2013 - Mid-Year

USD to KYD Exchange Value: 0.84
USD To GBP: 0.76214
USD To CAD: 1.27998
USD To CNH: 6.3209

Market Report
Mid Year 2013 
An honest appraisal of the Cayman  marketplace

In our last report, we called for continued mediocre to poor economic results in Cayman unless the US economy improved and Cayman was able to get needed Capital Projects moving. 

General Outlook
Cayman was unable to make any headway on any of the projects. The interim PNA Government, required by the vote of no-confidence in the UPD (after then Premier McKeeva Bush was charged with numerous counts of corruption), was simply a caretaker government. However, the stock market in the US made a strong move upward which, at least temporarily, increased spending. Right now dollar volume of Real Estate Sales is up 10.6% YTD over last year, and the recent trend seems to be strongly up. The dollar volume of pending sales is also trending higher at +27% YTD. That bodes well for a strong second half.

Specific Market Sectors:
The single-family home market is up over 30% YTD in dollar volume with the average sale topping US$1.0M. Sales of homes has been strong in the upper levels as this increase is in evidence even though the number of units sold was virtually the same.

A recent notable listing is La Buena Vida which is a very unique West Indian/Mediterranean style estate perched high on the grassy hillside on 0.88 acre on the South Shore of Grand Cayman. Comprising 6,800 sq. ft. and 5 beds & 5 baths it includes a guest cottage, oceanfront pool, generator, Koi ponds, lush landscaping, and endless views of the Caribbean. This has now been listed with Coldwell Banker at a significantly reduced price. Call us for more details and a private viewing.

As of this writing activity, the condominium sector dollar volume of sales is up 4% YTD, but with 13% more units sold. The average sale is still just over $0.5M but this also includes inland developments and units of all sizes. Sales are being made (but not fortunes) as buyers are still being fairly careful about what they buy, and what they pay.

Watercolours is the most ambitious and luxurious condominium project ever attempted in Cayman and they have now sold about 30 of their 60 units. Available units range from US$2.95M for the 3 bed units to US$9.5M for the awesome 6 bed models. Completion of the project to its projected excellent specs and standards is currently scheduled for May 2014.

The Sea Breeze Development on the Northern end of 7 Mile did not make it to auction. A settlement was reached just before and now 5 of the 9 units are under contract. Prices on the unsold units range from US$1.45M to US$1.65M for these lovely 4 bed & Den units comprising nearly 3,000 sq. ft. The property is very well constructed and beautifully fitted and finished. Units of comparable sizes and finishes are selling for nearly twice these prices! Call us for further details and a private viewing.

I had dinner recently with a couple who had purchased a condo through me in Renaissance on Seven Mile earlier this year and the husband mentioned having “Buyer’s Remorse.” That phrase is usually associated with a buyer having made a purchase and later regretting it. So I asked him what was the problem? (Keep in mind they had previously looked for 3 years without buying). He said his “Buyer’s Remorse” was all about hating to have to leave Cayman after each trip.” Now that is the kind of remorse we love to hear about.

Commercial downtown continues to struggle with a fair amount of unfilled space. Most of this is class B and below and some Landlords are taking the opportunity to improve the standards of their buildings. Piccadilly is a good example where 15,000 sq. ft. is available to let at rates as low as US$28 and a CAM of US$13. This property has been undergoing major renovations and is the only downtown property which truly has sufficient parking. Call us for more details and a private viewing.

Planning Changes
The Beach Resort and Neighborhood Commercial Planning Zones have been the most difficult to work with since they were implemented. These are two of the newest zonings and were meant to provide a needed compromise between existing zones but it hasn’t really worked out that way. Both zones have been more restrictive, more complicated with neither being very practically applied in our view. Recently the Beach Resort Residential Zone was changed to allow 50 ft. rather than 75 ft. setbacks on iron shore and 60 rather than 30 bedrooms per acre while retaining the 20 units/acre density. Height restrictions are loosened from 40 ft. for 3 storeys to 55 ft. for 4 storeys. We think these are sensible changes which may stimulate development on iron shore coastal properties.

