Real estate update: 2020 proved Cayman's market strength

Photo: This home at The Residences at Seafire was one of 68 luxury condominiums sold during 2020.

I’ve written several “years in review” in my career, but never for a year like 2020. As I reflect on how 2020 started, progressed and ended in the Cayman Islands, I am so proud of how our country and our brokerage — Provenance Properties Cayman Islands — performed.

Last year, the Cayman Islands Real Estate Brokers Association reported total sales of US$638.7 million generated by its 36 brokerage members, the highest in its history. This was no small feat, given that the borders to the Cayman Islands have been closed to most visitors 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 thus surprised some pundits, but given recent global affairs and the enduring strength of the Cayman Islands’ value proposition, the results are easily explained.

Global conditions

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. First-quarter sales were buoyed by these conditions. The emergence of a global pandemic in the second quarter of 2020 accelerated Cayman Islands property demand for three reasons: the desire to acquire a safe haven property in a low-density and safe locale; a sudden appreciation of the value of a back-up residency in a stable jurisdiction; and the response to market volatility and retreat from the turbulent market conditions to real estate as an alternative investment.

Value proposition

Cayman’s enduring value proposition also enhanced demand for real estate in 2020. As globally mobile and affluent individuals sought properties in jurisdictions for the previously mentioned 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 programmes that provide permanent residency through real estate investment
• A stable economy and sound governance and judiciary
• A high standard of living and modern infrastructure
• A 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.

Luxury market insights

While market performance varied 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$1 million and up.

Highlights related to the performance of the luxury market sector that comprises properties priced at US$1 million or more include:

• 7% median variance from list-to-sell price of properties
• 68 luxury condominiums sold
• 60 luxury houses sold

Assuming prevailing conditions continue in 2021, Provenance Properties is optimistic that the Cayman Islands real estate market will have another strong year as global conditions and Grand Cayman's value proposition continue to prompt international buyers to seek properties in Cayman.

This article first appeared in the February print issue of Camana Bay Times.