General Information
The real estate market in Cayman is simple and straightforward. Unliker some other Caribbean Islands and Bermuda, there are no restrictions whatsoever on foreign ownership. This, along with the absence of capital gains or annual property taxes, has created a very desirable market for investors.
TITLE / LAND REGISTRY
Property title is granted and guaranteed by the Cayman Islands Government. As a result there is no need for title insurance and no such companies operate in the Cayman Islands. Title to land is recorded in a modern, reliable and highly advanced land registry, where every plot of land is mapped and given a descriptive title number based on its location. I subscribe to the Land Registry database which allows instant access to detailed maps, surveys, aerial views, sales comparables, planning and terrain information, all of which is available online 24 hours a day, 7 days a week. Titles tend to be very clean, compared with land registries in other cities, and all encumbrances such as mortgages, rights-of-way and cautions pending contract are recorded on the title register. Vacant land can be owned and held indefinately without the obligation to build. Combine that with the tax advantages noted above, it is no surprise that long term, Cayman Islands real estate has provided steady stable long term appreciation and has proved to be an attractive and profitable investment.
STAMP DUTY
Apart from a one-time land transfer tax (known as "stamp duty"), there are no annual property taxes or restrictions on foreign ownership by individuals. Generally speaking, foreign owners pay 7.5% stamp duty for properties in the Seven Mile Beach corridor and 6% for all other properties. Please contact me for further details.
BUILDING AND CONSTRUCTION
Buildings are subject to planning controls and are required to be constructed to high standards: These are monitored by the Cayman Islands’ Building Control Department, which carries out inspections on such things as building sites, plumbing and electrical work. Construction companies now have to follow the guidelines of the newly gazetted Builder’s Law. Construction materials have to be imported and are subject to duty on the landed value, usually at 22%. Consequently, the cost of building is considerably higher than in places where materials are more readily available. Note that there are many skilled building professionals and tradesmen available on island to construct your home. Alternatively you can arrange for overseas persons to assist you as well. All types and sizes of houses, apartments, condos and townhouses are available for purchase, as are time-shares. Prices vary depending upon location, size, design and other features. Water and beachfront properties, particularly those on Seven Mile Beach, command high prices.
ATTORNEYS / FEES
Most law firms in Cayman have property law attorneys and it is recommended to consult one before signing a contract. Traditionally fee were a set at a percentage of the purchase price (eg: 1%), but the market has become more competitive in recent years and now it is fair to say that fees are negotiable. As a general guide expect to pay between .5% and 1%, but remember you only get what you pay for ! I can provide some recommendations to you.
Owning land in the name of a local or foreign corporation is possible, but it is recommended that an attorney be consulted as there are local laws to be complied with.
The Cayman Islands Real Estate Brokers Association
Buying and selling properties in the Cayman Islands in the 1970’s and 1980’s used to be a bit of an ordeal as practices, standards and service levels varied. However, in 1987 a number of realtors agreed to form The Cayman Islands Real Estate Brokers Association (CIREBA) which is based on the North American style of relationship between realtors. One of the association's founding aims was to “improve and elevate the general knowledge of persons engaged in the real estate business”. Every CIREBA agent must pass a customized training course before they can start working with customers and clients and gain membership of the association. The programme takes into account legislative matters, business ethics and due diligence requirements.
Today the association has over 200 sales associates from 30 member companies – more than 85% of all realtors in the Cayman Islands. All CIREBA listings are kept in a central database, known as the Multiple Listing System, or MLS, that can then be accessed by any member agent. The MLS encourages close working relationships between customers and individual realtors, and ideally for the customer there is no need to contact individual agents to find out about individual listings. All MLS agents have access to all MLS listings. It is therefore a very conveneint and efficient system for buyers and sellers alike. Of course, it is important to pick a good realtor that you can work with and then stick with them exclusively. "Agent shopping" is discouraged.
Summary of the Cayman Property Market (updated January 2010)
Real Estate sales volumes have been slowly but steadily rising since July 2009 when compared to the same months in the previous year. Genuine bargains still come to market, but not as frequently as in early 2009. While we are not out of the woods yet, the economy has stabilized and buyer reluctance has eased. It remains to be seen whether the new Government, elected in May of 2009 and generally perceived to be more pro business than the previous administration, can get its house in order in 2010, but there are some positive signs and a genuine willingness to changes need to immigration policies and improve the Cayman tourist product. With the downward cycle finally bottoming out in the US, and the Canadian economy surging ahead, hopefully discretinary spenders looking for vacation properties will return. Still, it will likely not be until spring of 2010 before we finally see sustained buying activity, as the more conservative investors will wait a while before jumping in themselves.
