Real Estate

Buying Land as an Investment in the Cayman Islands

May 29, 2020
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Buying Land as an Investment in the Cayman Islands

Buying land in the Cayman Islands is not just a lifestyle decision, it’s a solid real estate investment.

First the good news: buying land in the Cayman Islands is a straightforward process. There are no restrictions on foreign ownership, no annual property taxes, and no capital gains taxes. Also, the Cayman Islands Government guarantees title for all real estate transactions, thanks to a survey and mapping project in the 1970s that registered every block and parcel of land and title details with the Lands Registry. A land transfer in the Cayman Islands can be completed in days.

Another investment advantage in the Cayman Islands is that there are no time deadlines for building on raw land. Once you own it, you have complete control over when and whether the land is developed, without penalty.

Apart from your land purchase cost, stamp duty is your largest additional outgoing. This is a one-time fee of 7.5% of the value of the purchase payable to the Cayman Islands Government. First-time buyers can have the stamp duty waived entirely for bare land purchases up to US$122,000 providing an owner-occupied house is to be constructed.

A basic rule of thumb is to budget an additional 10% of the purchase price for closing costs.

Now the not-so-good news: The entire Cayman Islands real estate for sale market is very tight, with demand outstripping supply. At the top end, vacant canal-front lots at the luxury Grand Harbour site saw a per-square-foot price surge of more than 30% year-on-year in 2018, while mid-range residential lots in the Savannah area rose 22% in price. Shortages of property for sale in the Cayman Islands meant that freehold property transfers in the first nine months of 2019 fell by around 10%.

With such a large number of hedge funds, banks and businesses based in the Cayman Islands, the real estate market is geared to the top end of the market, where big money and prime real estate opportunity in 2018 saw a Seven Mile Beach condominium development site between the Avalon and Harbour Heights sell for US$54,500,000 (US$434 per sq. ft.)

But in this rising and stable market, there are still bargains to be had with land for sale in the Cayman Islands. For example, in the lower-end area of Grand Cayman’s Frank Sound, the average sale price of vacant residential lots in 2018 fell by 4% to US$3.97 per sq. ft. Further afield, the smaller islands of Cayman Brac and Little Cayman are developing at a slower pace and have correspondingly lower entry prices.

Little Cayman is the smallest and least developed of the three Cayman Islands and lies some 85 miles northeast of Grand Cayman. The island is just 10 miles long and one mile wide. Its 22 miles of spectacular coastline is surrounded by offshore coral reefs that are considered to be some of the best scuba diving in the world.

Barely 200 people live there and, apart from honeymooners and the local and migrating birds, the island is quiet and the beaches almost empty. Commercial air service is provided by Cayman Airways Express flights running between Grand Cayman, Cayman Brac and Little Cayman. Flight time from Grand Cayman to Little Cayman is 35 minutes.

Available lots on Little Cayman include a two-acre beachfront lot with 300 linear feet of reef-protected beach for US$902,000, working out at US$10.3 per sq. ft. The lot would be perfect for a large estate home or subdivision.

Or, for a mere US$120,000 there is a 0.35-acre lot of oceanfront land on North Coast Road East with views of nearby Cayman Brac that works out at US$7.8 per sq. ft.

The small sister island of Cayman Brac is quiet and peaceful and ideal for property buyers looking for privacy and tranquillity but with good infrastructure. The island is home to luxury boutique hotels and beachfront homes and has a unique, rugged beauty.

Flight time from Grand Cayman to Cayman Brac is 40 minutes.

Current listings of land for sale in Cayman Brac include a 0.56-acre beachfront site on South Side Road with an asking price of US$125,000, equating to US$5.12 per square foot.

In 2018, five lot sales on the Bluff of Cayman Brac achieved an average sale price of US$2.58 per sq. ft. Today, a two-acre lot on Cayman Brac’s popular West End oceanfront, with vehicular right of way access as part of the deal, is currently on sale for US$195,000, or US$2.2 per sq. ft.

Historically, a lot of the land in the Cayman Islands was kept in the family for future generations. The arrival of multinational corporations, property developers, hoteliers, international financiers, expatriates, and private investors has created a desirable and stable real estate market for the luxury lifestyle and profitable financial investment.