by: Chris Booth - MRICS RICS Registered Valuer - Head of Valuation
The world as we know it has changed. With the sudden appearance of a global pandemic in early 2020, global lockdowns ensued and the economy screeched to a standstill. As worldwide COVID-19 cases climbed to well over 100 million globally, the death toll increased, travel became restricted and many businesses and livelihoods were very badly affected.
However, despite the challenges, the Cayman Islands acted quickly and effectively to implement a hard curfew on 23rd March 2020, which was gradually softened in stages and ended completely on 23rd June 2020. The borders were closed and a mass testing program ensued, and as of 11th March 2021, 76,272 people had been tested for COVID-19. Of this 76,272 people tested, there have been only 463 confirmed positive cases of which 2 sadly resulted in death. However, these figures are a testimony to how well the pandemic was handled here in Cayman. Life in Cayman returned to almost totally normal within a matter of months, whilst the rest of the world is struggling to contain the pandemic even to this day, over 12 months later.
As of 1st October 2020, the Cayman Islands borders began a phased reopening and entry was limited to select categories arriving by air. The vaccination program has been widely rolled out, with The Public Health Department announcing that the vaccine will now be available to all persons over the age of 16 starting from 5th March 2021. According to the Chief Medical Officer Dr John Lee, “The Cayman Islands have been in an incredibly fortunate position to have been able to vaccinate its population so early on in the global campaign against Covid-19”.
For many in the world, life during the last 12 months or so has meant being locked down in our house or apartment for extended periods of time. It is clear, that with global rise in unemployment, wage cuts and business failures and general uncertainty over people’s lives, many people will be cautious about purchasing a new home or property. This uncertainty and lack of confidence, combined with downward market forces usually compounds a drop in property values, as seen in the last global recession.
But what does this mean for the property market here in Cayman?
It is well known that the Cayman Islands property market has been booming for many years. With the emergence of the pandemic, many were questioning whether the good times will finally be coming to an end. However, perhaps surprisingly, due to the global pandemic being handled so effectively, activity in the market has shown no sign of slowing, and in many areas is performing as strongly as ever.
For instance, there has been an unprecedented interest in the higher luxury end of the market, with international buyers viewing the Cayman Islands as a safe place to buy or invest, with many purchasing with a view to retirement here. The luxury end of the market shows no signs of slowing, with the investment dynamic changing somewhat from the typical “snow bird”, looking to vacate in Cayman, and moving more towards international investors seeking a permanent home here, taking advantage of the measures taken to control the global pandemic and with a view to achieving permanent residency.
It is not just the luxury end of the market which has seen increasing levels of activity and demand. As a planned plan to support those in financial difficulty, the Government implemented a plan whereby a pension plan member was able to withdraw funds from his or her account in a private pension plan subject to certain provisions. This came into force on 1st May 2020 and expired on 31st October 2020.
This initiative bolstered interest across all areas of the market, particularly at the more affordable price points, where the demographic has been able to secure enough capital to make down payments to secure a foot on the housing ladder or purchase lower value land parcels for the purposes of gaining permanent residency. This surge in liquidity spiked demand and quickly used up supply levels at the lower to mid-range of the market, which in itself caused a further hike in values.
It is important to remember however, that we are in unprecedented times. Uncertainty regarding the global economy is very high, and many economists are of the view that a massive global recession is inevitable. The impact of the global pandemic has likely yet to be fully felt in the world as a whole, let alone within Cayman, which usually feels the effects of a global downturn with a degree of time lag. It is therefore important to continue to monitor both the macro and micro economic factors affecting both the global, regional and local property market and periodic reviews of the value of real estate are as crucial as ever.
It is therefore essential that investors/purchasers or any stakeholders with an interest in property, employ the services of highly experienced, RICS qualified Valuers/appraisers such as the team here at Bould Consulting Limited, with more than 50 years of experience providing real estate advisory services in the Cayman Islands and Caribbean region.