The US remains the dominant world economy, and trends in its housing market have significant global implications. As the Cayman Islands are closely connected to and impacted by the US in so many ways other than just its geographical location, the property professionals at IRG always keeps tabs on US trends as they very much affect the Cayman Islands Property market. Through our global affiliates, Knight Frank and Luxury Portfolio, IRG has only the best access to both housing and commercial trends and investor know-how. When we take a look at the US economy we see a mixed picture. It has been four years since it was announced that the recession was over, currently GDP growth stands at 1.8%, unemployment is hovering around 8% and wages are struggling to rise above inflation. Despite this, mainstream house prices in the US are now 9.3% higher than a year ago and new home sales are at their highest level for five years! IRG’s BROKER/OWNER Jeremy Hurst agrees that the growth has also been mirrored in IRG’s successes this year. Although the local market is a mainstay for IRG, there has been a notable increase in buyers from the US and Canada, most markedly Texas, New York State and Toronto, and those looking to escape the Eurozone as mentioned in our previous news release. In New York we see the median price of luxury condominiums rose by 8.2% in the year to June, and by 5.9% in Miami. As a side bar- IRG’s commercial division noted in an August report that the Cayman Islands class A office space base rent (before taxes, maintenance and insurance), is now comparable with midtown New York and the West End of London. International buyers account for around a third of sales above $3m in the New York sales market but closer to 50% in its equivalent new homes market. Here in the Cayman Islands Miles notes that there is a new phenomena of cross-pollination with the UK based high net-worth investors coming via the US dominant Luxury Portfolio referral network, and now European buyers being channels through the well established, London based Knight Frank chain of offices in 16 key jurisdictions. Miles states “Our analytics show a diverse range of enquiries in terms of currency, language and origin and we have a strong conversion rate from enquiries to sales”. States side the key price determinant in 2013 has been supply, or the lack of it, brought about by tight credit conditions. The number of apartments for sale in Manhattan is currently at a 12-year low. Unable to secure finance, potential vendors are staying put, limiting the turnover of homes in all but the new homes market. The house building pipeline was effectively turned off in 2007 and both Manhattan and Miami sold only a ‘shadow inventory’ up until 2012 when new projects began to complete. With the development cycle lasting approximately two years we are only now starting to see these projects enter the market. The median price of luxury condos in New York rose by 8.2% in the first half of 2013 and its luxury market is being constrained by a lack of supply and tight finance conditions. Purchasers from New York are increasingly active in Miami’s prime market along with buyers from South America. This region is now an emerging market as the financial industry is steadily growing, particularly in San Paolo. Miami update The price of luxury homes in Miami rose by 5.9% in the year to June. The city was significantly impacted by the housing market downturn, but has redefined itself in the last two years. Sales volumes are up 20.6% year-on-year and supply is down 18.8% over the same period. Two key trends have emerged in 2013. Firstly, while capital flows from South America and Europe are highly influential, the volume of purchasers from New York has increased, many looking for a second home rather than a property to retire to. Secondly, around 73% of all non-distressed condo purchases were cash-funded in the second quarter of 2013 and have been at a similar level for the last two years. Miami’s boom is not credit-financed suggesting that, while double-digit annual price growth is not sustainable long term, the recovery does have a firm footing. In April this year IRG looked at the ‘emotional role of home’ where our investors see their second home as a more permanent location. “Azure water and white sandy beaches are only two of our major attractions, augmented by a safe and stable environment, and perhaps commercial premises, good schools, great restaurants but most importantly a quality of lifestyle that’s more about family time and entertaining friends, buyers feel comfortable here that they, and their investment can grow and mature over the years” says Miles. Cayman Airways has now added flights onto their already existing route between New York and Grand Cayman. Add to that the plans for airport expansion and the Cayman Islands Luxury Property Market could welcome qualified investors from regions such as Russia, South America and even Asia. Miles concurs; “We get a tremendous amount of qualified leads, once we make Cayman even more accessible IRG’s global reach through this world wide web of property professionals, will give our properties, and the Cayman Islands as a first class investment destination immense exposure to qualified buyers worldwide. We at IRG Ltd are always committed to marketing Cayman internationally.”