Property experts assess Cayman’s declining market

| 10/03/2010

Cayman Islands News Grand Cayman business news, Cayman property market(CNS): Although the Cayman Islands real estate market is continuing its four-year downward trend, analysts say this year’s fall in value was, at least, not as much as had been expected.  Although transfers fell by around 9%, Charterland Ltd chartered surveyors said it could have been a lot worse. Simon J Watson, the firm’s director, said there has been much speculation as to how the Cayman property market was impacted by the economic environmentof 2009. The decrease was expected but it was actually less than many property experts had predicted, he observed.

Watson noted that, although the market in Cayman is small and the data on which any analysis depends is small, it is still possible to discern certain trends in the local market. As a result of that, his team has conducted a full and comprehensive review of the property market in the Cayman Islands in 2009 to help investors make more informed decisions.  

“At Charterland, we believe that you should make property-related decisions based on the best possible information; with this in mind we present our second annual review of the Cayman Islands property market,” he added.

Watson also explained that the review was conducted based on data from transfers from investment sales only and not those known as ‘Natural Love and Affection’ or nil consideration transfers.

The report, which can be found on the Charterland website, revealed that 2009 saw a continuation in the decrease in the number of property bought and sold in the Cayman Islands, with only 1,444 properties being transferred, down by just over 9% from 2008. This is the fourth year that transfers have fallen from an all-time high in 2005 of 2,640 — a total drop in transfers of 45%

“Whilst this continued decrease in the size of the market was expected by most property professionals in the Cayman Islands, the 9% decrease was actually less than many predicted,” the report said. “The total value of the number of transfers also demonstrates a continued slow-down in the property market in 2009, with a total value of all transfers of CI$404 million, a decrease of over 16% from 2008 and by 33% from the high of CI$606 million in 2006.”

The authors said that the continued down-turn was not unexpected but the trend in the average value of the properties being transferred is much more stable, with only a fall of just under 2% from an average value of CI$285,000 in 2008, to an average value of CI$280,000 in 2009.

“This relatively small decrease in average value is all the more significant when compared with average property values in Florida, which have fallen on average by 14% overall and with some areas experiencing a decrease in average values by as much as 17%.”

With only a single sale over CI$5 million, compared with 6 such sales in 2008, the report found that the market for high-end properties in particular was impacted by the downturn.  This highest sale in 2009 was Starfish Point property at the end of Water Cay Road, Cayman Kai, which was acquired by Kenneth Dart in December for CI$10,500,000.

Category: Business

Comments (16)

Trackback URL | Comments RSS Feed

  1. Anonymous says:

    Regarding Charterland’s report: As a professional with many years experience in real estate and investing, I view the Charterland report with a healthy degree of skepticism. It is certainly not "a full and comprehensive review of the property market in the Cayman Islands".

    While the report appears to be slick and full of figures concerning the real estate market, I have well-founded misgivings regarding the report’s usefulness as a guide to value trends and investing in the "Cayman Islands" as a whole. I say this in light of the fact that in compiling the report and failing to acknowledge that the Cayman Islands comprises more geography than just Grand Cayman, Charterland Ltd. has committed a glaring omission not worthy of being called a professional effort.

    Things like this add credence to the widely-held notion that "foreigners" have little regard for the feelings and heritage of Caymanians and their land, and that they are here only to exploit the country for their own gain, regardless of who gets overlooked or slighted in the process. It gives much weight to the opinion of Sister Islands residents who say that those in business and government in Grand Cayman have little consideration for their islands. It certainly seems that Charterland does not!

    I find it quite surprising from a professional standpoint, and very sad from the viewpoint of a Caymanian, that the Charterland report gives no acknowledgement whatsoever that there are three islands in this country!  Perhaps Mr. Watson and his colleagues need to return to school and study the geography of the country before authoring the 2010 report.

    I see the report asbeing little more than a bare-faced self-promotional ploy on the part of Charterland Ltd. in the guise of a product of consummate expertise. I consider the report to be more or less an "infomercial" for the company to promote themselves as gurus in the valuation industry in hopes of drumming up business for themselves. However, in my humble opinion only a blind guru would fail to recognise two out of three islands!

