What to Consider When Buying Property in the Cayman Islands

What to Consider When Buying Property in the Cayman Islands

Think of the Cayman Islands, and typically, what springs to mind is a Caribbean paradise famed for high standards and luxury living. As showcased in the Tom Cruise 1993 movie "The Firm," it's not far from the truth. Located south of Cuba, west of Jamaica, and east of Mexico's Yucatán Peninsula, it's less than four hours by plane to New York City.

However, there is much more to this haven and its 86,000 inhabitants, especially for those considering buying property. Firstly, bear in mind that there are actually three islands. The largest is the cosmopolitan Grand Cayman, home to the capital, George Town, duty-free shopping featuring signature fashion brands and the vast majority of the nation's population. On its west side is the famed Seven Mile Beach, and all around is beautiful scenery and exotic nature, especially marine life.

Just 90 miles away is the more rugged and naturalistic Cayman Brac, with a small local population of just 2,000. It boasts an abundance of natural treasures, including some of the best diving spots. Little Cayman is the least developed island and arguably the most tranquil, with a population of less than 200. Unsurprisingly, when it comes to real estate, most interest is focused on Grand Cayman.

Last Tortugas

Although now a British Overseas Territory, the islands were discovered by Christopher Columbus in 1503 and originally referred to as "Las Tortugas" due to the numerous sea turtles in the area. Later, the name was changed to "Cayman" from the Carib word for crocodile. It wasn't until the 17th century that pirates, shipwrecked sailors, and some say deserters began settling there at scale, especially when the Treaty of Madrid ceded the islands to Great Britain in 1670.

But it wasn't until roughly 300 years later that the islands overcame their remoteness and transformed into a major offshore financial centre and tourist destination in the 1960s. Today, the Cayman Islands are also known for their robust financial services industry, which is aided by its tax haven status. Nearly 100,000 companies are reputedly registered in the islands, including almost 600 banks and trust companies.

Super Prime

When it comes to its famed property market, it has been a seller's market in recent years, given that high-value inventory is limited, with insufficient properties coming to the market to meet demand. While historically high interest rates and localised inflation affected non-cash buyers in 2023, this has now decreased to a more manageable 1.5% in the first quarter of 2024. Average listing prices in 2023 were north of $3.6m USD Grand Cayman.

Demand has been fuelled by overseas individuals seeking to move to the area, rather than pent-up local demand. Many are seeking to work in family offices, banks, and legal services, as well as in construction, given several major hotel and residential projects underway on the islands. Perhaps the only local market more intense than the purchase market is the rental market, with reports of new listings being taken down only a few hours later.

Planning Approvals

It's important to know that when building in the region a Certificate of Occupancy (CO) is required, mandating new buildings be inspected and signed off by the notoriously strict Planning Department. With only a small team of inspectors available, delays can understandably arise. But without this document, electricity can't be turned on, so it's worthwhile bearing this in mind when planning.

However, like many markets, traditional dynamics have been challenged, with the area experiencing a pandemic boom, which, once receded, inferred the market had cooled afterwards. From a geographic perspective, given the amount of low-lying lands, it can be harder to get a sea view than you imagine. This means the most resilient properties are those with oceanfront vistas, so it is unsurprising that market values have been holding strong.

Looking ahead, it's likely the appeal of the islands will only grow, especially considering its tax neutrality, deeply established financial heritage, and remarkable environment. Aided by the islands' removal from the internationally recognised anti-money laundering 'Grey List' in 2023, strengthening investment cases in the region.

Apart from a one-time stamp duty (7.5% on the purchase price, or the market value, whichever is higher), there are no annual property taxes to be considered, or indeed any restrictions on foreign ownership by individuals. Titles are granted and guaranteed by the Cayman Islands Government, meaning owning land is a solid and hassle-free investment.

It's also important to note that the area is a sailing hotspot, with more than 2,000 vessels on the Cayman Islands registry. For those into yachting, one benefit of registering vessels in the area is that they are considered British vessels and therefore protected by the famed British Royal Navy. There are also many marinas, as well as support for owners by providing a genuine physical presence in which to place their staff.

Of course, when considering any market, it's always worth doing your research and working with a broker who understands the market and has previous experience financing property in the area. This is where Global Bridging Finance's expertise is of huge value, as often many lenders will lack the knowledge and expertise required.