Surveyors reveal drop in Cayman’s property sales

| 10/04/2011

(CNS): The local property market fell by a further 30%, a new local industry report has revealed. The Cayman Property Review, by chartered surveyors Charterland Ltd, billed as an independent review, reveals that residential property sales in the Cayman Islands have fallen to the lowest levels since 1995. In the introduction partner Simon Watson says that in a year labelled “horrific” by the real estate sector, there is a need for accurate, impartial information about the industry. With only 1,015 sales in 2010 compared to 1,443 in 2009, the total sales value has also fallen by 36%, from CI$404 million in 2009 to CI$259 million in 2010, the report states. However, the authors conclude that the average value of individual property has not fallen as much as some feared.

“Based on the figures, there can be no question that the market for properties in the Cayman Islands continued to stagnate in 2010, following on from the declining number of total sales in the preceding three years,” the authors write. Pointing out that, although it is difficult in a market as small as Cayman’s to identify trends by examining every market value sale, Charterland Ltd said it was still able to point to some important and useful information

“When the average value of the total sales for the year is calculated, the first thing of note is that, although there is a decrease when compared with the average value in 2009, the drop is significantly less when compared with the decrease in the total number of sales, or the total value. 2010 saw the average value of all transfers for market value fall from CI$280,000 to CI$254,000; a total drop of just over 9% from the previous year.”

The figures suggest that although the market has stagnated in terms of numbers of sales, values overall have not taken the dramatic decrease that many in the industry feared, the report states.

“It would seem that sellers are choosing to hold-off on selling their properties, where they are able, pending a market recovery, rather than take a loss in the current market,” the authors speculated, saying that the lack of significant individual property sales further demonstrates that sellers are holding off putting properties on the market.

“The largest single transfer, in value terms, was the sale of the site of the Tortuga Duty Free Store in central George Town, for CI$3,666,600, equating to approx. CI$526 per square foot (SF). In fact there were no transfers registered with sale prices of more than CI$5 million in 2010, compared with six properties in 2008 and one sale for more than CI$10 million in 2009,” the report states.

The highest priced condominium sale in 2010 was for a unit at the Caribbean Club, which sold forCI$2,436,000.

“It is interesting to compare this with the highest rate per SF for a sale in Caribbean Club of CI$997 per SF in 2008. The fifth highest valued sale of the year was another condominium sale, this time in The Meridian. This 3,700 SF unit sold for CI$2,335,200 or CI$631 per SF. This price compares well with two other sales of 3,700 SF units in The Meridian which both sold in 2007 for prices equating to CI$598 and CI$641 per SF.”

Most of the property sales in 201 were for less than a quarter of a million, the report states, with less than 5% of sales being over a million.

“Overall, just under 65% of the overall sales in 2010 were for sales prices of less than CI$250,000, a fraction over 20% of the sales were for sale prices between CI$250,000 and less than CI$500,000, whilst 5.6% were for between CI$500,000 and less than CI$1 million and 4.4% of sales were for prices of more than CI$1 million and less than CI$5 million,” the surveyors say.

Contrary to the believe that Cayman’s real estate business is driven by foreign investors and overseas visitors, the report reveals that 90% of all purchasers in 2010 were registered with Cayman Islands addresses. The remaining 10% of sales were made by people with addresses in the United States, Canada, the UK, Europe and the Middle East.

On Seven Mile Beach, where purchasers are generally believed to be overseas investors, 67% were also purchased by people with Cayman addresses. 20% of all sales on SMB in 2010 were to purchasers from the USA. On Little Cayman, however, only 32% of the purchasers had registered a local address. But on Cayman Brac 94% of all purchasers in 2010 had registered addresses in the Cayman Islands and all other purchasers were from the US.

To download a copy, go to www.charterland.ky.

Category: Business

Comments (41)

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  1. Anonymous says:

    I Disagree with most of the above comments in regards to buying a property here.

    We are here for 7 years and rent has came down dramatically in the past few years, however you are just paying someone elses mortgage.

    If you own the property at least when you pay the mortgage you have the interest true, however you have part of the principal payment coming of every month and you will get your initial investment back for sure over the 7 year period. For me it is like a saving scheme or even if you are rolled over you would be able to rent this property out and have this as a small retirement fund.

    With regards to the Strata I do feel that they are very expensive and this does put a lot of people of purchasing a property here, The Strata works well when you are not on the island as you know that the grounds, pool etc are being maintanied to a high standard.