    It is only in the light of selfish commercialism that I can begin to understand the omission of the Sister Islands in the report. After all, the lion’s share of Charterland’s business and dollars are derived from Grand Cayman clients. I guess Charterland figured that Cayman Brac and Little Cayman have little dollar value to the company so why even bother to mention that part of the country in the report.

    That is still no excuse, because although Kim Lund’s real estate brokerage does not do a huge business in the Sister Islands, yet Mr. Lund’s equally self-promotional "Lund Report" still regularly makes reference to Cayman Brac and/or Little Cayman. At least Mr. Lund acknowledges that the country comprises three islands! Ditto for Mr. Thompson’s Century21 "Islands Property" magazine.

    I really would like to know the reason for the omission of the Sister Islands in the Charterland report. One rationale could be that the small number of transactions in the Sister Islands makes concise analysis difficult. However, this is not a valid reason to completely disregard their existance!

    Besides, even if only one parcel of Sister Islands real estate can be valued using accepted criteria, then an analysis can be derived for the market as a whole.  The opinion may have to be a qualified one, but even that is better than simply acting as if the Sister Islands do not exist. If it is too difficult for Charterland to arrive at an analysis for the Sister Islands, then be honest and just say so. If they just do not care, then that is another story.

    If the reference to "Cayman" in the title and body of the Charterland report derives from the colloquial vernacular (meaning just Grand Cayman), then so be it. However, in the introduction to the report, Mr. Watson explicitly – but incorrectly – touts the report to be a "…review of the Cayman Islands property market". Mr. Watson makes allusions to the report as being the "best possible information". A comprehensive report of a national scope is promised, however, the report sadly falls two islands short of that promise.  If this is the "best possible", then I would really hate to see a bad job.

    In my personal and my professional opinion, a report on the Cayman Islands property market should have offered some analysis, or at the very least a mention of, the Sister Islands market. A more honest title for the report would have been "Grand Cayman Property Review 2009". 

    In my book, Charterland’s omission certainly disqualifies them from being recommended to value land in Cayman Brac and/or Little Cayman. Moreover, if Charterland could overlook two entire islands, what other items of importance might they have overlooked that could have impact on the soundness of the report?

    All I can say regarding the report is this: Mr. Watson, I look forward to a better job in 2010!

    • Simon J. Watson says:

      Thank you for your comments, feedback is always appreciated on our reports.

      The Cayman Property Review 2009 is based on all property transfers, for monetary value, in the Cayman Islands; including sales on Cayman Brac and Little Cayman. We did not focus on these areas of the market in particular because, as we state throughout the report, in order to ascertain any meaningful trends there needs to be suffcient volume of transfers to provide a large enough dataset for analysis. It is for the same reason that we did not comment specifically on, say, the property market in East End.

      I would be pleased todiscuss your comments in person if you would like to call me on 525-2214.

       

  2. Anonymous says:

    And 77% of people believe that statistics are 100% accurate…

    • Anonymous says:

      Statistics are never 100% accurate, but if they come from independent, credible sources, they may be relied upon to paint a fairly accurate picture, or show a particular market trend.  All the evidence shows that the Cayman property market is in dire straits, and any attempt by realtors to suggest otherwise threatens the credibility of the whole real estate industry in Cayman. 

  3. Anonymous says:

    What’s funny is that "well-respected" realtors have been talking up the Cayman property market in recent articles.  They’d better watch the hyperbole if they want their reputations to remain intact.

    • long nose rat-boy says:

      "…if they want their reputations to remain intact."

      How did you type that without choking?

      There are nice realtors that I quite like, but from a business perspective there are really no "well respected" realtors.  Realtors have a simple reason for existence in life: they blow BS at everyone in the hope that they can close deals and earn massive commissions.  No sales = no salary, so they blow the BS like there’s no tomorrow.  Anything to make a sale and earn a buck.  Wouldn’t you?