Company News
Coldwell Banker has just hired Todd Younghans who is a Commercial expert to handle our Commercial Sales and Leasing. Todd relocated to Grand Cayman in November 2012 from the Carolinas Region in the US. He brings with him 19 years of commercial real estate experience in 3 different markets in the US. His Real Estate experience started as an appraiser in a small firm in Charlotte. Then in 1996 he joined Cushman & Wakefield where his focus was representing corporate landlords and tenants in the thriving office markets in and around Charlotte. Later in 2000 he was offered a position to expand the coverage for Cushman & Wakefield down into South Carolina. Todd handled a variety of transactions statewide in the office, retail, and industrial sectors. He is a member of the Society of Industrial and Office Realtors in the US, and is currently a candidate member for the CCIM designation which would make him the only agent with either US Commercial designation in the Cayman Islands. If you would like a professional presentation as a potential lessee or existing landlord, please give him a call at our office.

Paul Young a Caymanian who has just joined us, is originally from Canada and schooled at McMaster University and The University of Miami’s School of Architecture where he studied New Urbanism. Paul has been living in Cayman since 1999. His sales experience is diverse having worked in several jurisdictions including Toronto, Los Angeles, Bermuda and Cayman. Paul worked as a local CIREBA agent for 6 years before transitioning to the developer side of the business with The Ritz Carlton Cayman selling the Residences and DeckHouses, then on to Dart Realty where he helped develop, sell and lease Dart’s residential and commercial products. With over 30 years of combined selling experience, Paul is excited about representing such a strong and internationally recognized brand.

Local Electionomics
Our General Elections are now complete and the PPM finished with a very slim majority which required the inclusion of a former PNA/UDP Member as Speaker and a C4C endorsed Independent in Cabinet. Of the C4C endorsed group, 3 of 7 candidates were elected (Tara Rivers, Roy McTaggart and Winston Connolly) all 3 eventually agreeing to support the new Government. The UDP won only 3 seats and although one of those seats went to ex-Premier McKeeva Bush, the overall result was an overwhelming public rejection of the way that party had conducted its business.

A UDP member has now mounted a challenge to Tara Rivers’ seat. There are several laws/regulations which apply here: Citizenship, Residency, our Constitution, the Elections Law, and rights of Natural Justice. Some of these rights/laws seem to be conflicting, and even the Commonwealth Parliamentary Association election observers felt they were too restrictive. It would be a travesty for the Cayman Government to lose one of its bright young minds over some technicality, but, of course, these are the risks you take when your society degenerates into one which puts more emphasis on the letter of the law than the spirit of the law. Seems like there is even more Governmental clean-up required in Cayman than we thought. The matter will go to court in July.

So what do the election results mean in economic terms? Well, there is no doubt Cayman’s International reputation will improve immediately. And it should mean more Government transparency, with tenders being conducted fairly and generally more local business being encouraged. We also believe the new Government sees the need to get needed capital projects underway and completed – especially the airport and runway. That’s the good news.

The not so good news is this new Government now owns a massive debt and the UK will rightly allow no further unlimited borrowing. Balancing the budget is a problem. The streamlining of Government Departments and cutting out perks would be an unpopular, but very effective part of the solutions. Does the PPM have the Political will to make necessary cuts and move forward with Privatization of certain industries? We just don’t know yet.

Our problems are intertwined. In order to encourage new businesses and investors to come to Cayman we have to ensure the available labour pool can support those businesses/investments either locally or through work permits. Our local unemployment figures are too high right now, but at the same time our educational standards have been too low. Some sort of symbiotic relationship between Immigration, Labour and Education is required to give us some local jobs in the near term, but also allow businesses to employ the level of expertise they require. The crux of all this is that we must ensure our Education System can provide the required level of expertise going forward. This is a big job and we fervently hope this Ministry remains in the hands of Tara Rivers.