    I would reccommend buying a property if you intend staying for 7 years.

  2. Anonymous says:

    Recently stopped looking to buy a house in Cayman in the $1.5 million range. Government fees I accept – 5% to 7% to realtors is outrageous when the rest of the world is 2% to 3% and very hungry for business. Buyers in Cayman will continue to offer lower and lower prices to adjust for the fees. Rumours of Cayman as a 3rd world country are true – don’t come here – can’t work – get out after 7 years – Welcome to Cayman? What a laugh – what a tragedy.

  3. Anonymous says:

    Say you buy a home within 6-12 months of arriving on the island (as an expat). Stamp duty is 6 – 7.5%. Estate agent fees are an eye-watering 7%. It takes more than a year to sell so you have to put it on the market after you’ve been here say 5 or 5 1/2 years to make sure you get your money out before you’re rolled, so you have 4-5 years of ownership before its back on the market during which it has to appreciate by about 15% just for you to get your purchase price back. Plus you have to furnish and maintain it, and pay absurd strata and insurance fees. It just makes no sense for an expat to buy here.

  4. Anonymous says:

    Talking of rollover as many posters are on this site, why is no one making a huge fuss about the fact that rollover does not apply to civil servants, just private sector employees; it’s a TERRIBLE anomaly and injustice.?

  5. Anonymous says:

    To quote the infamous Basil Fawlty, ‘Next contestant: Sybil Fawlty from Torquay. Special subject: The bleeding obvious'”

  6. Anonymous says:

    Property prices are just too high! Plain and simple. The average time that a house is on the market in Cayman is 1 year! Average time a house is on the market in North Vancouver, Canada ….. less than a month! (only reason I know this is because these are the two areas that I am looking to buy a home in).

     

    You lower the asking price to something reasonable, you make a quick sale, pay off your mortgage and get on with your life. This reduces mortgage interest, insurance and risk of hurricanes!

    • NJ2Cay says:

      How in the world can lowering prices reduce the risk of Hurricanes. Sadly some folks don’t realize that it costs a certain amout of money to build a house and it’s a fact that poeple have to sell at a certain price to cover their investment or it’s not worth it to sell…..They will just wait it out, prices will go back up although it may take a while, that’s why people say now is a good time to buy, becuase prices are at an all time low and it’s a buyers market….

      • Anonymous says:

        I think the writer is trying to say that if you sell you property sooner rather than later, you don’t have to worry about your home being damaged by hurricanes year after year as you would if it was just sitting on the market.

        I have been looking for a house for 3 years now and I have not found one that is what I consider “fair value for what you get”. So I too may end up putting my money in my pocket and waiting……

    • Anonymous says:

      or of course dropping it may be to below your mortgage, then your screwed

      Let us not forget that the agents want 7% of your sale as well.

      So if you bought a home with 15% down 2 years ago, prices have already dropped 15% add the 7% commision for the agent and even with principal payments there is no room to drop the price, you just have to live with it

      • Anonymous says:

        There is no good reason to use a real estate agent to sell your home and pay 7% commission. That is just crazy. If everyone decides to sell their homes privately and not use real estate agents, I bet their commission rate would come down. Supply and demand…

  7. Anonymous says:

    Hardly a surprise. There is not point in buying here with the 10% costs upfront, 7% realtor commission when you sell at Rollover, high strata fees; cheaper to rent. Most “affordable” properties are small with a lack of parking, & the others are too expensive.

    90% of sales are probably Cayman addresses because US citizens open Cayman companies to own them!

  8. Anonymous says:

    I would have bought a house here if it wasn’t for the roll-over policy.

    If I did I’d have to put it on the market after I’d been here 6 years and who knows where prices will be then?

    What if it doesn’t sell and I can’t get my money out by the time I have to make a new life somewhere else?

    It’s not worth the risk. Instead I sent the money back home and bought a place there. How many thousands of ex-pats are doing the same thing?

    • Ex-Ex-Ex-Expat says:

      Thank your lucky stars. I did buy, just as roll-over was rolling out. Needless to say, there’s half a million dollars I’m not getting back… Oh well.

      Every single expat should be renting, sending the money home, and staying mobile. It’s what your (formerly “our”) Caymanian hosts want you to do – really. This is not a “bashing” post – Caymanians have made it plain that they don’t want expats growing rootsand expecting to stay, so don’t do either. It would be disrespectful to the Caymanians to do otherwise.

    • Anonymous says:

      Oh come on now!

