Finally, some real hope for an improving real estate market over the next several years.
We have had weak market conditions, since just after the global financial crisis in late 2008. That was a long time, ago. Initially, the market fell off in real estate sales activity, then sales prices were reduced, especially along the Seven Mile Beach corridor, as a lot of customers shunned investing.
Recently, over the last couple years, the market has bottomed out and sales activity has generally been flat, but showing signs of slow recovery. That trend seems to be continuing, early into this new year, as overall sales are similar to where they were, for the same period last year.
While we still seem to be wallowing at the bottom of this real estate cycle, commercial and development activity is foreshadowing much better times ahead. We are a small island and our local economy is also not that large, so it does not take a whole lot to impact our economy when there is any major improvement to our country’s infrastructure.
If you consider all the development currently underway, it is staggering, despite the fact that it is hard to see much impact from it, right now. However, do not fool yourself into believing that our current market conditions are the new normal. They are not and a vast expansion has just vigorously started, late last year.
Consider the new hotel that will be redeveloped from the former Hyatt Regency Hotel site, at 170 suites initially – there are also plans to develop some residences. At two persons per suite, on average, tourism would increase by almost 100,000 at an 80 per cent occupancy rate. That is about a 25 per cent increase in tourism.
Another property being redeveloped into a new hotel is the former Marriott Courtyard Suites. If we estimate at least 200 suites, rooms, and residences – although, there will likely be more than this – and use the same projection as we did for the former Hyatt Regency Hotel, the impact is substantial, as well. About 116,000 tourists would be added and increase tourism by another 25 per cent plus.
These two new hotels and residences have the potential to improve our tourism by about 50 per cent in two year’s time. Anytime we have previously increased tourism by 15 per cent to 20 per cent in a year, our real estate market has boomed. In this case, by around 2015, we could have two new hotels adding a tremendous amount of demand to our real estate market, predominantly along Seven Mile Beach.
Now, give further consideration to a new tourism product – medical tourism. This new industry that is developing in Cayman and coming online around the same time as the new hotels, could quickly add another 100,000 medical tourists to the mix within a couple years of the hospital and medical facilities being open.
This is big. In essence, we could increase tourism by 100 per cent, from around 300,000 tourists a year to 600,000, in about three to four year’s time, by around 2016 or 2017.
It is hard to realise just how much of an affect the two new hotels and Shetty medical development will have on our economy. Statistically, it could be staggering. We may not even be ready and fully cognizant of this groundswell of demand that will hit fairly quickly, especially after being lulled to sleep over the last five years from depressed demand. It is going to come all at once.
While a lot can still upset this anticipated boom, like a major global crisis of some sort, there is no question that the Cayman Islands are moving down the road to much better economic times. The groundwork and foundation for this is already set in place with the start of the two new hotels and Shetty medical facility.
In May, if we can elect a strong business oriented government to support this progress, that would ensure the economic recovery can continue. With a government comprised of elected representatives, who really want what is best for the country, then the improvements discussed in this article would be the start of a long term of progress for the Cayman Islands and more opportunities for everyone living here.
We will all be watching the many exciting local events that are starting to take place. Now, is not the time to be sleeping, as Cayman is changing for the better and you need to be ready, when the better times hit. A year and a half to two years is not that far away.