From a historical perspective Cayman is poised for a solid rebound, as we did not experience the run up in real estate values that other resort areas, like Florida for one example, experienced. Our economy is more diversified, due to our financial services industry, tourism, universities and stable property development industry, which has not encountered extensive speculation and therefore has maintained most of its value.
In addition, "medical tourism" may eventually become the third pillar of the Cayman economy. As reported in the local media and the Wall Street Journal in December 2009 Dr. Devi Shetty’s organisation, the Narayana Hrudayalaya Group, has announced plans to build a 2,000 bed hospital in the Cayman Islands. Dr Shetty’s spokesperson in Cayman also confirmed that the world famous heart surgeon would soon be coming to Cayman with his revolutionary low cost health system. Although the on-island location has not yet been revealed, the new medical facility is expected to be one of the largest single developments ever in Cayman funded by the private sector. The plan is to build and run a 2,000-bed general hospital where procedures, both elective and necessary, will be priced at least 50% lower than what they cost in the US, in order to draw Americans who are either uninsured or need surgery that their plans don't cover. Obviously if this venture becomes a reality it will have a profound impact of the Cayman Islands economy and real estate values.
Property prices are now at or near their lows when viewed over the previous 5 years and in some cases, condominiums and homes can be purchased for less than what it would cost to buy the current land and build. That opportunity cannot last. The Cayman Islands have some significant new developments, just ahead, that will drive demand and prices higher over the next decade. They are very exciting and they are actually happening. Ritz Calton Dragon Development, Canana Bay and the five star Island Resort and Residences are the primary examples.
In 2009, despite the global financial collapse and recession, Cayman Islands real estate sales prices were only discounted by 11% on average from their listing prices. Condominium prices were by 8%, according to our real estate statistics. In normal market conditions, this discount would be less.
Because we went into the recession fairly valued, we have not experienced a wholesale unwinding of prices and massive discounts on listing prices. However, in fairness, some of these listing prices had already been lowered from their original price, prior to procuring a sale, so their total discount in price, in some instances, could have been as high as 20% to 25%.
This has been an unusual decade for the Cayman Islands, since we really never had any significant run up in property prices, unlike other parts of the world. Our market was held back, in some respects fortunately, due to one shock after another: September 11th, 2001 terrorist attacks, USA recession, Gulf War, Hurricane Ivan in September 2004, and most recently around September 2008, the global financial crisis and strengthening recession. Any time that prices in our real estate market started to gain traction, they were stopped in their tracks.
Now, we realize that prices seem to have fallen as far as they will go. If you had to call a bottom to our market, Jan -June 2009 would be it. Customers and clients, who were focusing on asset protection, are now once again starting to accumulate assets with good value and strong appreciation potential. There are some exceptional choices for them. Sustainable returns of 8% to 12% are not unrealistic – compare that to what you are getting from other invesments, which unlike Cayman Islands property may also be subject to tax. These are safe, real, documented returns on investment which will be worth much more than that in a few years because Cayman is not slowing down, rather just the opposite.
In the coming spring, we should find improving market conditions, due to anticipated improvements and progress in tourism, our financial industry, and real estate development. The pent up demand that still continues to build will not go away and at some point will start being satisfied. Development is continuing and that activity in itself drives business and speeds recovery, while leading to a new era of prosperity.
To say that the pent up demand for property is huge… is just as huge of an understatement. Purchasers that were deferring decisions to buy are starting to make offers. Difficult times have brought tremendous opportunities – and this, in a market where there was already great value and opportunity, due to being behind the curve already. A good idea would be to buy while the market is down. We are on the edge of a new upward cycle. You can watch it happen or become wealthy by participating.