      You never have any guarantees no matter where in the world you buy a house.

      Have you not read any of the news in the last 12 months, indicating how many people in the USA had to take a loss on their property?

      There is only so much control you have over matters, the rest, well, it just happens one way or another…..

      • Anonymous says:

         Maybe, but at least you might actually get to live in it.  Hard to do once you are rolled over and sent away…

        • Anonymous says:

          A point about the rollover which mystifies me is that quite a few people are rolled over but then come back after a year to the same job. What is the point?

      • Ex-Ex-Ex-Expat says:

        I have a guarantee. I can live in my house as long as I like, and I can do whatever job I like and start any business I like, employ as many people as I like and I can enjoy a property market filled with people that have the same rights. Guaranteed.

      • Anonymous says:

        Perhaps no guarantees but if you are in the US and lose your home, there are other resources to help out. Investing in another country is a gamble, but most places give a bit more security than only 7 years.

      • Anonymous says:

        costa rica

        • Anonymous says:

           "Costa rica"

          In Costa Rica, there is something called "squatter rights" which means if you leave your house for 6 months or more unattended then people can move in and take it from you.

          In Mexico, you can’t own property, you can only rent it for 99 years.

    • Anonymous says:

      I agree with you. It is true that most expats won’t buy homes here because of the rollover & also the restrictions on PR are quite strict and expats I know feel it is not worth it. Rents are very cheap now & deals can be made on rentals so why buy. Expats whom thought they wanted to stay & make the effort for PR have changed their minds, I am one of those so Cayman will lose some really good expats in my opinion. Cayman will get lots of young expats who will stay for a few party years and then leave but won’t make any real investment in the country at all. Perhaps that is what Cayman wants, just a turn over in population. Anyway, it is not my country so I have to do what the Caymanian people & their gov want & I wish them well.

    • Anonymous says:

      the rollover policy only affects home sales/purchases because people let it….think about it….before the r/o was ever brought in, loads of exapts on annual work-permits still bought homes eventhough every year they’d have to re-apply for a work permit……but its even more of a nonsense the fact that banks give mortgages to expats….banks give people 20/30 yr mortgages…yet these people may have a work permit refused, or be rolled over!!

      • Anonymous says:

        I disagree as with the rollover you have to leave for sure. With work permit renewal, even every year, at least there was a good chance you would get to stay in the position as a good steady long term employee is good for business. Now, it is 7 yrs and then rolled out so why would anyone waste money on buying a house now – it doesn’t make sense.

    • Anonymous says:

      why to put your money here ,if you know you will have to go after 7 years,not worth it…Property prices will fall down futher down…it will be so cheap with no buyers except one and everybody knows who it is…thanks to roll over policy and its devastating effects,

      • Lachlan MacTavish says:

         With proper elected leadership for the people and the country, not for them selves, Cayman is a wonderful place to invest you money. 

        We simply need leadership that wants to eliminate crime, re develop the financial and tourism industries, stop entitlement that cannot be sustained and viola you have a stable country.

        Not rocket science, common sense and leadership for the people. Nothing could be worse than what you have now. Pick people to run the country for you the voters. Time for change.

        • Ex-Ex-Ex-Expat says:

          “With proper elected leadership for the people and the country, not for them selves, Cayman is a wonderful place to invest you money.” .

          I believe you are right Lach, but only in theory. Cayman doesn’t have proper elected leadership, Cayman won’t ever have them in the forseeable future, so Cayman will never again be a good place to invest money. That’s why I left, and I believe that’s why most people are leaving. In the end, permanently defective leadership will always destroy a country.

          If Cayman could change money would flow back in, but it can’t so the money is going, going, gone…

  9. Watch and learn Cayman says:

    Real estate transactional volumes are down globally.  This is not a Cayman thing, or a crime thing, it is an economic thing.

  10. Anonymous says:

    I feel for the people who own a home, need to sell and seemingly can’t.

    I don’t feel for the Real Estate Agents as they often holding up the closing of the deal because people are reluctant to pay such a high commission for a crap service!

    • Anonymous says:

      I agree with your comments but the real estate agents are just part of the problem. The banks are the other part and no one has commented on that yet. I made an offer to purchase a home last year but the endless foot dragging by the local banks and some silly demands border on absurd. After six months of back and forth with the lender they decided the property wasn’t worth its purchase price. Six months later – well,of course not!! You need a truck load of cash because attempts to get a mortgage will certainly kill the sale.

