Cayman’s real estate market showed resiliency in 2022. In many ways, it was a banner year for the island’s real estate market.
Almost US $1 billion in property was sold this year. The second highest in Cayman real estate history. And the average value of each transaction was the highest we have ever seen.
Long story short — as a safe, tax-neutral jurisdiction with the best infrastructure in the Caribbean, Cayman remains a strong investment.
Another record year
The US $972,230,658.22 sold this year is just below the record-setting year of 2021, when there was $1,084,760,978.86 in sales value, according to the Cayman Islands Real Estate Brokers Association (CIREBA).
To put those numbers in perspective, the total sold value of properties sold in 2020 and 2019 was only about 60-70% of that.
The average value of each transaction in 2022 was higher ($1.131 million) than it was in 2021 ($1.015 million). An 11% increase year on year.
This reflects what we are seeing in the United States as well, where the number of home sales is forecast to drop 16% in 2022 compared to 2021, but the value of those homes is expected to grow by 10% as well, according to the National Association of Realtors.
The great reset
While sales value numbers remain strong, 2022 was in many ways a year of recalibration.
We’re experiencing an uptick in housing supply following 18 months of record housing scarcity. This is an expected and completely healthy shift in the market. After all, rising interest rates, inflation, volatility in the capital markets and the war in Ukraine have combined to slow the economy generally, impacting those who require financing. There were 1,037 active listings as of the last week of the year, while there were 688 this time last year.
While that shows an increase in supply, those numbers really come in line with pre-pandemic housing availability. There have been times in my career when I’ve seen more than double that number of active listings, meaning even a recalibrating Cayman market is a strong one.
External economic factors have begun to affect more of our clients. Initially, it was really those needing to borrow who were most impacted by inflation and subsequent interest rate hikes. However, we’ve now started to see the impact on just about everyone, regardless of income or type of property.
This has led to some softening of prices or has required more patience from sellers. It has led to difficulty in acquiring financing for buyers and caused some hesitation.
Another trend I expect to see is an increase in rental rates. That may sound counterintuitive, seeing as how there are several new developments online or coming online soon. But with the current environment making it more difficult to borrow, more people who may have been interested in buying will have to rent for the time being. This will increase the demand in the rental market.
Tourism in Cayman is back!
Anyone on the island has noticed the influx of visitors over the past few months. This is our first “high season” without COVID-19 related restrictions on travel since the start of the pandemic.
Talking to those in the industry, they say the hotels are very close to being at 100% capacity, despite many increasing their rates. That means a wealthier visitor arriving in Cayman, which bodes well for local real estate.
In December, Tourism Minister Hon. Kenneth Bryan told Parliament that visitor numbers in October and November were approaching those of Cayman’s record-setting 2019 numbers.
Set yourself up today to have success tomorrow. I’ve said it time and time again, and it remains true even in today’s economic environment.
Cayman Islands real estate has proven to be resilient and a sound investment. If you’re a potential buyer, take notice of what’s happening. Increased supply and the potential for more negotiating leverage may mean now is the time to move forward before demand and prices spike.
For sellers, don’t panic. This recalibration is temporary, and even those who need to sell now will see an impressive return on investment.
The most important thing to remember is the property journey is different for everyone. There is no one-size-fits-all solution. For a more bespoke detailed report tailored to your personal property journey, feel free to drop me a line.
Happy New Year and have a wonderful 2023.
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