The Cayman Islands luxury real estate market appeals to wealthy foreign buyers for many reasons. Here are five of the most attractive.
In the Cayman Islands there is no income tax, no property tax, no corporate tax, no capital gains tax and no inheritance tax. This makes it a magnet for wealthy foreigners looking for an island paradise retreat, either for the lifestyle or for tax purposes. Here are five of the top reasons why investing in Cayman Islands luxury property is such an attractive proposition:
Choice of Locations Seven Mile Beach is the aspirational end of the Cayman Islands luxury property market. Here, the sun and the sand and the sea provide the setting for luxury and the lifestyle of the wealthy. Alternative prestigious areas are found all over Grand Cayman, either in exclusive communities or grand individual homes in isolated and very private plots, usually with a beach or canal frontage. The areas of South Sound, Rum Point, North Side and the secluded tranquility of Cayman Kai all have the luxury property for sale starting at the million dollar mark.
Listings on the books of the Cayman Islands Real Estate Brokers Association (CIREBA) in the third quarter of 2020 detail more than 100 residential properties for sale in the US$1 million-plus category, ranging from a 3,000 sq ft off-plan family home on a new development in South Sound to an enormous eight-bedroom waterfront mansion, also in South Sound, at a shade over $40 million.
Optional Residency If you have independent means and are looking to relocate permanently to the Cayman Islands — as a retirement dream, part of a tax strategy or just for lifestyle choices – you are eligible for permanent residency so long as you agree not to work in the Cayman Islands and meet income and investment requirements.
To acquire a Residency Certificate, issued by the Immigration Department and renewable and valid for 25 years, you will need a proven annual income of CI$150,000 as well as a local investment of CI1 million (formerly CI$750,000) of which CI$500,000 (formerly CI$250,000) must be in developed real estate. By far the majority of wealthy foreign real estate buyers choose to meet the investment requirement with a property purchase above CI$1 million, thereby meeting the requirement with one transaction. There is a one-time fee of CI$20,000 to secure a Residency Certificate. The website of Immigration Cayman Islands lays out the fine print.
Professional Realtors Hiring a real estate agent is a no-brainer if you are looking to buy a property in the Cayman Islands. When you are the buyer, there is no cost and all commissions are paid by the seller. Always deal with a member of the Cayman Islands Real Estate Brokers Association (CIREBA), a regulatory body providing a professional and ethical network of independent real estate companies of the Cayman Islands. CIREBA uses the Multiple Listing System (MLS), which originated in the US and Canada, where properties listed through one CIREBA member company are available to every CIREBA agent.
A professional realtor with experience of high priced property for sale in the Cayman Islands has an enormous amount of local knowledge, well-established contacts in the legal and financial sectors, and knows contractors, property managers and service companies – all available as part of the overall service. Your broker can research a wide range of properties as well as details like days on the market and past sales prices. When a price has been agreed, you will pay a deposit of between 5% and 10% of the purchase price. The process usually takes about four weeks, longer if bank financing is involved.
Easy Financing With so many legal and financial professionals, the Cayman Islands offers expert care and advice when you look for financing for that perfect Cayman Islands home. The territory is home to more than 40 of the world’s largest 50 banks and there are more than 100 other banks under the supervision of the local Monetary Authority.
Access to easy finance is a major advantage in the real estate sector of the Cayman Islands. Banks typically offer standard mortgage terms of 10-15 years, taken out either in Cayman Islands dollars or US dollars. Buyers are encouraged to appoint an attorney to prepare the necessary legal documentation for closing, at a cost of 0.5% to 1% of the purchase price. To secure a mortgage from a Cayman Islands bank, you will need a valuation report (about CI$500, depending on the value of the property). The approval process takes up to six weeks. The bank will also require that you have home insurance on the property for the duration of the mortgage. There is a 2% Stamp Duty on the policy, calculated on the cost of the annual premium.
Security With greater wealth comes a greater concern about security. With the highest per capita income and the lowest crime rate in the Caribbean, The Cayman Islands offers unparalleled safety and security to owners of luxury homes. Properties over CI$1 million are going to have CCTV, video door alarms and other security measures. Gated communities often have security personnel.
Many of the worlds’ richest people live partly or wholly in their Cayman Islands home or build significant luxury real estate investment holdings in the territory. It is a place where even the wealthiest can enjoy life on island time without significant concern for security. Lastly, a caveat: Buying a luxury home in the Cayman Islands is a major step for anybody, including the wealthy. Don’t get caught up in the excitement and end up with an expensive white elephant on your hands if your goals or circumstances change dramatically. As with all money matters, your accountant or tax attorney should be consulted before you go ahead with buying luxury real estate in a tax neutral jurisdiction such as the Cayman Islands. The devil is always in the detail and your specific circumstances could have a strong bearing on how this investment affects your overall tax and regulatory exposure in your country of citizenship.