Cayman Real Estate Market: Q1 2024 Review

First Quarter Market Trends

The Cayman real estate market performed well this quarter despite an extended global confidence crisis created by the current financial and geopolitical environment.

Broadly speaking, our local real estate market continues to grow with steady demand. Population growth, coupled with a slowdown in development, leaves the level of available inventory woefully inadequate and pricing ‘somewhat’ firm.

The higher-end sector, which also has a dangerously low supply, continues to be active throughout the market’s recalibration. Historically, during market pauses, this sector usually emerges first, followed by other sectors. In other words, this sector’s activity is an indicator of what’s to come in other sectors.

Mid and Entry-level properties are moving again, albeit slowly. Despite zero change to lending rates and the cost of living, enquiries have picked up in the last quarter. There appears to be a mixture of reasons: a new level of buyer, a slightly more negotiable seller, a new sense of acceptance of the current lending rates, and a general unwillingness to wait any longer.

Data Source: CIREBA

Resurgence of an old trend

This past quarter, a trend that I haven’t seen for a few years has re-emerged. Homes that sat for a few years at high prices started to be reduced, and then suddenly, there was a flurry of interest and, in some cases, a multi-bid situation. The gap between buyers holding on to a 2018 market perspective and sellers stuck in 2020 has begun to close. Prior to the lending rate increases, sellers were often unwilling to budge on their price point, often to their own detriment, as they shouldered high carrying costs. The recent economic climate has not only forced buyers to reconsider their budget and property plan but has also given sellers a push to reconsider their pricing strategy.

The short-term forecast for Cayman real estate

I expect we will see much of the same. There will be a continued, albeit slow, uptick in confidence. This leads to a further increase in demand, which in turn fuels the market speed and, over time, creates a surge in pricing. In short, though the market continues to grow currently at a slower rate than two years ago, this slowdown will be short-lived.

Knowing this. Recognising the patterns and data. It is up to the individual, the family, and the investor to take advantage of the slowdown before the next surge. We have discussed, predicted, and experienced this very cycle numerous times before. Using time to your advantage will serve you well. Fewer buyers mean less competition and more negotiability. The recommendation is to try and get on the property ladder now, in some way, shape, or form. It doesn’t have to be your forever home, but it will be your future leverage.

Data Source: CIREBA

The remainder of 2024:

• Continued price appreciation: Home prices are set to rise in many areas, albeit possibly slow at first, but that pace will increase into Q3 and Q4 as demand remains strong and inventory constraints persist.

• Shifts in housing preferences: Preferences for larger homes, suburban living, and properties with home office spaces or outdoor amenities will continue, driven by ongoing remote work trends and lifestyle changes post-pandemic.

• Mortgage rate softening: While mortgage rates are expected to remain relatively high, for much of the year, economic indicators and central bank policies predict a slight softening by the end of the year. The very first shift in rates will fuel confidence and, in turn, a rush on the already limited supply.

• Local lending rates: I should note that a lot of local banks are providing great incentives. They are demonstrating an increased willingness to create solutions, putting in the extra effort to work with buyers more than what I have seen in years past. So, whether you are looking to buy in the next year or five years from now, I encourage you to start the conversation. Reach out and chat with the lending institutions; that way, when the time comes, you will already be one step ahead (For help, please contact us. We would be happy to provide personal introductions to our preferred lending institutions.). Oh, and in the meantime, don’t forget to save, Save, SAVE!

• Inventory challenges persisting: Inventory shortages will persist in many market sectors throughout the year. This will exacerbate competition among buyers and force upward pressure on pricing, which will be compounded as lending rates decrease. Multiple-offer situations will once again become the norm.

The long-term forecast for Cayman real estate

• Changing landscape: The revitalisation of George Town continues, and not just the beautification but the experience and functionality of the capital are improving. Road improvements will make it more feasible to live in what has traditionally been seen as Cayman’s outer districts. We hope the Government will also soon answer the call for radically enhanced public transportation, furthering the attraction of the outer districts.

• Policy impact: Changes in government policies related to housing, mortgage lending, Stamp Duty rates, immigration and PR thresholds, affordable housing needs, development plans, construction and so on will influence market dynamics (i.e, buyer and seller behaviours). Whether we like it or not, Cayman's evolution and growth continues. I encourage you to ask a professional to help you plan your property journey with all this in mind. Creating a bespoke property plan that considers your today and tomorrow, while understanding how broader island changes will impact your investments and therefore your life.

The future of Real Estate

Cryptocurrency purchases, Auctions, and A.I. are all transformative elements in the global property market and Cayman’s real estate industry is also experiencing change.

• Cryptocurrency purchases: Cryptocurrency has introduced a new method of payment in real estate transactions. Some sellers accept cryptocurrency as payment for properties, offering buyers an alternative to traditional financing methods. Although in Cayman, a third party must be used to verify and exchange funds into standard fiat currency. CIREBA does not support Crypto Currency for Real Estate transactions, as the use of Crypto introduces additional complexities due to regulatory uncertainties, volatility risks, and potential security concerns.  That being said, Cryptocurrency transactions through third party entities can potentially streamline international transactions and appeal to tech-savvy investors. Parallel Cayman is the only on-island entity formally certified and licensed to manage crypto transactions.

• Sale by auction: Online auctions provide an alternative method of selling real estate, often resulting from a stagnant market or a time-sensitive seller. Auctions can generate competition among buyers, potentially leading to higher sale prices for properties. They are particularly useful for selling unique or high-value properties, distressed assets, or properties with uncertain market value. In Cayman, the online auction platforms are further expanding their reach, allowing us to target buyers from around the world in a new way.

Examples of properties sold by auction in Cayman:

1. https://www.caymancompass.com/2024/03/07/take-a-look-inside-one-of-caymans-most-exclusive-mansions-before-it-is-sold-at-auction/
2. https://www.caymancompass.com/2022/12/13/cayman-property-under-the-hammer-in-rare-new-york-auction/

• A.I. in real estate: Artificial Intelligence is revolutionising every industry. In real estate the tools and algorithms are used for property valuations, market analysis, predictive analytics, customer relationship management, and personalized marketing. Some of which we are starting to see in Cayman.

Mike’s real, real estate advice.

Honest advice? Use an experienced agent to develop your own personalised property. Then be patient and stay the course. That’s all. Simple!

FACT: You can’t make a mistake in real estate that time can’t fix. Real estate is a long-term asset, so think with a long-term mindset. Accept the ebbs and flows of the market. The key ingredient here is using time to grow your wealth, slowly but surely.

Real Estate is so simple yet dynamic and complex all at the same time. For us, it’s about analysing and deciphering the data. The resulting effect is crystal clear clarity and confidence as to where the trends are taking the market. This is where we thrive, and you will benefit.  

(Please note that this is a broad analysis of the overall market. Please reach out for a more bespoke detailed report tailored to your personal property journey).

Data Source: CIREBA