 | | Local rental agent Kerry Horek, owner of Island Rental Services | By Trent Jacobs
trent@caymannetnews.com
The global recession has arrived on Cayman’s shores, according to local real estate experts, who say the industry is dead quiet. Kerry Horek, owner of Island Rental Services, who deals with long-term rentals, said that the reeling market is due to a combination of the worldwide recession, the Cayman government’s indefinite hiring freeze, and the US lending crisis, which is keeping foreign students from obtaining loans. “This is the most depressed market there is; it’s almost to a standstill,” she said. Ms Horek added that many students attending St. Matthew’s University are going back home because they can’t afford to go to school. In addition, labour restrictions prevent most students from holding jobs that could help supplement their tuition and she noted that, in general, some larger companies on island have instituted soft hiring freezes. “The global economy has slowed down and our economy has slowed down. It’s not just the government who has a hiring freeze in effect but some of the larger firms out there are now holding off on hiring additional staff,” she said, forecasting that the situation will not get better any time soon. “My prediction is that we’re going to be in this dump for another nine to 12 months until we start to see changes that are positive and start to ascend out of this recession that we’re all feeling right now.”
She is advising some of her clients to lower their rental fees to make their properties more attractive, explaining that it is better to cut rates and lose a little rather than leave a property vacant.
Effectively owners will have to redefine what they feel is a fair market price. Properties that were once priced at $2,500 a month might have to come down to $2,000 a month to attract new tenants, she advised. “Tenants may have very few bumps in the road as far as the rentals are concerned because they will be the ones benefiting and saving at the end of the day as the rates come down. “But owners are going to be faced with putting a few more of their own dollars in to cover the monthly costs even if they have the property rented. And those who don’t will be faced with covering the full costs of the upkeep for that un-rented property,” she said. Kim Lund, of RE/MAX Cayman Islands, said that since the beginning of the last quarter of this year, the impact of the recession is being felt on all levels of his industry from lower end investments to multi-million dollar properties. “There’s no question that the overseas investment market has fallen off a lot just in the last six months and it’s just crawling along right now,” he told Cayman Net News, adding, “The effects of the recession are already here. It’s not as severe as it is in the United States but, having said that, it’s severe enough for those of us here who are trying to make a living.” Investors from the US and Canada make up about 85 percent of property sales and this ultra-dependency means when things get rough economically in North America they get rough in Cayman, Mr Lund said. He added, however, that the local industry must take the good with the bad, and if the US markets improve by the second quarter of next year he expects to see sales pick back up. Mr Lund noted that the time to diversify investments in Cayman’s real estate market may have passed because now the recession has spread worldwide. “The problem is it’s a global recession right now so Europe isn’t any better and Asia isn’t any better. Everyone is either in a recession or heading into recession or really slowed down. “Although we really do need to diversify from the US, the fact that we are not diversified from the US in this particular crisis may actually help because the US will be the first economy to pull out of the recession,” Mr Lund said. The National Bureau of Economic Research, a private non-profit organisation dedicated to promoting understanding of how the economy works, recently released a report that determined the US recession began in December 2007, which ended 73 months of economic expansion. Their definition of a recession is “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income and other indicators. “ | 
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