Here we are in the middle of summer which is not the usual time for good news in the Caribbean real estate markets. And further, I am not known for trying to make positive predictions without good solid evidence to support it.
We believe potential investors appreciate an honest “unvarnished” view of the market – even if it is not necessarily what they would like to hear. Having said all that, we are feeling cautiously optimistic at this moment. There are a number of factors which lead us to this conclusion.
First, the CIREBA statistics are starting to show some positive indicators.
Additional supply coming onto the market is slowing. Prices are levelling off and in some cases rising. Sales activity, while not taking off yet, is showing increasing signs of activity just in the last month or so. More showings, an increase in web traffic, more enquiries and more visitors coming in to look at properties. Prices are now at levels which are attractive to those interested in upgrading their residence or business, or making an offshore investment.
Second, the rejection by both the UK and Cayman government of any move toward direct taxation. The spectre of direct taxation has been keeping many people who are looking for a no tax jurisdiction from moving to Cayman. If we can formulate a reasonable residency policy to go along with no direct taxation, we will see a significant influx of new people and new spending here.
Third, the bond issue, plus the US$155 million borrowing which has just been agreed. These funds will allow a number of new capital projects to be undertaken. The new medical Centre slated for East End, the airport “expansion”, the new cruise berthing facility, the new cargo port, and the North Sound deep water channel will all have huge spin off effects on our local economy giving Caymanians more disposable income for purchasers here.
The fact is that it has been local spending which has carried the real estate market here since Hurricane Ivan and the above projects will give a section of our economy which was beginning to get a bit anaemic, an immediate transfusion.
Fourth, at the same time that we should begin to see the benefits of #2 above, there is a groundswell of conservative backlash rising in the US. There is now a real chance of large Republican gains in the US legislature and if this leads to the repealing of Obama-care or the end of cap and trade or other proposed big government programmes, the confidence of the average American, and also the confidence of the world in the future of the US Dollar, will increase rapidly. A healthy USA would be the best result for Cayman, and even though that is not a foregone conclusion – we are happy to note it is now at least more likely.
Fifth, one of the Western World’s most serious environmental disasters has just occurred and sadly for the Southeastern US its effects will be widespread. Providentially the Gulf Stream current which is the major water influence in the Gulf and Caribbean flows from South to North and this will keep the oil spill moving north and away from Cayman. Some projections have it running all the way up the East Coast of the US to the Maritimes in Canada. One always hates to benefit from another’s misfortune, but this may be the case here.
Sixth, both the “Partnership for Recovery” budget address delivered by Premier McKeeva Bush and the throne speech delivered by Governor Duncan Taylor seem for once to be taking us in the same direction. And that direction is recognition of the local problems we need to solve, coupled with fiscally responsible solutions. The only disappointing aspect of all this is the noteworthy, but minimal cuts in Civil Service pay of just over 3 per cent.
Whether the size of the civil service will also be reduced is even more important. While government cuts are always rare and so are to be applauded, they are not in line with what has been required in the private sector to make ends meet. We are still dependent on too much borrowing to indicate a truly healthy economy in my view, and without further cuts we will likely face continuing deficits in the future.
Although widely heralded by many, the new millennium has brought with it more challenges than benefits to Cayman and indeed the world. The one-two punch of Ivan and then the current economic crisis has had us on a rollercoaster ride here over the past five years. Our focus has been on the secular and material world and we now have to try to reintroduce or reenergise our traditional values to try to recover our balance.
It is heartening to see European countries turning back to fiscal conservatism and balanced budgets; it is heartening to see the conservative groundswell of Christian values in the US; it is heartening to see UK/Cayman and private sector/public sector cooperation over problem solving here.
But the fact that the world’s population has for so long been exposed to excessive borrowing, over consumption, subjective morality and behaviour and over-dependence on litigation, all encouraged by a media which feeds us only what they want us to believe (often without regard to truth), means we have a long way to go to ever rectify this situation.
There is a voting block of younger people world-wide who just don’t know what it takes to be successful in life without a handout or some sort of built-in social, national or political advantage. These people will have to be re-educated and that is the biggest challenge we have to face. We are getting a lot of the pieces in place to return to prosperity here in Cayman.
But to ensure it happens and to guarantee that it continues will require a change in attitude here as well. In truth, that might be the hardest puzzle piece to put into play.