Market performance

2020: Cayman Islands market— strength amid global volatility

Seven Mile Beach

Last year, the Cayman Islands Real Estate Brokers Association (CIREBA) reported total sales of US$638.7m generated by its 36 brokerage members, the highest in the history of the MLS. This was no small feat, given that the borders to the Cayman Islands have been closed since late March 2020 and country-wide shelter-in-place regulations were observed for more than three months in the spring.

The real estate market’s strong performance surprised some pundits but given recent global affairs and the enduring strength of the Cayman Islands’ value proposition, the results are easily explained.

Global affairs

Historic low interest rates and strong stock market performance provided an optimum environment for investors who had liquidity positions to expand their real estate portfolios in 2020. Q1 sales were buoyed by these conditions. The emergence of a global pandemic in Q2 accelerated property demand in the Cayman Islands for three reasons: the desire to acquire a safe haven property in a low-density and safe locale, a greater appreciation of the value of having a back-up property in a stable jurisdiction and a retreat from the turbulent market conditions to real estate as an alternative investment.

Cayman Islands value proposition

Cayman’s enduring value proposition enhanced demand for real estate in 2020. As globally mobile and affluent individuals sought properties in jurisdictions for the aforementioned reasons, Cayman’s attributes provided the solutions to their needs. These included:

• No restrictions on foreign ownership of property • No alien landholding licenses required • No income, corporate, capital gains or recurring property taxes • Straightforward permanent residency through real estate investment programmes • Stable economy and sound governance and judiciary • High standard of living and modern infrastructure • Rich natural environment and welcoming culture

These factors appealed not only to international buyers but also to residents who looked to expand their investments in Cayman real estate with confidence after witnessing first-hand the benefits of property ownership in a safe and stable jurisdiction in a turbulent world.

Market insights

Whilst market performance will vary by property type, price range and neighbourhood, the following data provides some insight into the performance of Cayman’s real estate industry in 2020. Provenance Properties specialises in selling luxury waterfront properties priced at US$1m+. As such, this review highlights the performance of that market segment. In 2020, the median days on the market for all Cayman Islands properties was 199. This includes all properties – residential, commercial and vacant land.

In comparison, the median days on market for all Cayman Islands properties priced at USD $1m+ was 327. At first glance, the median days on market may appear high, particularly when demand for luxury properties is increasing. However, despite the efficiencies that were achieved in conveyancing property during the shelter-inplace period, the transaction process was slower than normal in 2020 as individuals, organisations and government adapted to working remotely. Further, the continued closure of borders adversely impacted the number of sales in the high end of the market as some international buyers were reluctant to buy property sight unseen.

Other highlights related to the performance of the luxury market sector include:

• 7% - Average variance from list to sell price of properties priced at US$1m+ • 69 - Number of condos sold • 57 - Number of houses sold

Assuming prevailing conditions continue in 2021, Provenance Properties is optimistic that the Cayman Islands real estate market will have another strong year. Low interest rates, continued availability of financing, strong financial stock market performance and geopolitical uncertainties will continue to prompt international buyers to seek properties in Cayman.

Only in Grand Cayman:

2019

• Total number of sales 831 • Total volume US$639.3m

Land

• Total number of sales 214 • Total volume US$88m

Single family homes (over US$1m)

• Total number of sales 52 • Total volume US$105.5m

Condos (over US$1m)

• Total number of sales 65 • Total volume US$164.5m

2020

• Total number of sales 700 • Total volume US$694m

Land

• Total number of sales 211 • Total volume US$84m

Single family homes (over US$1m)

• Total number of sales 57 • Total volume US$146m

Condos (over US$1m)

• Total number of sales 69 • Total volume US$198.5m

All stats have been analysed by Provenance Properties Cayman Islands. This report is not written on behalf of CIREBA. Stats were collected from the CIREBA MLS on 16 March 2021.