Grand Cayman Real Estate

The basics/background – The islands of Grand Cayman, Cayman Brac and Little Cayman (collectively “the Caymans”) are a British Crown Colony and virtually tax free. There are no day-to-day taxes here - no income, withholding, inheritance, corporate, capital gains, property or even sales taxes. This is the primary reason why the Caymans are the fifth largest financial center in the world despite the fact that Grand Cayman is roughly 76 square miles in physical size – about 22 miles long and 8 miles wide at its widest point. The islands industry is 75% tourism-driven and the remainder financial industry. *Our primary focus will be on Grand Cayman as almost all of the development, infrastructure and tourism are oriented here.*

The Caymans are clean, safe and very modern - in terms of amenities, infrastructure and day-to-day comforts. Grand Cayman is approximately 20% populated by expatriates from Europe (largely the UK), Canada and the US.

Grand Cayman is shaped roughly like a shoe with a large cut-out where your foot would go in (the North Sound). The island is quite flat with a peak elevation of about 78’ above sea level. Land ranges from swamp/wetland to wooded to coastal areas of exposed limestone/coral composition. Shallow water areas tend to be quite rocky and covered in coral with sporadic sandy bottom. On the heel side of this “shoe” (to the west) is the primary tourist area of the island - and the Caymans in general. This area is generally referred to as “Seven Mile Beach” or “SMB”. While the beach isn’t actually seven miles long, it is considered to be the island’s best beach and has more development on it than the rest of the islands put together. Restaurants of all types are plentiful around SMB, from KFC’s and Pizza Huts to endless gourmet dining experiences of every sort. In the very southwestern portion of Grand Cayman, you will find George Town, the capital and largest city, the international airport and the cruise ship docks and passenger traffic.

Hurricane Ivan, which did so much damage to the US Gulf Coast, paid an even more destructive blow to the Caymans in September, 2004. The storm passed within 30 miles of Grand Cayman and resulted in damage or destruction of 80% of the island’s infrastructure and housing. Winds of 180 to 200 mph battered the islands, making Ivan the worst storm to the hit in almost 90 years.

Physically, the islands are quite flat and have no rivers on them, part of the reason why the sea water is so clear. This leads us to, perhaps, the reason why the Caymans are so well-known to most tourists: diving and snorkeling. Grand Cayman has become world-famous for its “Stingray City” just off its north coast, where numerous dive operations take waders and snorkelers to interact with the rays.

Cayman Brac is approximately 14 square miles in size and has more topography than the other islands, with peak elevations of around 150’ above sea level. There are “cliffs” here, which is where the Gaelic name of the island was derived.

Little Cayman, as its name would imply, is quite small – roughly 10 miles long and 1 mile wide. Its resident population is estimated at around 170! It is fairly well-known for its dive sites, including a wall dive which ranges in depth from 20’ to 6,000’.

The Caymans are located in the Eastern Standard Time zone or GMT – 5. It has its own currency – the Cayman Island Dollar, which is fixed at an exchange rate of $1.25 CI to $1 US or $0.80 US Dollars is equal to $1 CI. US Dollars are accepted everywhere and there is no haggling over exchange rates – e.g., $20 US will be $16 CI everywhere. The calling country code is 345.

Land use includes marinas and yacht space (in the canal and waterfront areas off the North Sound and northern parts of the island, primarily), several golf courses in the offing and all the traditional Caribbean activities. High-end shopping is available in the cruise ship areas of downtown George Town.

Accessibility/Getting there – Grand Cayman has a well-served airport – Owen Roberts International, located in George Town, in the southwestern corner of the island. There is direct jet service from Minneapolis, Detroit, Chicago, Philadelphia, New York, Boston, Atlanta, Charlotte, Tampa, Orlando, Fort Lauderdale, Miami and Houston in the US, as well as Toronto and London. All major US airlines serve Grand Cayman, as well as Air Canada, British Airways and Air Jamaica. The flight from Miami is approximately 70 minutes in length. Plans continue for upgrading the airport and expanding its runway to allow greater long-haul flight access from Europe.

Cayman Brac and Little Cayman are more difficult to get to, requiring small plane or boat transportation from Grand Cayman (a roughly 90 mile trip). There is daily jet service to Little Cayman and Cayman Brac from Grand Cayman on the Cayman’s national airline – Cayman Air. There are multiple daily flights to both islands from Grand Cayman on Cayman Express aboard smaller, propeller-driven aircraft.

Once on Grand Cayman, taxis are readily available as are rental cars (a Cayman driver’s license is required, but a temporary one is pro forma and available at the rental counters).

Desirability for investment – Strong points for the Caymans are the usual Caribbean draws, plus their modern infrastructure, ease of access and getting-around, wonderful tax climate, stability and rapid price appreciation. There are numerous, true 5-star properties, including the Ritz Carlton, Mandarin Oriental, and several other non-brand affiliated properties. There appears to be strong interest from all of the high-end hoteliers in having a branded resort on Grand Cayman. Notably, there are no requirements for development of land after purchase (unless you take subject to private covenants requiring same). For speculators or buy and hold land investors, contrast this with other islands where foreign investors will have say 2 years to commence construction – such as a St Lucia or begin paying penalties for failure to commence construction within 6 to 12 months as in French areas of the Caribbean, like a French St Martin or St Bart’s.