We can expect more pressure from the high tax jurisdictions (led in this instance by our own Mother Country) against no tax jurisdictions in the British Overseas Territories. All this, while Cayman’s Banking regulations are far more stringent than the UK’s own (or the US for that matter). This will cause continued strain on our colonial relationship with the Mother Country. It would be refreshing to see our “Mother” stand up for us every once in a while in areas where we are actually doing a good job. These intrusive new regulations make it harder for normal citizens to do legitimate business and the astounding amount of personal information the UK wants to require is very worrying for all citizens. In fact, the UK requirements infringe upon our Civil Rights and Privacy.

New Governor
Sadly we must soon bid adieu to Governor Duncan Taylor who is leaving to take a post in Mexico. He was a breath of fresh air for Cayman and had become a very well liked member of the local community. His willing participation in local athletics contests and his approachable demeanor endeared him to many. He will be missed. Taking his place will be Cayman’s first female Governor, Mrs. Helen Kilpatrick. Mrs. Kilpatrick is currently acting Permanent Secretary in the UK Home Office, and has a Finance, Accounting and Corporate Services background. We suspect our local Government had better get our finances in good shape in short order!

Controversial Local Topics
Issues Like: “One Man – One Vote”, Term Limits (rollover), the Environmental Bill, and a Minimum Wage, have all been mentioned as front burner items by the new Government. Although admittedly, the status quo in all areas is not acceptable, we are not sure the particular existing suggestions are the best solutions. We hope the new Government will look carefully at other less drastic solutions than just rubber-stamping those proposed. As a result of the elections, we are not facing quite the same problems now and we have some great new intellects in the LA. Let’s please hear all points of view prior to making a final decision on those issues.

The Cayman Islands Chapter of the YMCA has completed its Community Needs Survey and is in the process of looking for an operations manager with significant Y experience to help the Board get through the early stages of programming and fund raising. A “Y without walls” at the moment, the organization will identify and support deserving local initiatives in the short term while keeping an eye open for a suitable home in the long term when finances permit. Anyone interested in becoming involved should contact the Chairman Pastor Randy Von Kanel at This email address is being protected from spambots. You need JavaScript enabled to view it. or Secretary JC Cahoun at This email address is being protected from spambots. You need JavaScript enabled to view it..

US Economy
The recent Stock Market performance may have been the peak as the S&P, emerging markets, and homebuilders index all headed south in May. Mortgage applications have also dropped considerably. It is hard to tell but none of the underlying data seems to support a strong recovery in the states any time soon. That means discretionary spending by increasing numbers of tourists due to a strong US economy is extremely unlikely. However, Cayman has always benefited from serious problems in neighboring jurisdictions and the US is not just in recession. They have serious economic, social, and philosophical problems which threaten the very capitalistic system which made them great. Those concerned with that socialist direction are looking for alternative places to live and invest and Cayman is an obvious choice. Good weather, convenient location, English spoken, US dollars traded, friendly people and relatively low crime are all high on the wish lists of any potential expatriate. All we need to do is make them feel welcome by a clear and reasonable permanent residency program and a specific path to citizenship, coupled with effective marketing. This is an excellent opportunity for us in terms of new sources of revenue – if we don’t get greedy.

“The ball is in our court”. We cannot depend on the US or UK to bail us out of the mess we have created for ourselves. But there is a generally hopeful feeling throughout the island as a result of the election. With the PPM’s apparent willingness to work with 3 Independents to create a 12-seat majority, things can get done. But this must be a proactive Government based on the serious issues that face us. If we are proactive, make some good decisions, and are not afraid of making the hard decisions, we can turn Cayman around. Meanwhile, we have to hope that the Americans who are willing/able to spend are encouraged to come to Cayman to do that. Although, the world atmospheric conditions are charged with uncertainty, we see reasons to believe the local weather is improving so we predict continued partly cloudy skies with intermittent clearing over the next 6 months.