OVERVIEW OF RESIDENTIAL AREAS IN GRAND CAYMAN
West Bay Road - World Famous “Seven Mile Beach”
This area is really divided into two areas: the beach and the other side of the road from the beach. Both are ideal for the young, single crowd and for retirees as you can walk to restaurants, bars, nightclubs, shops and the cinema. The areas near the Hyatt and the Ritz have numerous restaurants, bars and nightclubs within walking distance. Younf famiies can take advantagfe of the local International School along with other family friendly events at Camana Bay. There are many apartment complexes on Seven Mile Beach itself, but most are rented out for short term, daily rentals. Some, however, do long term rentals like George Town Villas, The Grandview, Treasure Island Condos, Laguna del Mar, Seagull Condominiums, Lacovia, The Sovereign and The Pinnacle. Rental prices, per month, in this area range from medium range to super expensive (CI$2,500 – CI$10,000+).
Areas such as Snug Harbour, Palm Heights Drive, Canal Point Drive and Parkway Drive are all great places to live and really popular with families - Snug Harbour in particular has experienced significant appreciation of both home and land values in the last 5 years (source - Deloitte & Touch Annual Property Surveys 2007, 2008). Watch for this trend to continue as Camana Bay and Ritz Carlton ramp up. Governor's Harbour and the Cayman Islands Yacht Club, are a little further north and on the border of the Seven Mile Beach area and West Bay. There are many 3 bedroom houses in this area as well as upscale 2 or 3 bedroom apartments. They are well maintained and professionals tend to rent them. Again, always look around as the quality can vary widely. These are quiet areas, near to restaurants and the beach. The commute to town in the mornings is now quite short because of the new bypass. People say it has halved the old commute time.
Apartments at Britannia have tradtionally been popular but prices have dramatically declined in the last few years due ot the fact that the former Hyatt hotel has not been rebuilt or refurbished since being damaged by Hurricane Ivan in 2004. You can now find some good deals and still enjoy the benefits being able to use the Britannia golf course, multiple swimming pools, tennis courts, gyms and sunbathing on Hyatt Seven Mile Beach. Apartments have either canal, pool or golf course views. If you are looking for a long term (10+ years) area for capital appreciation, Britannia would be a good bet as ultimately the old hotel will be redeveloped, and prices will take off again.
South Sound
This is a lovely, upscale area, close to schools and George Town. The traffic is less of a problem and the sea is never more than a stone’s throw away. Properties available are executive homes and 2–3 bedroom apartments. Two bedroom apartments across the road from the sea can be rented from about CI$2,200 per month. Apartments on the sea can be found for CI$2,500 and up. Apart from Seven Mile Beach, South Sound is one of the most convenient and, therefore, expensive areas to rent or buy on the Island.
South Sound is where you will find the Rugby Club, Tennis Club and Squash Club. There is a dock for launching a boat; the bay is fringed by a reef so it is great for swimming and snorkelling, and people love to jog and walk each evening along the breezy road which follows the sea. Roads on which you will find large family homes, most with pools, off of South Sound Road are Vienna Circle, Mary Read Crescent and Anne Bonny Crescent. At the far end of South Sound Road (away from George Town) is Old Crewe Road where you will find Sunrise Apartments, Pine Crest Apartments and Elizabeth Villas. Rents in these complexes should be under CI$2,000 per month. Some of the newer, more exclusive condominiums can be as high as CI$2,600–2,800 per month. Many houses and apartments along South Sound have been renovated and rebuilt to a higher standard following damage caused to them during Hurricane Ivan.
George Town
George Town is the capital of the Cayman Islands. It is located on the southwest corner of Grand Cayman and has a busy port with working cargo ships and an influx of cruise ships almost daily. The main roads in George Town are North and South Church Street, which run through town and are parallel to the water. Walkers Road has most of the schools on it and also lots of residential properties. Smith Road, Shedden Road and Eastern Avenue cut through town and run down to the waterfront roads called North and South Church Street.
The Government is moving forward with plans to relocate the port facilities to a less populated part of the island and expanding the existing port to allow larger cruise ships to disembark passengers directly onto the dock. While it is early days, ultimately this plan will benefit not only Goerge Town but Grand Cayman as a whole.
Most of the properties in George Town are mid-range in price. It is a good area to live in if you have kids because the main school area is on Walkers Road, which is literally five minutes from the town centre. Also, with the increasing traffic levels it means that you will avoid the main rush hour traffic jams (the route in from West Bay/Seven Mile Beach and the route in from the Eastern Districts are slow moving at peak times). There are a lot of lower to mid-priced condominiums for rent off Walkers Road – at about CI$1,200–$1,500 for a 1-bed apartment and CI$1,400–$2,500 for a 2-bedroom per month. Some of these older apartments can look and feel tired, so it is worth looking around and not getting discouraged as there are some gems as well. This area has a hodge-podge of places, some really nice and some older and cheaper.
