Residential
In the detached home market the supply is up 31% and the average listing price is down slightly from last year. That was to be expected. The average sale price is down 16% over last year because of the phenomena referred to above. Coldwell Banker Cayman Islands Realty has sold all of the available residential listings in the prestigious gated community of Vista del Mar which was in a large part responsible for the somewhat misleading value increase.

With regard to condominiums the average value of listings is unchanged and the supply is slightly higher. The supply of top level units however, has decreased and we expect to see a tightening of that market sector bringing with it firming prices. Although the number of units sold is slightly higher, the value of condos sold is slightly lower. This has occurred for the same reasons as noted in the detached home market including the Sovereign and Great House sales by Coldwell Banker Cayman Islands Realty at $2,995,000 and $2,700,000 respectively. Also included in this number are the presales of Meridian at prices from $1.2 – 1.4M. There are only 4 units currently left for sale in this project.

The Ritz has decided to take advantage of the increased height allowance and will shortly announce it will build 7 stories on the beach. This will add a few extra oceanfront units to a rapidly diminishing availability list. So if you have any interest please contact us right away. Competing with the Ritz on the same lovely stretch of Seven Mile Beach is The Waters Edge. 35 oceanfront 3 Bedroom units of 3140 sq. ft. are proposed in a six story structure. While not offering the full range of Ritz amenities The Waters Edge prices are lower (in the $2,500,000 range) for very nice floor plans which are all directly oceanfront. Call us for full details.

Commercial
Commercial office space is being absorbed slowly as our financial community begins to retool in an attempt to continue to do business within our changing regulatory environment. We expect to continue to see mergers and downsizing (except in the legal and accounting firms) which will help keep commercial office rates stable for a while yet. Coldwell Banker Cayman Islands Realty has just leased the Foster Building on the North Church Street waterfront for approx. $30.00 sq. ft. which is a good rate for good but not prime downtown space. We also have a full floor available (approx. 7,000 sq. ft.) in the Axis Building already outfitted with wall to wall marble & hardwood doors. With classy fittings, ocean views and sufficient parking, this will make a great corporate home at very favorable long term lease rates. Call us for details.

Development
Land purchases for Development are increasing as local business people take advantage of the lower prices to position themselves for further expansion when the economy improves. In fact it has been the local resident purchaser who has played a significant role in keeping our overall real estate market moving since the current downturn began at the start of the new millennium. Do you suppose it is a case of local purchasers being stubborn and unwilling to recognize serious problems in the world economy, or is it the case of insiders knowing better when to buy or sell? We hope it’s the latter!

Sister Islands
Sales activity in the Sister Islands has been very sporadic. When things are slow in Grand Cayman both Cayman Brac and Little Cayman are usually even slower. In general however, lack of good airlift capacity will keep Little Cayman from booming and lack of good beach has always hurt Cayman Brac’s chances. For those of you who complain about the increased crowding and commercialization on Grand Cayman, the Sister Islands are a very good alternative – especially Little Cayman.

Tourism
Hon McKeeva Bush, the Tourism Minister, is reaching out to the Private Sector in an attempt to create a Tourism Authority. This is to be an advisory board made up of Private Sector stakeholders along with some combination of Government members. In these days of careful budgeting let us hope this new Board will take the place of something existing not become a new drain on our already staggering economy. The idea is a good one if it doesn’t become a political instrument or let any one private sector interest group derail policies which are in the best interests of the majority.

Lending
On the one hand the miniscule interest rate attracted by CDs makes Real Estate investment property look really good. But with the banks becoming increasingly difficult for potential borrowers to deal with, few can take advantage of this great business opportunity. Most recently banks are hedging on their 70% loan promises. Many now will only lend 50% even after giving verbal agreements to the applicant at the higher percentage! This remains one of the most serious obstacles to renewed growth in the Real Estate Industry. If CD rates continue to be hardly worth the effort, we would not be surprised to see more private placement money becoming available to borrowers as investors can make a good return that way. If you are interested – let us know.

Legal Issues
By the time you read this, Government will have extended the Stamp Duty reduction to 5% for another 6 months to get us through the winter prime selling season. This was the recommendation of the CIREBA Board of Directors, and will help continue the resurgence of the Real Estate industry.

