When looking for opportunities to make investments on the Cayman Islands real estate sector or even if you are looking to purchase property for your own use, there are several considerations that need to be taken into account. Generally there is a wide range of real estate that is available and if you are in a position to afford it, the Cayman Islands is a wonderful place to own property bearing in mind its position as a holiday destination, as well as a financial and business hub.
Since the Cayman Islands is a tax-free nation, you will only need to pay a one-time stamp duty for the purchase of property there. There are also no restrictions on foreign ownership of real estate on the islands. It is of course advised that you consult a property lawyer on the Cayman Islands before signing off on any documents of purchase or rental of property on the islands.
If you are planning to purchase vacant land, and build your own building on the island, then you will need to ensure that this fulfills the requirements stipulated by the Cayman Islands Building Control Department and work with a local construction company. You will also need to bear in mind that construction materials, which are commonly imported, have a duty of about 22% on their landed value. This can impact on the cost of building and therefore unless you have the budget for it, it may be better to purchase readily built property.
When looking for a real estate agent to work with, you should explore using one who is registered with the Cayman Islands Real Estate Brokers Association (CIREBA). This association monitors the practices of all its members and you can therefore be assured that you will be dealing with an agent who is professional and honest.
In terms of choices of properties available, there average figures are approximately as follows. This data has been obtained from the CIREBA Multiple Listing System and is valid as of June 2010.
| No | Type of property |
Average price |
| 1. | 3-bedroom condominium |
US$430,000.00 |
| 2. | 2-bedroom condominium |
US$350,000.00 |
| 3. | Vacant land of varying sizes |
US$150-CI$200 per sq foot |
It may be useful to note that according to CIREBA, there has been a drop in property prices between 2009 and 2010 and this has resulted in a decrease of the value of property by between 10 to 20 percent. This of course suggests that it is a good time to purchase property on the Cayman Islands.
If you are planning to purchase a condominium, it is useful to remember that there will be a monthly maintenance fee of between CI$250 – CI$500 that is payable for the maintenance of the common facilities.
The key advantages to purchasing property on the Cayman Islands is the fact that there are no direct taxes, that they have a open and stable governing system and on the basis that there is a large expatriate population there who are constantly on the lookout for rental accommodations and business premises. In addition, the Cayman Islands provides a good infrastructure in terms of facilities and of course, the very tiny but essential fact that the Cayman Islands is the perfect holiday destination!
The detailed consideration for buying property on the Cayman Islands
When purchasing a piece of property on the Cayman Islands, you will find that this may be a better option than renting property there, as the rentals can be quite expensive, and of course there is the advantage that the property will ultimately be yours. Further, there are no restrictions on purchase or property for personal use and there is no tax payable on the property. Transfers are generally easily done, and if you are purchasing vacant land to build your own home, then even building time on the islands is fairly quick.
In terms of stamp duties and other charges that arise, there is a one-time stamp duty fee of 6 or 7.5 percent based on the sale price or the valuation price of the property, depending on where the property is located. There is also a duty that will have to be paid if you are taking a mortgage. For mortgages of CI$300,000 or less, the amount is 1% and for more than CI$300,000 the duty is 1.5%. In addition, a valuation will have to bee conducted and this can cost upwards of CI$350.00 depending on the property type and its location.
There is also the cost of legal and registration fees to be considered and this is usually based on about 1% of the purchase price. When you are transferring the title, the Transfer of Land form must be registered with the Lands and Survey Department. The form costs CI$150.00 and there are other forms that need to be submitted as well. Your lawyer will be able to advise you about this.
If you are planning to build on vacant land, you will have to pay for the cost of building permits and this is calculated on the square footage of the land, in addition to the other costs mentioned earlier.
Mortgages on the Cayman Islands
There are many reputable banks that will be able to provide you with a mortgage. The interest rates on the Cayman Islands are calculated based on the New York Prime plus between 1-3%. Do expect to pay an initial deposit of about 10-35% of the value of the property and you should be able to take a mortgage for the remainder over a duration of between 15-25 years, depending on your financial standing, age etc. The mortgage rates are competitive between the different banks on the Cayman Islands and it may be a good idea to approach several banks before signing off on one.
Always ensure that before you apply for the loan, that a proper valuation is done on the value of the property. This will ensure that you have a complete understanding of the full value not only of the property, but also of the fittings and other things that come with it.
In addition to the basic mortgage, many banks on the Cayman Islands require that a life insurance policy is assigned in favor of them for the amount of the mortgage. You will therefore be better off if you explore the different quotations and coverage terms for this in order to ensure that you get the best deal possible.
Cayman Islands property management services
If you are not planning to reside on the Cayman Islands as your primary home, then it may be worthwhile to consider using the services of a property management company. This organization will then be responsible to ensure that your property is maintained, that it is let out and that all the financials for this are in order. This will unburden you from handling the issues of tenants and tenancy agreements and a host of other peripheral issues. You will of course be required to pay them a regular monthly fee for their services.
Conclusion
If you have your heart set on purchasing your dream home on the Cayman Islands, remember that there are certain little factors that can make a difference to what you purchase. Always get your lawyers and / or the real estate agent to ensure that all strata title fees are paid to date, that water bills are current and that the property has had the services of pest control experts as well. It is useful to try to also ensure that the air-conditioning has been regularly serviced by the current owner, so that you will not incur unnecessary expenses when you take possession of the property.
If you have decided to explore the options available, look for a reliable real estate agent with reference to CIREBA and do provide the agent with specific information about your budget, preferred location, size of the accommodation, and when you want the sale to be concluded.