There are also a few 3 bedroom houses suitable for families in the George Town area. These are often locally owned and well cared-for with large yards.
Spotts, Prospect & Red Bay
This is the fastest growing part of the Cayman Islands as it is close to George Town and many new condominiums and homes have recently been built. Also the new East-West Arterial road has made the commute to George Town even faster and easier. Grand Harbour shopping complex is at the entrance to Prospect. It has a large supermarket (Hurley’s Marketplace), a pharmacy and various shops including a Blockbuster video store, a liquor store, bookstore, clothing, art and a toy store. There are also two restaurants. Cayman’s first skate and surf park, The Black Pearl, is located behind Grand Harbour.
There are lots of residential homes in this area and the commute to town is relatively quick (ten minutes). New high end executive homes are emerging on the vacant canal lots behind Grand Harbour. The rents in this area for apartments are mid-range (CI$1,800 and up) and there is a wide range of quality.
There are two very exclusive areas in Red Bay. The first is Old Prospect Point Road, which is a quiet community found on a winding road by the ocean where long-time Cayman residents and multi millionaires have built very exclusive expensive homes. The second area – Patrick’s Island – is an upscale residential area with ocean and canal frontage where vacant land is still available and many desirable 3 and 4 bedroom homes have been built.
West Bay
This is a residential area at the top, or north end of Seven Mile Beach. It is less expensive than George Town or Seven Mile Beach, and there are some lovely homes and condominiums on or near the sea. The upscale, canal-front residential area called “The Shores” commands premium prices, as do properties on Boggy Sand Road, a mini millionaires row with an island feel which runs along a beautiful stretch of Seven Mile Beach. Popular condos which do long term rentals include: Coconut Bay, Ocean Side Plantation and Villas Pappagallo. All of these properties are on the ocean.
Some of the most popular restaurants, such as Calypso Grill, Oestra and Ristorante Pappagallo, are located in West Bay, as are other restaurants like the Cracked Conch with its New York style bar and superb seafood. Tourist attractions like Boatswain’s Beach (former home of the Turtle Farm) are in West Bay and diving from the Cracked Conch restaurant is very popular. Locals enjoy renting a tank from the dive shop (downstairs from the Cracked Conch) and diving with the tarpon, which like to hang out at the mini-wall just three minutes swim from the dock, then rinsing off and having lunch at the restaurant. You can also go horseback riding along a rugged and little travelled beach in the area called Barkers which spans part of the northern tip of West Bay.
The new bypass means that the drive into town now takes about 30 minutes during rush-hour but the traffic can still back up quite badly at the West Bay four-way stop. West Bay has lots of character. Rental prices to suit any budget are available.
Canal Front Living
There are a number of waterways, which cut inland from the North Sound. If you are planning to buy a boat, you cannot beat the convenience of having a dock right in front of your home or apartment. Some of the locations nearer George Town are Governor's Harbour, Canal Point and Snug Harbour. Further from George Town are Prospect, Red Bay, Patrick's Island, North Sound Estates and The Shores. House prices are generally in the medium to high end range (US$600,000 +)
Canal front condos off Seven Mile Beach are located at Palm Heights Drive, Safehaven Drive and Lime Tree Bay Avenue. In Governor's Harbourt Cook Quay; Drake Quay; Nelson Quay; Jellico Quay; Magellan Quay; Prince Charles Quay and Raleigh Quay are very popular areas to live and have houses and apartments all in the high to exclusive price range.
Savannah, Lower Valley, Newlands & Pedro St. James
This is another area with both inland and canal front properties. Sunrise Landings and North Sound Estates (both canal front areas) which fall within Savannah and Lower Valley. It is very popular with young Caymanian families as land is still affordable. The commute times during rush hour are longer, but if you leave early or late enough you can get to work in about 15–20 minutes. The new East-West Arterial has improved things dramatically. There are many trees and open areas in Savannah. The usual properties for rent in this area are family homes. Prices in this area are in the low to mid-range (US$300,000 +).
