The 2022 Cayman Real Estate Market and Beyond

As tourism picks up and Cayman’s day-to-day life continues to inch toward its pre-pandemic self, I anticipate we’ll see the 2022 Cayman real estate market react in a variety of ways – just about all of them positive.

And with that backdrop, here are my predictions for what is to come for the 2022 Cayman real estate market.

Demand

In time, travel to and from island will become easier, so logically we can expect an increase in Cayman’s tourism and population. That increase is going to fuel demand and this will be especially significant for certain sectors of the market like rental properties.

If supply is low, higher demand brings the potential for upward pressure on rental rates, until supply outweighs demand then the opposite takes effect. However, in key locations, there will always be limited supply so for the time being we project rental rates will initially stabilize, before increasing once more. In the outskirt areas supply currently outweighs demand so rental rates have already stabilized before an anticipated softening.

Regardless of location, landlords should take advantage of the relatively low demand we are experiencing and prep for future growth. Investing in your property through upgrades and improvements will always help command better rentability even in a high supply market. Differentiate your rental unit as it will either command easier renting or a higher rate. As evident by the amount of works underway in the Seven Mile Beach area alone, various condo complexes and individual properties have already invested in upgrades and renovations and we anticipate this trend to continue.

Capital investments like these, have been the case in Cayman after several major global events like September 11^th, Hurricane Ivan, and the economic crisis of 2008 - 2013. Now the same will be true as we continue to adapt to the new normal of living within the Covid crisis. In a sense, these ‘shocks to the eco-system’ bring a forced market evolution. They are catalysts to healthy pivots, generating property upgrades as the jurisdiction adapts and the market readjusts.

There is a tremendous amount of confidence about what’s to come. We see the market continue its stabilizing and recalibrating before the next growth spurt. But don’t just take it from me, look what other players in the market are doing. Amongst many condo complexes and hotels, the Ritz-Carlton, for example, just reopened after completing a US$50 million renovation project. It’s beautiful. When you have entities like that investing in Cayman to that extent, it demonstrates that they too have confidence in what’s coming around the corner.

Location

There was a time, maybe 50 years ago, when my father could have purchased a large tract of developable land on Seven Mile Beach for about $2,000 because nobody wanted it. There was low to no demand. Now, Seven Mile Beach is commanding up to US$200,000 for only a ‘running foot’ of that same land. Welcome to the most sought-after area in Cayman.

I say that to illustrate real estate is a long-term investment. Over the past 20 years or so, it has proven more difficult to sell a home if it wasn’t located in the Seven Mile Beach corridor, South Sound and pockets of Cayman Kai and Rum Point. However, those areas now demand some of the highest prices in Cayman. So, investors are examining other locations on the outskirts of those key locations with the long-term in mind. Secure tomorrow, today.

Case in point, years ago, many people considered the Grand Harbour development too far away from central George Town and the Seven Mile Beach corridor. Now, it’s undeniable, Grand Harbour and its surrounding edges are booming. In addition to the improved shopping centre itself, several major developments have been constructed or nearing completion nearby; Arvia, Bahia, Aura, The Lagoons, Grand Palmyra, Vela, Harbour Reach, Harbour Walk, and Indigo Bay have all gone up over the last several years. That’s a lot of development!

So, to predict and project what’s happening next, it’s a simple concept; much of George Town, the Seven Mile Beach area and South Sound have simply run out of space and pricing has forced demand further out.

The next options on the “outskirts” of those areas are becoming increasingly attractive and that’s where people should look for long-term real estate assets. That’s where we can get the benefit of buying now and holding for five or 10 years. It’s all relative to your personal property journey. We shouldn’t buy for that immediate return on investment, you’re buying it for a gradual, slow return. Shifting your mindset to longer-term gives you the competitive edge in your investments.

Pricing

Cayman saw price increases across multiple sectors in 2021 and, while prices in certain sectors may soften for a short period of time, we do expect to return to what has become our normal incline over recent years. For instance, the pricing pressures will remain on Seven Mile Beach and South Sound.

The reality is that Cayman has been underselling itself for the better part of two decades. For Seven Mile Beach style condominiums, it’s common in other competitive jurisdictions like Miami, Hawaii, Turks and Caicos, Bahamas and Aruba to see asking prices around $1,800-$3,000 per square foot. In Cayman, the prices were at US$800 per square foot as little as 3 years ago and now range up to US$2,400 per square foot. I will not be surprised if in the next three to five years we see high-end condos along Seven Mile Beach going for about $3,000 per square foot.

In fact, the trends already show this is happening. In 2017, Seven Mile Beach beachfront condominiums netted an average of $961,000 per sale. Last year, they averaged $2.25 million, an increase of 134% during that four-year span.

At The Discovery Club, the average sale price of two units in 2020 was $1.19 million, a 169 percent increase over the average for 2015. It’s a similar story at other beachfront condominiums like George Town Villas (160 percent), Silver Sands (83 percent) and The Pinnacle (59 percent), all of which have experienced significant increases in average sale prices during that same span.

Cayman is a special place to live, work, play, invest and raise a family. We’ve seen demand drive price increases and that demand is justified because there really is no other place on earth quite like Cayman. So, if you are still thinking in yester-year’s mindset that, $2,000 per square foot is a ridiculous price, then brace for impact as it will only increase further. Don’t get me wrong, it is high, but we will be having the same conversation over even higher prices in five to ten years’ time.

Inventory

I expect the slight increase we saw in listing inventory over the final two quarters of 2021 to slow down early in 2022. Prior to the third quarter of last year, we saw about 18 consecutive months of decreasing supply – and thus, increasing demand.

On the 13^th of July 2020, there were 1,043 active listings in Cayman, the highest total through the end of 2021. That number dropped by 35 percent over the next year!  And while the drop in listings has begun to level off, starting in the third quarter in 2021, they decreased to 557 on the 13th of September 2021. That is the absolute lowest number of listings we have seen in the previous year-and-a-half. And a 47 percent drop from that highest mark in July of 2020. All that is simply to add perspective, some context, to the modest 2 percent increase in listings we’ve seen in the third and fourth quarters of 2021.

So, while we will continue to see an increase in supply for the first quarter of the 2022 Cayman real estate market, we are still at a very low inventory count. And what’s more, I fully anticipate that the supply will stabilize again before declining once more in the second and third quarters of the year. It’s the organic growth of the market.

2022 Cayman real estate, the year ahead

Lest we not forget just how unique the Cayman product is. No matter the jolt to the marketplace, we recalibrate, adapt, pivot, and grow time and time again. December ended with the most sales we’d seen in nearly three months and Back on Market listings remain very low. Using this knowledge, we can choose to secure tomorrow, today by making long-term based decisions and not reacting to short-term happenings.

Inevitably, this year will bring continued difficulties around Covid-19, prolonged complications with supply chains, further market ebbing and flowing yet values remain stable and, in many locations, will only increase. Many projects will finish this year and next. The redevelopment of the incredible Lacovia, the new Watermark, and Aqua masterpieces serve a clientele that supports further growth and demand. We can also expect new sustainable development laws to be implemented in time. All this is to say, the property-market ‘ecosystem’ is healthy, and we have a very bright future ahead for 2022 Cayman real estate.

Of course, we are all at different stages of our respective property journeys and it’s crucial to understand your personal property plan, not for just today but also for tomorrow and beyond. Consider your property wants and needs into the future and tap into our guidance and tested strategies to help make your vision a reality.

(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).