Location: WITH MAPS OF CARIBBEAN AND AREA

the Caymans location in the Caribbean Sea

Grand Cayman, Little Cayman and Cayman Brac

Investment Appeal:

OVERVIEW OF GRAND CAYMAN WITH NOTES ON CAYMAN BRAC AND LITTLE CAYMAN

The tax and land use landscape of the Caymans:

There are no restrictions on foreigners buying property in the Caymans, just a stamp duty of 9% (or lower) payable to the Government. Stamp duties can be as low as 4% or as high as 7.5% throughout most of the Caymans with the higher 9% applying to SMB, where an “average” property costs in excess of $1 million US. Closing costs can be estimated at 10% in total, plus realtor’s commissions of 4-10% if applicable. Title to property is guaranteed by the government and registered, therefore no title insurance is required. There are no income, inheritance, sales, corporate, capital gains, property or withholding taxes in the Caymans! Further, there are no penalties nor mandatory development timetables for foreign investors in the Caymans, unlike many other parts of the Caribbean.

RENTAL

The majority of development on Grand Cayman is new condominiums and, consequently, a high percentage of rental properties is available. It is possible in many cases to have the costs of ownership (mortgage payments, utilities and “strata” fees as they call their homeowner’s association dues) covered by rental income. As in most places, be leery of realtors telling you that “you will cover all these costs and still make money”. While that can be true in some cases, rental income is typically better factored-in as an offset to ownership costs during a holding period, while one is hoping for property appreciation. Like condo rentals in, say Florida, you can conservatively hope for 80% of ownership costs to be covered by rental. If you can do better than that, great. Occupancy rates for condominiums appear to be pretty steady at around 40%.

Seven Mile Beach is the primary location of most rental properties, followed by South Sound and George Town. I think the future will see more rentals on the east end of the island and up toward the Cayman Kai area in the north central part of the island. This is partly due to the lack of remaining undeveloped (un-redeveloped actually) property on SMB and partly due to the inevitable sprawl of development away from George Town and the airport.

OWNERSHIP AND TITLE INFORMATION

As stated above, foreign ownership is not subject to any special stipulations and can be held individually or via another vehicle. Almost all land is freehold. Title is recorded in the central land registry and title insurance is not involved, as the Government certifies title at the time of transfer.

Seven Mile Beach - "SMB"

DIFFERENCES FROM ONE AREA TO ANOTHER - "NEIGHBORHOODS"

GRAND CAYMAN

On Grand Cayman (GC), the explosive development of the last two and a half years (since Hurricane Ivan in September, 2004) has taken place on Seven Mile Beach. The Ritz Carlton development is but one example of branded and non-branded ultra-luxury, five-star properties covering the length of SMB. Average prices here are upwards of $1 million US for condominiums with numerous examples over $3 million. The value of raw land here has made multiple dwelling unit condominiums the nearly exclusive dwelling type on SMB. As construction resources – crews, companies and materials – are in high demand and low supply, almost all such resources have been directed toward these high-end condominium developments on SMB. North of SMB in the West Bay area as well as to the inland side of SMB, there have been numerous canal-front developments completed and commenced in the last few years. These tend to be high-end houses on ¼ to 1 acre lots with mooring for yachts or other motor vessels.

The next largest areas (DISTANT second and third) of development on GC are in George Town, the capital city just south of SMB, and the South Sound area further south and slightly toward the east. Condominium development in the South Sound area tends to be smaller scale, more of the 3-4 star level and far more reasonably priced. Prices here are commonly in the $2-400,000 US range for oceanfront condominiums (as little as 1/10 SMB prices).

Heading east from South Sound toward Bodden Town and further east to the end of the island in East End, almost all oceanfront is already developed and comprised of high-end houses. Interestingly, ½ to 1/3 of all of these homes still stand damaged or substantially destroyed from Ivan. This is again due to the lack of available construction crews and materials to re-build or repair these properties. Damage can vary from docks in need of repair to total losses. Investors might be interested in buying some of these “fixer-uppers” for far below their intact value and waiting-out the construction boom before re-construction or repair. Obviously, the homes are selling for pennies on the dollar of what they would command if perfect. In the northeast corner of the island, in the Collier’s Bay area, there have been a small number of high-rise condominium projects in recent years, including the Royal Reef, Reef Resort and Morritt’s Tortuga Club. This may be indicative of a trend away from SMB toward other parts of the island. **Please note that there are few sandy beaches on the south side of GC, though a few in the East End, Gun Bay and Collier’s areas. South Side properties tend to be fairly rocky with considerably more surf and wave action than on SMB.**

In the Northside and Cayman Kai areas (the north central part of the island and northeastern tip of the North Sound), high-end homes and some smaller villa, townhouse and condominium communities have also been springing-up over the past few years. Prices tend to be fairly high around Cayman Kai, though not as high as SMB.

