Property perspective: Regional report highlights economic growth
The recently released IRR Viewpoint Caribbean Market Update 2016 Annual Report highlights some interesting discussion points when it comes to the state of Caribbean economies, especially in relation to real estate.
The report, written by James V. Andrews of Integra Realty Resources – Caribbean, begins by confirming that: “The tourism industry throughout the region continues to demonstrate strong growth, leading to moderate economic growth in the Caribbean economies dominated by tourism.
“There also appears to have been an uptick in construction and real estate development in some of the more active tourism markets; and real estate activity has been relatively stable. These factors, along with moderate GDP growth in most jurisdictions have led to modest economic improvement ….”
I am actually quite surprised that some Caribbean destinations are able to demonstrate positive economic growth when their economies are only based on tourism, in particular because it’s an industry that revolves around labor which can be a volatile issue subject to politics.
The Cayman Islands, on the other hand, is fairly unique within the region in that it relies on its immense financial services industry as the most important sector when it comes to supporting our community, followed by tourism.
This industry ensures that there are a great many jobs for local residents, helping to spread the wealth and offer opportunities for young people coming out of school.
Not only does Cayman have strong tourism and financial services industries, it has also begun carefully carving out a broader economic base through the development of a destination healthcare industry and, most recently, a strengthening of its maritime industry with the announcement just last month that Cayman would be hosting Cayman Maritime Week in May. Maritime Week is an exciting new venture between the Cayman Islands Shipping Registry and local maritime industry partners including Maples and Calder, and Cayman Maritime Services Park, part of the Cayman Enterprise City Special Economic Zone.
I believe, because of the strength of our various industries, Cayman’s real estate industry has evolved into a separate and important economic pillar of its own.
In its country analysis of the Cayman Islands, the IRR Viewpoint had another interesting point to make. It said: “The economy of the Cayman Islands is different than much of the Caribbean due to its heavy reliance on financial services as its primary revenue source. Tourism is the second largest contributor to GDP. As such, the real estate market depends largely on the domestic economy.”
As a practicing real estate agent with more than 25 years of experience, I would disagree with this comment to some degree. I would say that the input by the domestic market is extremely important and has a large impact on our industry, but I would estimate the split between local and overseas buyers as more like 50-50, rather than biased heavily in favor of local residents.
With the average Seven Mile Beach transaction at around $1 million plus, there is still a great deal of foreign interest verses local buyers in these types of markets.
Dart’s Hyatt purchase
In order to maintain and grow Cayman’s strengthening tourism industry, I believe it is vital that we continue to develop room stock. The coming on board of the Kimpton Seafire hotel later this year will add huge value to this important aspect of the industry.
It is also hoped that Dart’s recent acquisition of the old Hyatt hotel, the Britannia golf course and the Beach Suites hotel will soon yield further room stock for the industry.
I note that, until Dart decides exactly what it will do with this acquisition, the Beach Suites will shut down. I hope very much that new accommodation will replace the old, in the manner that we have come accustomed to when Dart has been responsible for development, i.e. a measured, well thought out, quality project.
As an owner at Britannia, I also hope that Dart will be clear on whether it will continue to extend to Britannia owners the current rights they enjoy when it comes to use of the Britannia facilities, such as its golf course and the Beach Suites Beach and pool, etc.