Finance Minister Roy McTaggart has recently touted the 2.9-percent economic growth Cayman experienced last year, but to many that number is just an abstraction.
To get a real sense of how the economy is performing, take a drive from George Town to West Bay, according to Tony Catalanotto, the treasurer for the Cayman Islands Real Estate Brokers Association.
“Construction is booming. Anyone that takes a drive from West Bay through Governors Harbour, we’re seeing renewed activity,” Catalanotto said during a presentation on the local real estate industry at the Chamber of Commerce’s Economic Forum.
According to data from CIREBA, there are 40 major real estate developments that are under way or about to begin. Projects range from major developments by the Dart group, government and Health City, to residential neighborhoods and gated communities.
“In the old days, you’d see a sign for pre-sale. Then the sign [would] come down and you’d see nothing but cow pastures. Today, if you see the sign, it’s only a matter of time before the actual sales have been executed,” he said.
The construction is being largely driven by an exploding demand for property in the Cayman Islands, said Catalanotto.
CIREBA data state that the number of properties sold in 2017/18 took a slight dip from 748 in 2016/17 (158 homes, 342 condos, 196 land, and 52 other properties) to 732 (158 homes, 312 condos, 210 land, and 52 other properties). However, increased demand and limited inventory has led to the value of the properties sold to increase by about 14 percent during that same time, from a total of $442,857,186 in 2016/17 to $503,541,484 in 2017/18. The year-over-year value of homes sold increased from $726,698 to $982,445; condos increased from $574,386 to $758,826; land decreased from $437,215 to $366,946; and all other properties decreased from $882,788 to $663,514.
To date in 2018, 313 properties have been sold for $221 million, an average of $706,000 per property. This is an increase from the value of the average property sale of $660,000 in 2017, according to CIREBA.
While the average value of properties sold has seen a major uptick, some areas have seen more of a boost than others.
The Seven Mile Beach area has seen the biggest explosion in value, with 112 properties sold in 2017 for $150 million (an average value of $1.34 million), and 38 properties sold to date this year for $72 million (an average value of $1.89 million). Currently, there are 1,489 property listings in Cayman, valued at a total of $1.83 billion, with 202 listings on Seven Mile Beach for a total value of $439 million (an average value of $2.17 million).
If you are looking for property on Seven Mile Beach, you are probably too late, said Catalanotto.
“There’s virtually no land left on Seven Mile Beach that’s available for redevelopment,” he said.
The lack of remaining land on Seven Mile Beach is starting to drive demand for high-end properties elsewhere in George Town, including just south of George Town Central and into the South Sound area, said Catalanotto.
“We’re seeing a movement from Seven Mile Beach corridor, [which] became a bit unaffordable, to the other side of George Town. There’s a complex called Kisha that’s now 100 percent sold out, followed by the old Sea View site, Oceana; now you got Fin,” he said, explaining that many people would rather live in those areas than among tourists on Seven Mile Beach. “Most of these properties are catering to that [affluent] demographic.”
In terms of buyers, Catalanotto said there is an emerging, younger demographic.
“Cayman is becoming very trendy, catering to the 35- to 50-year-old wealthy set,” he said, adding, “Cayman Enterprise City is a part of this.”
The CIREBA treasurer added that the market is seeing more interest from young Caymanian first-time buyers, many of whom are coming back from school abroad.
“They don’t want to miss the opportunity,” he said.
One of the territory’s lagging areas is downtown George Town, which has been stagnant in recent years.
“If you go down there …, there’s not a lot that goes on there after 5 p.m.,” Catalanotto said. “A lot of the office buildings have been vacated, moving to Camana Bay …. If you go down Cardinall Avenue, if you’re on ground level, that’s great, but above that is largely vacant space.”
However, the abundance of real estate downtown is an opportunity for investors who want to buy properties they would not otherwise have access to, he said. Central George Town could be turned into a residential area, he explained, with old retail and office buildings repurposed into condos, loft-type apartments and boutiques.
One major project that would help rejuvenate the area is government’s plan to construct new court facilities, Catalanotto added.
Along with a depressed central George Town, another challenge facing the territory includes a lack of industrial land. Catalanotto said there is little to no property left in the industrial area behind the airport, and more is needed for warehousing, container storage, and tile companies.
“We need to repurpose some of the swamp land we have on the island into industrial land,” he said.
Non-real-estate challenges affecting the market include hurricanes, the U.K.’s recent move to force its British Overseas Territories to make their company registries public, rising crime rates, and public infrastructure than needs improvement, he said. While there’s nothing much residents can do about the first two challenges, he said, the second two need to be addressed if Cayman’s real estate market is going to continue to improve.
“By comparison to South Miami, we’re still relatively cheap. There’s an opportunity to attract high-net-worth individuals – people who don’t ask for a lot but spend lots of money,” he said. “We have some of the real estate, but do we have the infrastructure, do we have the right immigration policies? I think we’re missing the boat.”
The Department of Planning’s Chief Planner Haroon Pandohie said his department is in the process of updating Cayman’s 1997 development plan, and should release the first part of that document this summer. The plan will address many of the issues mentioned above.
The first part of the plan will be a policy statement about the general vision for the territory, said Pandohie. From there, more detailed studies will be undertaken, he said.