For the first three quarters of 2011, the consolidation and stabilisation within the real estate market has continued and we now seem to be in a bottoming trend.
Real estate activity had fallen off for three straight years starting in 2008, through to the end of 2010. It is only this year that we are seeing a foundation developing, as the Cayman Islands real estate market is up about 6 per cent in market activity overall. This is our first improvement for sales activity, in over three years.
There have been some very large real estate transactions that have vastly increased the dollar value of real estate sales, this year. These transactions have mostly been associated with the Dart acquisitions that have been well publicised.
However, these unique, large transactions are more of an anomaly than the norm, so they are not indicative of a much improved market, even though the dollar value of sales may have more than doubled this year. Rather, the actual sales activity is the better barometer to use to gauge the health of the real estate market and although that indicator is improved, it is mostly flat.
While we are up about 6 per cent in overall sales activity from last year, we are down slightly for the third quarter itself. It would appear that the momentum we had during the first six months of this year has flattened out, during the fall season. Still, overall, it appears that the trend indicates the real estate market has bottomed and over time, we should hopefully be able to sustain a market that will steadily improve, barring any other disasters that are not obvious, at present.
In terms of the outlook for the next five to 10 years, there is some good potential ahead of us, providing that we continue with sustainable development and improvements to the country’s infrastructure. If we can start growing our population, continue with the improvement in tourism arrivals and develop projects/infrastructure that is desirable for tourism, business and residents, we will realise a stable economic improvement and better living conditions.
For the last 12 months in a row, stay-over tourism has improved from the year before. Not only is this critical to our economy, due to the ripple effect that each dollar from tourism has throughout our local markets, but these are the visitors who create demand for our supply of products and services.
Developments like WaterColours and Camana Bay, which create many jobs in construction and then afterwards, in operations, cannot continue without this demand. Our economy is dependent on tourism and development. If we ignore this, less revenue will flow though the Cayman Islands and businesses will continue to suffer.
We have not planned ahead for proper updated facilities like a new airport, improved FBO and cruise ship berthing facility. Since we have not done this very well, other islands and Caribbean countries are getting the tourism, business and revenue that used to be ours, because they have been proactive in planning ahead.
Although we have an opportunity to regain some of our market share back, government needs to move very quickly. As a service oriented economy, we need to provide the necessary infrastructure. And not only for now, but for 25 years in the future, or we will continue to fight the uphill battle that we currently have been losing.
Tourism and investment is a fickle business. The dollars that could be spent in Cayman will go elsewhere, as the last few years have blatantly shown us.