  11. Truth B Told says:

    No doubt the Lund Report will tell us "there has never been a better time to buy"!  The How Full Of Crap Is The Lund Report Index is at an all time high!

    • Anonymous says:

      And one of “The Lund Report’s” competitors in his quarterly news-sheet will as usual take a swipe at Obama, blaming him for his industry’s ills.

  12. Anonymous says:

    The realtors here have had it so good for many years reaping their 7% commission on sales, I don’t feel sorry for them one bit, they got so greedy when the boom time was running. How is it the government accepts this 7% ‘obligation’ when a realty sales commission in the rest of the world is 2 to 3%? I hope this downturn weeds out some of the real estate brokers & the government wakes up & passes a bill to reduce the sales commission that they deem is their god given right. Either that or the government takes a few percent from the sales commission for their budget. 

    • Anonymous says:

      If the realtors would take a reasonable commission, say 2% – 3% this alone would have a positive effect on the market but its all about grab as much as you can while you can…. wonder where they got that idea from??

  13. Anonymous says:

    as usual more questions than answers…..

    • Anonymous says:

      yep… seems like a report filled with too many generalised statistics which offer little or no information to the avergae man/woman

  14. Lachlan MacTavish says:

     My unscientific understanding is that Cayman’s reaction to world events is always 6-12-18 months behind. Personally I worry for my friends in the business because I believe it will get worse before it gets better. 

    I wonder why real estate business owners are not putting extreme pressure on Mr. Bush to address the crime issue, make Cayman more attractive to international professional services and provide incentives for developers.

    Crime is the most important, Cayman now has a reputation in the USA travel industry as having a crime problem for tourists. 

    Safe place, crime free, thriving professional services industry and stay over tourism equals a healthy real estate industry. If you want your business to recover get pro active IMHO.

    • NJ2Cay says:

      The reason is Caymanians have complained for years that Expats and foreigner have ruined the Cayman way of life and put many local out of work, they have blamed the Crime spree on Expats saying that the Island needs to rid themselves of foreign influence. The result of this was the rollover policy, Higher Work Permit fees, foreign workers leaving the island and less tourism. Which in turn has directly affected the real estate market. This is what Caymanians wanted and asked for, so they could get lower rents for higher end apartments and homes and less unemployment. They constantly complained that it was the expats taking jobs from Caymanians and that once they are all gone things would get back to the way they used to be and every Caymanian would have a good high paying job and a beautiful home for an affordable price. So the Government reacted to this and now you see the result. Hopefully everyone is happy with the outcome.

      • Anonymous says:

        I feel a lot of people are buying apt and the frank hall home can’t built fast enough,there are more home owners now,I feel that is why the market is soft and we have too many real estate agent some need to close.Government need to stop issuing business license there are too many business it thin out the market for everyone especially the hair salon and barber shops,people are opening business and renting booths to work permit holders and immigration is not doing any thing about it there is not body to complaing to.Why do everyone come to this country and want to tell us what to do.please enjoy the time u have here .

        • Representing 90% of Expats says:

          "Why do they come here and try to tell us what to do"? Because cayman doesn’t appear to have a clue. The majority are un- or undereducated with a poor work ethic when compared to Asian countries, the US or Canada. It’s not a race thing, it’s a cultural thing. Unfortunately, since the days of walking down any lane and picking your breakfast mangoes straight off the tree are a distant memory, cayman MUST move into the computer age, and present enlightened, computer-savvy graduates to the world. you MUST begin to properly educate your youth- i fear it is almost too late now. Wishing it back to "the way it was" is futile. Even if it were possible, cayman would completely fall off the list of "relevant" countries. it would actually merit the term 3rd world country. (right now, it is more like a "faux"3rd world country, to its credit, and to the credit of the lovely caymanian people). without a strong emphasis on a 21st century education and a large reduction in political corruption, cayman is on a "crash-and-burn" trajectory.

      • Ex-Ex-Ex-Expat says:

        I expect you are right. This is the result of Caymanians trying to “rid themselves of foreign influence”. So many policies and programs telling the foreigners to pack up their jobs and money and get off the Island.

        I remember before I left Cayman that I mistakenly started the process of setting up a business, as I always do, only to discover that I was not entitled to OWN a business in Cayman. Fortunately I had not wasted much more than some of my time before I realized I couldn’t start a business in Cayman.

        I just wonder where the high-paying jobs are supposed to come from for the Caymanians, once they “rid themselves of foreign influence”?