      I am not opposed to people earning a living, but when the people who make money from me buying something are the same people telling me what a good idea it is to buy that something, I would have to be stupid to think that they were providing an objective assessment of the merits of the purchase.  If a non-corrupt government gives me statistics and factual trends without the BS sales pitch (i.e. "There’s never been a better time to buy, buy, buy!!!!!!!!!"), then I might feel I had some objective information about the market.  Listening to the real estate vultures for objective business advice is only for the freshly lobotomized.

       

  4. Anonymous says:

    surely the level of tranfers in september was high because the stamp duty went up again in october ??? 

  5. Financial advisor says:

    Although Dart is somewhat good for our economy can does anyone else see that he has taken over Cayman an owns all the valuable property left on the island and has the financial ability to solely develop it on his own with out the need for partnership to reduce risk… He has single handedly bought our real estate market.

    He the majority of Beach Front property in West Bay he has bought the last remaining beach front property in Cayman Kai that leaves Frank Sound Beach front property but who wants that???….

    Sad situation no opportunity left for caymanians… i guess we’ll all be slaves to Dart!

    • Bit of common sense says:

      The irony being that it was the same said caymanians who sold Dart all that property in the first place. As far as i am aware, Mr Dart didn’t hold a gun to any Caymanians head. Greed got the better of them and this is the inevitable outcome. How else was this going to end?????

    • Anonymous says:

      Did you want the land beside the dump?

      Did you have the money to buy THE LAST (really?  The LAST?  Come on!!)remaining beachfront property in Cayman Kai?

      You ask who wants Frank Sound – better hold on to your hat.  That’s Cayman’s next frontier.  I guess it would be better for you not to invest there so you can point fingers and write letters when someone else buys it.

      No opportunity for Caymanians you say?  I have news for you – you make your OWN opportunities.

       

    • Anonymous says:

      I live in a high-end neighborhood and most of my neighbors are native Caymanian plus a few long-time status holders.

      They seem to be very happy in their very nice and large properties.  So I don’t get what you are saying…

    • Anonymous says:

      I think what you mean to say is that it is sad that you don’t have a nice property.  Big difference between you and "Caymanians".

       

    • Anonymous says:

      We should all want to be slaves for the Lord Jesus Christ and no one else.

      Lets be real now, it was Caymanians that sold our properties to Mr. Dart he did not force anyone to sell him their property under duress.  Now don’t go hating the man because we were greedy and wanted to sell our birth right for pottage like Esau. From the 1980s to the mid 1990s no one taught the younger generations of Caymanians that Property was wealth. Our poor young people were taught that $100,000 was wealth, vacations overseas, shopping sprees, trips to  Disney World, Las Vegas and Cruises make one wealthy and the only way to achieve this was to sell your properties that were in your family for generations.

      Welcome to 2010 Native Caymanian generation Y are now forced to learn that land is wealth. Just about 35 years they were some of the most wealthy people on the face of this earth as they owned most of the real estate on this island sadly they have lost that ownership and it was simply as a result of greed and lack of knowledge. We had so many examples to look at and even follow, Bermuda, Anguilla and BVI but no our long term plans do not extend beyond 10 year, that is why we are now lost beyond that wonder plan of vision 2008.  Since 2008 is over come lets revisit our economic, development and land reform plans, let us plan towards 2510. 

      On a note of optimism the Cayman Islands are still British therefore, we are still owned by "Her Majesty" and not by anyone else.

  6. Lundy Lundy Bridge says:

    There has never been a better time to buy!

    • A funny game . . . says:

      A funny game is to track the movement of property prices over the last three years to the back issues of the Lund "there has never been a better time to buy" Report.

      I have seen the next edition just before it goes public:

      "Yes, Cayman is facing the real prospect of property taxation and the sharp reduction in domestic disposable income as income tax is introduced to prop up the bloated civil service, and it is true that there is a significant risk of the market being affect by a large drop in the number of offshore industry workers on island, and while many people would think that buying real estate in Cayman is about as sensible as dabbling in the sub-prime structured product market, in our opinion there has never been a better time to buy."

  7. Anonymous says:

    too many generalisations noted above…. there is a myriad of factors to be considered when talking about property values and transactions….