Residential
Sales prices for homes are down about 11% this year and about 21% from a year ago. It is still a buyers market and deals are continuing to be made at very attractive levels. Coldwell Banker Cayman Islands Realty just closed 2 homes in Governor's Harbour on Jellicoe Quay at $800,000 and $950,000. Even the top level residences are being discounted as evidenced in the sale of Vista II an 8500 sq. ft. home in Vista del Mar which was just sold for US$2,600,000, and Vista I which is subject to a trade. Both transactions were brokered by Coldwell Banker.

The condo market is interesting. Some complexes have many units listed and sales there are occurring sporadically with only the deeply discounted units selling i.e. Grandview, Regal Beach, & Laguna Del Mar. In other complex's there are no units listed and buyers are standing in line to purchase i.e. Avalon, Christopher Columbus, Great House and Commonwealth. In fact some all time historical highs have been reached in several complexes this year making this part of the market harder to read. The MLS figures actually show a 22 1/2% rise in prices over last year but as mentioned above, that varies greatly between properties. The old real estate adage of location, location, location is clearly in effect here.

Fluor Daniel which is one of the world's largest contractors has been awarded The Ritz Carlton contract with a combination of construction expertise and financing. We understand Hurlstone will be the local sub contractor. We hope this is the last hurdle for a project with great potential which has jumped more than its share of hurdles already. As of today's date 40 of the 71 condo units have been sold. Call Coldwell Banker for information.

Waters Edge, one of the Seven Mile Beach pre-construction projects that hasn't happened, is back to the drawing board. The Developer of Grandview, Regal Beach and Pinnacle is in the process of scaling back the project to units which will sell in the $2.0M range (rather than $4.0M - $7.0M). Call Coldwell Banker for further details.

The Cayman Islands Government recently approved a change in the height limit for condos and hotels in Hotel/Tourism zones. Seven stories are now allowed (three previously) but thankfully setback requirements from the sea will preclude some properties from taking advantage of the change. The Meridian has announced it will now be six stories instead of five. The Ritz is looking to extend upwards as well. Underground parking is also permitted now and this combination of height and parking will allow more properties to achieve maximum densities. In a stronger market these changes would considerably increase the values of development sites on 7 Mile Beach. Look for developers to increase their approaches to existing properties and push for redevelopment. This is not easy for condominiums however, as 100% agreement is required by owners for such a move.

Commercial
There is still more commercial office space in Cayman than demand can absorb. With the changing face of our financial services only the large law firms and large accounting firms have enough business to consider expansion. Look for continuing decreases in rental rates and value for existing commercial office space. Small store commercial retail is sagging due to the faltering local economy. Going against the grain and hoping to piggy back on the success of the Ritz is a planned commercial centre to be called Parc Place, between the Ritz site and the Falls Shopping Plaza. Its location will draw customers from both the Westin and the Ritz. Retail commercial spaces are now for sale within the project. Call Coldwell Banker for details. The eastward expansion of George Town commercial activity continues. In this regard Coldwell Banker has sold a 5 acre tract just beyond Grand Harbour for US$1,850,000 for local commercial development.

Land
The uncertainty of the economy – both worldwide and local has had a dampening effect on home building even with building costs falling. However, the desire for people to buy now when prices are lower has kept land sales reasonably strong. Land is also a maintenance free investment for foreigners which will likely provide a greater long term return than the stock market.

Development
Brian Butler's Meridian is now coming out of the ground with 25 of the 33 units now spoken for. Call Coldwell Banker for availability and prices. A consortium has just begun a condo project near the Kaibo in Cayman Kai, there will be 25 units of 1 and 2 bedrooms with prices ranging from US$189,000 to US$289,000. There are 13 units spoken for as of this printing. Ronnie Foster is the lead developer and Arch and Godfrey the builder. With secure anchorage available this works well for boaters, and the prices are good.

Dart has finally received Planning approval for Phase I of their ambitious West Indian Club Development. This will be for land works only. We look forward to a well conceived and well executed project if Darts' previous activities are any indication. We also do not expect the same frivolous Planning objections and appeals which have greeted major projects here over the past few years. Encouraged by Chief Justice Hon. Anthony Smellie, the legislature has recently passed a law restricting Planning challenges to only surrounding landowners as it was prior to the misguided ruling of a few years ago which allowed virtually anyone to object to a proposed development. The conservative, strict constructionist philosophy the Chief Justice has displayed in many areas is a breath of fresh air but unfortunately he appears to be swimming against the tide. That's too bad as decisions like his will help to increase confidence in the Cayman Islands. Professionals will know where they stand because his judgements are based on what the laws are, not what some people think they should be.

Sister Islands
The only news of late is the decision to sell whole ownership at The Club at Little Cayman rather than fractionals. This is a high class 8 unit property with every conceivable amenity and high quality finish. Its ties with the Little Cayman Beach Resort provides water, sewage, tennis, diving and management. The oceanfront 3 bedroom 2444 sq. ft. units have just been reduced to $795,000. These would make a great purchase for 2 or 3 families buying as a group. We can email photos of the project if you are interested.