Located in Savannah is the historical site called Pedro’s Castle. It is known as the “Birthplace of Democracy in the Cayman Islands”. The Government has spent almost US$10 million dollars restoring the site and today it is lovely to walk around the Great House’s grounds and slip back into history.
Also in Savannah is the Countryside Village Shopping Centre which opened about three years ago. It is located immediately on the left at the roundabout where the road intersects between Savannah, Pedro and the entrance to Newlands. This village wasa fantastic addition to the community and includes restaurants, a Foster’s supermarket, Cayman National Bank retail branch, A.L.Thompson’s hardware store, Jacques Scott's liquor store and many other really useful stores which means that many people will no longer have to make the drive to town for everyday essentials.
Beach Bay
Beach Bay is on the right just before you get to Bodden Town. If you drive all the way down Beach Bay Road you get to Sea Spray Drive. Along this coastal road are some fabulous houses and apartments. There is a small beach at one end of Sea Spray Drive and the other end rises into a cliff. The rents here are in the high range (US$5,000 +).
Bodden Town
Those who venture out to Bodden Town love it – you are on the beach, away from the centre of it all and the rents are reasonable. There is still the feel of a small Caymanian town in Bodden Town with a mixture of locals and ex-pats living amongst one another. The beaches in Bodden Town are rustic, usually littered with driftwood and turtle grass and are a lovely place for walking dogs.
Although the impression of a long commute may keep the faint of heart away from Bodden Town, it takes just 30–35 minutes if you leave early or late enough (leave before 7am or after 8.30am and come home before 4.30pm or after 7pm). Again, the new arterial road should make a big difference to the commute. Prices in this area are in the low to mid-range (US$300,000 +). Even though Hurricane Ivan happened over three years ago, Bodden Town is one of the few areas that is still showing evidence of the storm. A few homes have simply not been rebuilt and others that should be bulldozed have not yet been removed. The National Recovery Fund has been helping to rebuild homes in this area.
Frank Sound & Cottage
Frank Sound is an area which crosses the Island as you drive towards Rum Point. This area has affordable rental homes with large properties. The Cottage area, well before East End, is an exclusive area of upscale homes and townhouses in the high rental range.
Queen Elizabeth II Botanical Park and the Mastic Trail are off Frank Sound Road.
North Side & East End
This is the Cayman of yesteryear ! On the way to North Side in the village of Old Man Bay the‘Over the Edge’ restaurant serves great local seafood directly on the ocean. It's where islanders go to get away from it all. There is a small Fosters Food Fair supermarket opposite Morritts Tortuga Club in East End and Ocean Frontiers (also in East End) is a great place for diving. This is an historical and beautiful part of the Island. The ‘Wreck of the Ten Sails’ is a well marked historical site next to Gun Bay.
The commute time from this part of the Island is about 40 minutes to George Town (without traffic). Rental properties are very reasonable even if they are near the water. Prices are low to mid-range (US$250,000 +).
Rum Point
Rum Point is northwest of North Side and is just before Cayman Kai. It has a beautiful stretch of beach and faces the North Sound (home of Stingray City). It is dotted with Casuarina trees, clear waters and exclusive homes. The Rum Point Club can be reached by car (1 hour) or boat (15 minutes) across the North Sound from the SMB corridor. The Rum Point restaurant is now serving again after a few years hiatus after Hurricane Ivan. A ferry now operates to take diners to and from the restaurant but unfortunately there is still no regular daily ferry service. Rum Point is a great place to hang out in hammocks, eat lunch at a picnic table and swim in the safe and shallow water right in front of the bar and sun-lounger area.
Cayman Kai
Cayman Kai is just beyond Rum Point. It is generally expensive as most of the houses are luxurious secondary homes on the water, although there are some lovely smaller condos located by the Kaibo Yacht Club and the "Pools of the Kai" further down the road. There is a holiday-home feel about this area and life is centred around the beach and barbecuing.
Prices in this area are in the high to exclusive range (US$500,000 +). Some residents treat themselves by renting a house up here for the weekend to relax and get away from it all. There is a great restaurant called the Kaibo Bar and Grill, which serves lunch and dinner every day.
* I wish to thank the editors of the New Resident magazine for their consent to the use of portions of the text appearing in this section. The New Resident is an invaluable guide for relocating to the Cayman Islands. See http://www.caymannewresident.com or contact me for a free copy.
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