Several years ago the previous Government instituted a policy that required anyone who owned more than 1 rental property to have a Trade and Business License. At the time it was a Buyers Market and there wasn’t enough rental property to go around. Instead of just letting supply and demand work its natural magic, the government of the day decided to solve the problem by making it virtually impossible for foreigners to own more than 1 rental property. That allowed the locals to own and continue to control the rental apartment market. However, it also destroyed most of the buying demand for those properties. So when the market turned and the locals then wanted to sell, there were no buyers. So here we sit with foreigners looking for income property investments to buy with CD rates so low on the one hand, and on the other hand we have local owners of apartment complexes who want to sell but can’t find a local buyer or can’t get their price locally. We know that both David Ritch (the past Trade and Business Chairman) and Sherry Ann Bodden-Cowan (the current Chairman) are sympathetic to this situation and are doing their best under the law to make things happen. But our question is: why not repeal this ill-conceived law - especially under current economic circumstances?

Infastructure
The Government is making good progress in getting the bloated budget it inherited from previous governments back into reasonable shape. Some of the necessary expenditures are to improve our road system which can no longer handle the volume of traffic in Cayman. However, the continuing of the northern leg of the West Bay Road by-pass has been pushed back a year because of funding restraints. This will unfortunately lead to traffic congestion again this winter in the heart of our tourism area – Seven Mile Beach. We think it is counter productive to put so much effort into bringing more visitors to Cayman if our infrastructure can’t handle them; and it’s a shame to allow traffic congestion to overshadow the many very good reasons to come to Cayman.

Kudos
Cayman hosted a meeting between the OECD and other low tax jurisdictions which ended on November 2nd. Hon McKeeva Bush, Leader of Government Business, in his opening remarks declared that the Cayman Islands would not make any further concessions to the OECD until it could be assured that ALL countries were making the same concessions. Finally one of our leaders has had the guts to demand the level playing field which has been the foundation of international agreements since there were nations (but unfortunately so has bullying). It is, and always has been unlikely that the Swiss & Americans would agree to all this high tax jurisdiction bullying. As a result it is hoped that Cayman can reformulate its laws to help stop money laundering but at the same time retain privacy for the affairs of those who do business here. The EU tax initiative, which is also being pushed on us by Britain to avoid tax consequences on its own Bond market at home, will certainly have a negative effect here. The final say in all these tax related events lies with Great Britain – the mother country. It is becoming increasingly clear that the time honoured colonial principal of bleeding the colonies is still alive and well.

Readers Viewpoint
From H.W: “I follow your report with great interest and thank you for it. As a visitor for the last 19 years I have considered Cayman for a 2nd home and am doing so again. Troubling spots are West Bay Road traffic and Cruise Ships. 5 ships a day is a big time bad idea. We skipped Cayman this past year….because of the increasing problems associated with massive commercialism that has grown over the years. We are looking for a reason to come back.”

Special
We are very pleased to announce two new additions to our staff. Carlene Alexander-Kay is back with us after a short sabbatical in condo management and will be handling commercial leasing, residential rentals, “know your customer” compliance and our concierge program. We also welcome Jan Tomkins who is an attractive, energetic young woman with lots of sales experience who is originally from Dallas, Texas. She will be re-energizing our Westin office. They are both welcome additions to the Coldwell Banker Cayman Islands Realty team.

Our network continues to grow. We have now franchised Coldwell Banker offices in other islands including Bermuda, Bahamas, Turks & Caicos, Dominican Republic, Jamaica and the Virgin Islands. If you would like information on Real Estate in any of those islands please let us know.

If you have recently moved or will be changing address please make sure we have your up to date information if you would like to continue to receive our mailings. We thank you for your comments, and if you like our approach and the way we do business, please pass this on to any friends and associates who may be interested in the Cayman Islands. We appreciate your referrals.

Forecast
The world economy is still generally unhealthy and we still have the threat of terrorism looming as long range concerns. However, we have seen some firming of prices of late and expect that to continue aided by the normal increased demand associated with the Winter Season. While relatively speaking there is a lot on the market, our market is quite small and once a buyer plugs in their unique criteria the choices are very limited. This is pushing prices of properties higher especially in the luxury condominium category. With increased seasonal demand, we expect to see prices leveling overall. So our forecast is for partly sunny skies with scattered clouds.