Cayman Brac

There is very little development on Brac in comparison to Grand Cayman. Here there are no high-end or branded hotels, large condominium projects or large-scale developments – at least not yet. Obviously, land values are consequently considerably lower. Oceanfront parcels on Brac can be purchased for as little as $40,000 US. There are few sandy beaches on Brac.

Little Cayman

Little Cayman is similarly cheaper than Grand Cayman though there seems to be a bit more activity due to its status as a big diving draw. As with Brac, there are few sandy beaches on the island.

Realtors/MLS:

Unlike much of the Caribbean, the familiar large real estate names Americans are accustomed to seeing and using in the States have a strong foothold here – ReMax, Century 21, Coldwell Banker and ERA for example, as well as Sotheby’s. Consequently, there is a rough MLS system here (more available in magazine print than online – but it’s a start). As a result, finding properties in the Caymans is much easier than in most of the rest of the Caribbean basin. Like most everything else about the Caymans, the overall sophistication of the market is simply far in excess of virtually all other Caribbean destinations.

Representative listings:

All prices in US Dollars

Land

Seven Mile Beach – 0.34 acre, canal-front lot with access to North Sound – asking $295,000.

Bodden Town area – 1.75 acres, five minutes from water, asking $300,000. ¼ acre, water view, asking $100,000.

East End – 0.75 acre parcel beachfront with 1 acre parcel across street, asking $400,000 for both.

Northeastern portion of GC – two different one acre beachfront lots with 200-270’ of frontage, asking $700,000 each.

Cayman Kai area - Three-tenths to half acre waterfront lots – asking $550,000 to $1.3 million. Rum Point canal front lot - 0.38 acres - asking $250,000.

Northside – Half acre beachfront with 100’ beach frontage – asking $1.4 million.

CAYMAN BRAC –

7.25 acres beachfront with 700’ of frontage – asking $895,000. Half acre beachfront with 220’ frontage - asking $200,000.

LITTLE CAYMAN –

14.4 acres inland, asking $500,000. 4 acres beachfront with 400’ of frontage, asking $340,000. 0.3 acres beachfront with 100’ of frontage, asking $200,000.

Villas/Houses

Seven Mile Beach – six bedroom/five bathroom, 4,500 s.f, asking $6 million. Canal front from $1.2 million to beachfront from $9.5 million.

George Town – three bedroom/two and one half bath house, 3,500 s.f, asking $1.6 million. Small four bedroom/two bath, 1,200 s.f home on 0.30 acres, asking $560,000.

Bodden Town – three bedroom/two bath, 1,600 s.f home, not on the water, asking $380,000. Homes ranging from a two bed/two bath, 1,400 s.f home on the water, asking $675,000 to four homes between $2 and $7 million asking prices.

East End – beachfront homes from 2,400 to 4,000 s.f, asking from $900,000 to $1.6 million.

Cayman Kai area – two homes listed from $1.5 million to over $2 million. Houses are at least 3 bedrooms/3 bathrooms and both waterfront.

Northside area – two bedroom/three bath, 1,600 s.f, hurricane-damaged house on half an acre beachfront, asking $800,000.

CAYMAN BRAC –

Three bed/two bath, 1,200 s.f house with some water views, asking $160,000. 1,300 to 2,500 s.f homes ranging in price from $220-350,000 inland and $550-650,000 beachfront.

Condominiums

Seven Mile Beach – four bedroom/four and one half bathroom, 7,000 s.f, pre-construction – asking $7.5 million. Two bedroom/one bath, 850 s.f, in modest complex - asking $325,000. Mid-range complexes with listings from $400-700,000 and high-end complexes asking $1 million to multiple listings above $3 and 4 million.

George Town – three bedroom/three and one half bathroom, 3,000 s.f, pre-construction – asking $1 million to $1.45 million. Two bedroom/two and one half bathroom, 1,900 s.f, asking $570-800k. Several pre-construction three bedrooms – starting from $350,000.

South Sound area – Two bedroom/two bath not on the water, close to town, pre-construction – asking $300,000. Two bed/two and one half bath, fixer-upper on water, asking $400,000. Two/two, 1,400 s.f, asking $520,000.

Bodden Town area (Beach Bay) – pre-construction, high-end project from $1.5 million.

Northeastern area – new, pre-construction, high-end project ranging from $800,000 two bedrooms to penthouse units at $3.5 million.

Cayman Kai area (all beachfront) – One bed/one bath, 1,300 s.f, with its own plunge pool $400k; two bed/two bath, 2,000 s.f, with plunge pool $575,000. One bed/one bath, 1,039 s.f, asking $285-350,000. Penthouse condos from over $1 million.

Northside area – One bed/one bath, 600 s.f with available dock space, asking $325,000. Two bed/two bath, 1,300 s.f, asking $445,000.

CAYMAN BRAC –

Four bedroom/four and one half bath, 3,400 s.f penthouse unit in mid-level complex, asking $600,000.

LITTLE CAYMAN –

Three bedroom/three bath unit, with 2,100 s.f, near town and on water, asking $460,000.

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