Right Time to Invest
The Cayman Islands, which are located 150 miles south of Cuba and 480 miles southwest of Miami in the Caribbean, have emerged as a favourite destination for tourism. Besides, the islands, which are a British overseas territory, have evolved into a major global offshore centre, leading to favourable circumstances for investment in business as well as real estate. So, if you are looking for commercial property in Cayman, the right time is now.
Real Estate in the Cayman Islands
Cayman Islands Real Estate Overview
The Cayman Islands was affected by the global financial recession of 2008, which contributed significantly to the market in the recent past, however the markets began recovering by 2014. Due to strong performance in the high-end property market, the overall value of sales increased by 27 percent. Although Cayman Islands was devastated by Hurricane Ivan in 2004, the recovery was quick and newer commercial as well as residential projects have seen the light of the day. The Cayman Islands Real Estate scenario continues to show signs of growth. This is partly due to the continued economic recovery in the US. Some of the recent projects are:
- 18, Forum Lane, an 85,000 square mixed commercial and residential LEED complex situated in Camana Bay in Grand Cayman.
- Cayman Islands Yacht Club was refurbished at a cost of CI$7 million in 2014.
- More business are opening in the Cayman Enterprise City (CEC) – a special economic zone.
- Health City Cayman, a new privately owned 140 bed hospital in the eastern part of Grand Cayman.
- A new cruise ship berthing facility in Georgetown by using a public private partnership (PPP) model.
- Dart Realty continues to expand Camana Bay.
- A new hotel, Kimpton Hotel and Residences, which is the first ten-storey building in the country) on Seven Mile Beach, is expected to be completed by 2016.
- A Conrad Hotel and Residence in Beach Bay on Grand Cayman is in planning and development phase.
- Owen Roberts International Airport Expansion slated to be completed by 2018.
Currently, institutional investment in the Cayman Islands is increasing due to the large amount of capital needed. Investors can easily look out for Cayman Property for sale or Cayman Commercial property for lease. At least two thirds of commercial real estate is privately held.
Investing in Commercial Property
Since the Cayman Islands government does not levy any direct taxes, investors can avail of a tax free opportunity to invest in commercial property in the Cayman Real Estate market. Investors are encouraged to invest in property such as:
- Class A, B, and C office buildings
- Retail Centres and Warehouses
- Strip Malls
- Resorts and Hotels,
- Multi-family apartment complexes
- Strip malls
- Hotels and resorts
- Multi-family apartment complexes
External View of a Commercial Property in Cayman Islands
It is possible to achieve net annual tax free returns in the 6% to 9.5% region, which depends upon the age, occupancy, and type of the commercial property. In case of Class A office buildings that have strong tenants, annual returns of around 8% are possible. Many real estate agents exist in the Cayman Islands, which offer professional advice on the sale and purchase of commercial property. Some of the services they provide include rent roll analysis, property management, creation of marketing and leasing campaigns, projection of net operating incomes, and calculation of the market value of the concerned property. CIREBA (Cayman Islands Real Estate Brokers Association) operates an MLS (multi listing system) that lists all the commercial and residential properties in the islands and gives a fair idea of the Cayman Islands real estate market. It is advisable that you ask a CIREBA member before signing anything.
Fine Cayman Islands Real Estate
Foreign Investment in Commercial Real Estate
When it comes to foreign investment, it is possible for individuals or companies to purchase up to one residential property for personal use. Two further residential properties can be purchased for rent without the need for trade and business licensing. However, the ownership of commercial real estate by either an individual or company is deemed as carrying on trade and business in the Cayman Islands, which requires suitable business licensing. The primary legislation in this regard is the Trade and Business Licensing Law (2007 Revision) as well as the Local Companies Control Law (2007 Revision).
Additionally, an individual or corporation engaging in almost any business locally is required to be licensed under the TBL Law (TBL License). Other approvals might also be needed e.g. approvals from the Department of Environmental Health or from the Cayman Islands Central Planning Authority. A foreign company that wishes to purchase, lease, or otherwise hold an interest in real estate in the Cayman Islands is required to register at the Cayman Islands Companies Registry as a foreign company.
The Cayman Islands is generally a ‘no direct taxes’ jurisdiction and the Torrens Title system of land registration has been adopted here. The main legislation in this regard is the Registered Land Law (2004 Revision). Pursuant to this legislation, the title for each land parcel is created by a system of land registration (registration), which is maintained by the Registrar of Lands. The Cayman Islands government guarantees the correctness of each register. At the Cayman Islands Land Registry, land parcel files can be inspected by the public. The public register is managed by the Registrar of Land. Also, individual parcel registers can be searched and obtained online. In the Cayman Islands, title insurance is generally not available as it is no commonly used. The state guarantees that if any proprietor suffers a loss that arises from a register error which cannot be rectified, the proprietor is entitled to compensation from the Cayman Islands government.
Commercial Real Estate – Some Popular Investment Structures
In the Cayman Islands, one of the popular structures for holding real estate is through an ordinary company. Through this company, it is possible to own and lease Cayman Islands property, hire employees based in the Cayman Islands, and even transact business with the public in the Cayman Islands as well as internationally. This company can also apply for a TBL license as well as an LCC license. A foreign company is yet another popular structure for holding real estate in the Cayman Islands. This model is particularly useful if the said company does not want to set up a separate legal entity but wants to directly operate a physical presence in the Cayman Islands. Another, but the least popular form of investment vehicle in the Cayman Islands is the exempted company. Such a company is not permitted to trade in the Cayman Islands with any person, firm, or corporation. This company is in limited circumstances allowed to own or lease Cayman Islands property.
Investing in Cayman Islands real estate is a safe proposition due to the stable political climate, an emerging real estate market, and a resurgent economy. Property in the Cayman Islands can be purchased in the name of an individual or corporation. Usually, a deposit is required to be paid after a formal written offer in a standardized format has been made and accepted. A transfer of land form has to be executed by the buyer and the seller that will be recorded as title to the property. Apart from a onetime stamp duty of 7.5% on the purchase price or the market value of the property, (whichever is higher), there is no property tax, wealth tax, or capital gains tax in the Cayman Islands. However, there is a KYC (know your customer/client) requirement for the purpose of Cayman’s anti-money laundering measures.