The local economy and real estate market is improving, however, it is still happening at a slow pace in terms of genuine activity.
Sales of real estate in Cayman started improving in 2012 and overall, it was a better year than the previous few years, but not by a whole lot.
A year later, by the end of 2013, sales activity improved 4 percent to 5 percent from 2012. While the percentage of improvement sounds alright, this is comprised of only 28 more sales and pending sales than the previous year. Definitely, not a boom quite yet. In terms of total closed condominium sales along Seven Mile Beach, there were exactly 58 sales in 2012 and 58 sales in 2013 – completely flat for the resort market.
While these are not the signs of a recovery that is quickly picking up pace, at least the confidence and attitude of the customers is showing some solid improvement. Even though sales activity is not overly active, showings of properties are continuing to ramp up, prices have firmed, and more serious offers are being made versus the “low-ball” offers that were common during the recession.
The amount of debt accumulated over the slow years of the recession is taking time to pay off. Many people got badly hurt and are much more cautious about investing and spending. It will still take more time for buyer confidence to be fully restored and the impact of that improvement to be felt in our real estate market. It seems that this healing process has begun, according to current activity and the buyer’s mind-set.
An important part of rebuilding confidence is for purchasers to realize that an investment in real estate, this year, cannot be purchased for less money next year or the year after. It takes a few years of stability for that realization to sink in and it seems that we are almost there. However, it will likely be another year before we see numbers that show a more dramatic improvement over what has occurred the last couple years.
As a forecast, based on what we have experienced so far with the recovery in the real estate market, I would expect 2014 to continue the recovery. I would not expect the improvement to be much more substantial than last year. 2015 appears to be the year where we could see a stronger level of investment. We are still about a year away.
By next year, the U.S. and global economy should be on a firmer footing, while our stay-over and cruise ship tourism should be much improved and possibly setting records or very close to it. New development is limited, so our supply will likely not increase too much, but it appears that our demand should show good progress from new residents, improved tourism, and less risk adverse investors.