move the dump away from our residential, commercial, and tourism areas. It is good for the country. Why have we not started on any of these projects?
Less and less people will be investing and spending money on real estate or any other business, until our country’s leaders finally start these projects that are good for the country and lift us out of this deepening recession.