Month: March 2023

Cayman Real Estate Market: Q1 2023 Review

Posted on March 30, 2023 by - Buyer, Investing, Seller, Tips, Trends

Numerous external and international pressures influenced the Cayman real estate market’s first quarter 2023 performance. A lot changed, and yet reflecting on the final numbers of the quarter, surprisingly, not a lot has changed. Cayman real estate is a resilient, strong market. Let’s dig in.

External Market Influences:

  • Federal Reserve hikes put interest rates at the highest since 2007
  • Russo-Ukrainian War is affecting the price of oil and, as a result, shipping costs
  • Chinese manufacturing delays affecting access to construction materials
  • Silicon Valley Bank crash raises odds of US recession, which should slow the Federal Reserve’s corrective measures
  • Inflation results in less disposable income for investments

Local Market Influences:

  • Multiple new developments previously delayed by COVID are now at completion
  • The backlog caused by COVID had a knock-on effect on the pipeline of new developments as we see a slowdown of new products being brought to market
  • The decrease in new developments is compounded by continued high material costs and shipping delays, as well as local labour shortages
  • Increased local lending rates and scrutiny of new buyers and overseas investors

Q1 2023 Cayman Real Estate Market Performance

I told you a lot was changing! After record-setting years in a robust seller’s market, one would expect to see a decrease in sales and property value, an increase in days on the market and new listings. But that is not what exactly happened.

Yes, fewer sales are happening, and as a result, the total value of properties sold (sales volume) is down. But the average price per sale has gone up.

(Source: CIREBA. 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).

Despite the internal and external market pressures, property value in Cayman remains strong. The data proves this. Cayman remains a seller’s market, albeit with a few more buyer-friendly aspects.

Opportunities for Buyers

Yes, lending rates have gone up, but real estate is a long-term asset, so when we view lending rates over the last thirty years, the current interest rates fall below the average. In short, believe it or not, it’s still a good time to buy. Rates will come down again, and hopefully sooner than we think. The rate of increase by the Federal Reserve has already considerably slowed, and the last announcement on the 22nd of March was the first time the Fed did not allude to further anticipated hikes.

As someone looking to get on the property ladder, it is easy to forget the impact of current lending rates on existing owners. Property owners with variable mortgages face monthly mortgage payments up to double last year. Unfortunately, this is forcing some owners to rethink and lose confidence in their property investments. Sellers with a specific timeline to sell may be more willing to negotiate. Homes initially listed with inflated price points (testing the market) are now correcting to meet true market value.

In addition, some buyers who qualified for financing for pre-construction properties a year ago may no longer be eligible for lending. So we are seeing an increase in re-assignment sales. (I should also note that depending on the pre-construction property, we are seeing up to a 45% appreciation in value from initial contracts to project completion. That just shows you how fast the market is moving.)

All this is happening at a time when there are fewer buyers in the market. If you can afford to buy now, do it. This is your window. Because when lending rates come down, and buyer confidence returns, demand and, with it, pricing will increase.

Tips for Sellers

No knee-jerk reactions, please. Inflation and mortgage rates will come down. If it wasn’t in your plan to sell now, do everything you can to try and stay the course. Property is a long-term investment, and you will see the most appreciation by retaining your asset.

If your home is currently listed for sale, be patient. There are fewer buyers in the market right now, but rest assured, sales are still happening, and property value hasn’t dropped. In fact, it’s risen ever so slightly. (Please note: this is a general market statement as different sectors react differently. Please reach out for a more bespoke detailed report tailored to your personal property journey.)

If financial circumstances, relocation, or your property plan mean it is time for you to sell, my advice, as always, is to go to market with a strategy. A proper plan, people! Understand your market sector, factor in your timeline to sell and carrying costs, and then present and price accordingly.

Here is a great example. I had this conversation with a landowner recently. Their circumstances had changed. A new baby was on the way. They no longer had the time to build, and they needed to put their land up for sale. After looking at comparables, both sold and current listings, discussing their timeline to sell and examining the pool of buyers in their segment of the market, we honed in on a comfortable, fair market price range. But ultimately, what ended up cementing the list price, was their monthly carrying costs. Listing on the lower end of the range increases the pool of buyers and speed of sale. In the end, it will put more money in your pocket because of the saving in carrying costs from a quicker sale.

Real Estate Investors

More investors are moving their money from funds and the stock market into bricks and mortar. There has been an increase in overseas enquiries, both for the high-end sector of the market and rental investments. Why these two sectors? Scarcity. Simple; supply and demand.

Cayman’s rental market is highly active. Population increase and increased lending rates mean more renters are afoot. The demand is at an all-time high, and inventory is scarce. This means rental investment properties are providing healthy returns for landlords. So it’s no wonder savvy investors are jumping on board.

When I say scarcity, I am also referring to the fact that there is a limited supply. There is literally a finite amount of real estate in Cayman. The product here, the lifestyle, is second to none. Safe, tax neutral, no restrictions on foreign ownership, great health care and education, world-class amenities, crystal clear blue waters and year-round sunshine — it’s an unmatched quality of living.

Your Property Journey

Sorry, that was a lot of information, but it shows that there is no one-size-fits-all real estate answer. Your lifestyle and your priorities are unique to you. What makes sense for you in your property journey is not the same as your next-door neighbour, your work colleague, or your friend. If you have specific questions, feel free to drop me a line. I would be happy to discuss what the current market performance means for you, your family and your personal property journey.  