Tourism
There has been a new Tourism Director appointed (Lania Rittenhouse) and changes have already been implemented. This summer the Harbour Drive will be closed to vehicular traffic for two days in an attempt to increase the comfort of cruise ship passengers. The first trial day was a stunning success with a local market selling local goods and food products, hair braiding stalls, island music and a very upbeat atmosphere. Some of these people will certainly return as overnight visitors, which is the aim, so we would expect this experiment to be continued. Unfortunately, the decision to increase the number of ships each day is probably having a negative effect on both the quality of the visit and the total volume spent. Our little town cannot handle 5 cruise ships on one day without better infrastructure – even without vehicular traffic. Overcrowding in any sales situation hurts sales volume - people just can't get served and leave frustrated. Overcrowding of vehicles on the West Bay Road over the past 3 years has been one of the most often mentioned deterrents for return visitors. We love the Harbour Drive experiment but we think increasing the daily number of ships is a counter productive move for the island.

Lending
With low interest rates and reduced prices more people have been interested in purchasing and borrowing to do so. Unfortunately the local banks are making loans harder and harder to come by. First, there is the huge amount of paperwork which our government now requires the banks to get from prospective customers. That is so outrageous that one of our clients was quoted 60 days for a loan commitment! Real estate sales contracts with financing conditions attached are much less likely to be accepted with that kind of time delay. Second, certain banks claim to be looking for loan business and even come in to our offices to speak to our agents about sending customers to them. However, when the deal is on the table it's an entirely different story. Frankly, over the last year there has only been one local bank which has gone out of its way to make loans happen for real estate customers; and if you are doing business with us you will know who that is. The rest are agonizingly slow and often unreasonable about collateral/loan ratios or rates no matter what they claim up front. This has a habit of changing from year to year - sometimes because of personnel changes in a particular bank. Nevertheless, there is rarely more than one bank at a time in Cayman which gives good loan service and that's a shame. Butterfield has just announced two loan packages with fixed rates. That's a first for the Cayman Islands. CIBC and Barclays are merging. We wonder whether the result will be a bank which will function at the normally high level of CIBC?

Immigration
With his appointment as the Chairman of the Immigration Board David Ritch has called for "comprehensive policy" on this delicate subject. Over the past few years foreign residents have determined based on both public discussion and treatment that they would get no long term tenure. As a result, that previously lucrative pool of real estate investors has dried up. Many long term residents who have contributed much time, effort and money to the island are leaving. Government needs to continue to address the education and training of Caymanians, but that cannot happen overnight. Although local employment must be a primary consideration, a certain number of skilled foreign professionals are necessary if our economy is to function properly. Once those people are gone, if their replacements are not adequate, the clients that they served will go too - for a net gain of zero jobs and a net loss of significant spinoff dollars.

Spending
Of the Economic Stimulation measures which the Government adopted at the end of last year, the one which has had the most positive impact has been the lowering of Stamp Duty to 5%. It would be easy for nay sayers to claim it failed since Stamp Duty revenues are down from last year. However, that comparison is invalid. What we need to consider is what Stamp Duty revenues would have been this year without the concession. The answer is: Much Lower. This was a positive move. Now Government needs to use the same concept in dealing with the rest of their fees and give the Private Sector the chance to help pull us out of recession with productivity rather than higher fee burdens. Other Caribbean countries with big bureaucracies, heavy fee burdens on the private sector, and national airlines have had big problems. History tells us that this is not a sensible road to be taking.

Legal and Constitutional Issues
In a long overdue decision earlier this year the Legislature finally raised the court costs which the loser of a lawsuit must pay when a court case is over. It's embarrassing how long we have waited for this and how many innocent people had to settle out of court to avoid the costs of defending themselves in the meantime. Hopefully certain local law firms who have of late encouraged their clients to sue, will now have to change their ways and Cayman will ease back toward the non-litigious society it used to be.

In an effort to stop money laundering the Cayman Islands Government passed legislation requiring local financial services to procure and keep on file identification information for all our clients and customers. The Real Estate Brokers Association Board with our attorneys over many hours have managed to distill an ambiguous law with voluminous guidance notes into a somewhat user friendly format. Anyone doing Real Estate business (or any business) in the Cayman Islands unfortunately has to put up with more paperwork. But who knows, if you are a foreigner, maybe it will make you feel more at home here!

Some elements within the proposed new Constitution do not appear to have the support of a large segment of the population. Nevertheless the current government is opposed to a referendum. If there ever was an issue which should be decided by the people we would think this is one.

Communication
Our internet service provider Cable & Wireless is struggling and as a result Cayman's email service is a disaster. We suggest a phone or fax contact at least initially if you need to contact us. Also please note the change in our email address:

General delivery = info@cirealty.ky

Specific agent = (agents first name)@cirealty.ky

Kudos
You've all heard the phrase "When the going gets tough, the tough get going". Well in a tough market place last year Coldwell Banker Cayman Islands Realty earned the honour of #1 office worldwide for our size within the Coldwell Banker network of 3200 offices. Congratulations to our hardworking staff!

Forecast
We see continuing downward pressure on prices with the same factors moderating that movement. However, locally we are starting to see an increase in the supply of new properties on the market (8% higher since our last issue) so we will have to watch that. We also see continuing stress in the US stock market with no end in sight there. This will lead more and more investors into Real Estate. As a result, although generally investment may be down, real estate may be the strongest part of what is an otherwise weak economic picture. So look for partly cloudy skies till year end.