Moving to Cayman? Make sure you’re properly budgeting for paradise.

Posted on March 23, 2023 by - Buyer, Investing, lifestyle, Rent, Tips

So, you’ve taken the plunge and accepted a job offer in paradise.

Congratulations! You’re going to love it here.

But before you start packing, you’ll want to understand the costs of moving to, and living in, the Cayman Islands.

Relocation packages

Before accepting a position, ask whether your potential new employer covers the costs associated with moving to the island.

Many companies in Cayman will provide relocation packages, while others cover shipping costs or flights. This can form part of your discussions when negotiating an employment contract.  

Once you’re on the island, many employers will arrange housing for two to four weeks in a hotel or condo to allow you time to secure accommodation.

Securing a rental property in Cayman

Rental prices in Cayman vary depending on location, size, and amenities.

At the time of writing this, on the CIREBA website, the least inexpensive rental listing is a 1-bedroom, 1-bathroom apartment in East End for CI $1,100 per month. On the other end, a 3,200-square-foot three-bedroom condo at the Water’s Edge is priced at CI $32,800 per month. So the first thing you’ll want to do is figure out what you can afford.

In addition to the monthly rent, there will be some other up-front costs — landlords in Cayman often ask for the first month’s rent along with a security deposit of equal value before handing over the keys. Some landlords may ask for the last month’s rent as well.

Cayman Transportation

There’s a lot to say about transportation in Cayman, but one thing is almost certain — you’ll want to have access to your own vehicle. Public transportation on island can be unreliable. And taxis and ride shares get too expensive to use every day.

There are several options to buy a car on island: new from a dealer, used from a dealer or rental car company, imported from overseas or purchased locally from a private individual.

If you’ve got the budget, buying new from a dealer is your best bet in terms of quality and reliability. You can find many popular makes and models locally.  

If that’s not an option, some dealerships and rental car companies sell used vehicles. The common understanding locally is that these vehicles are generally in good shape since they’ve been serviced by professionals who have a reputation to uphold.

Some popular options include:

You may be familiar with eBay or Craigslist, but in Cayman we have eCayTrade. If you’re buying locally through eCay, be thorough. Many garages offer a used car inspection for about CI$ 75. You don’t want to buy a car on the cheap and then pour thousands into it later on.

Don’t want to buy? You can import your car from home. That process involves first getting the vehicle to the Port of Miami or Tampa, clearing US customs and booking the car on a ship to Cayman. In addition to the shipping fee, you’ll need to pay customs duty (0-42% depending on the vehicle type and value) plus a one-time disposal fee and handling fees. This can be a complicated process, and you may want to consider hiring a broker to help you through the process.

Here are a few to look into:

Utility Bills in The Cayman Islands

CUC is Cayman’s energy provider and will likely be your most expensive utility. The average monthly bill for 800 KWH of usage is US$251.33.

If you’re renting, ask your landlord if they plan to keep the CUC account in their name or their company’s name or if you need to start your own account and pay CUC directly. If it’s the latter, you’ll need to fill out some forms and coordinate with your landlord for an online submission to change the name on the billing account. There’s also a deposit required, the amount of which depends on 45 days of estimated usage. CUC offers various options on the return of this deposit on the closing of your account.

Water will be your second-biggest utility with your Water Authority or Cayman Water (Seven Mile Beach and West Bay area only) bill likely somewhere around CI$ 30 per person.

You’ll want to get in touch with Logic, Flow, C3 or Digicel about setting up internet access if not already arranged through your landlord. Much of the Seven Mile Beach corridor is equipped with fibre cable, although that becomes more difficult to find the further you get from town. Many broadband plans start at around CI$ 80 per month.

Logic, C3 and Flow can also offer cable or streaming television options.

Flow and Digicel are Cayman’s telecoms providers. Cell phone plans include pre-paid, where you literally go to a gas station or convenience store to “top up” or post-paid plans, which start around CI$ 70 at the time of writing this blog.

For families, your budget needs to also include additional costs like school tuition and fees. School fees in the Cayman Islands will vary based on the level of education of your child or children, with prices tiering from Elementary, Middle and High School levels.

Those seeking an American curriculum can look to options such as Cayman International School, Hope Academy or Triple C School. Those who prefer to adopt a British education system can look to schools such as Cayman Prep and High School or St. Ignatius Catholic School.

Pension & health insurance in Cayman

A majority of expatriate workers in Cayman will have both pension contributions and health insurance premiums deducted from their paychecks. Pension contributions are required by law, and employees must contribute at least 5% of their salary, while employers must match at least that amount.

Health insurance is also required by law, and the premium costs will depend on your plan and employer.

Life in Cayman

It’s no secret Cayman is an expensive place to live. The costs can add up, but the value is more than worth it.

The benefit of moving to Cayman is the quality of life. The people are friendly, the food is good, and the infrastructure is the best in the Caribbean. You can work hard and play hard, whether that’s weekend scuba diving, trips to Seven Mile Beach, or any other of the many fantastic recreational options.

Cayman is a wonderful place, and moving here is the best decision you’ll ever make. It was definitely mine.

Considering moving and questions? Let’s chat.