The dream of home ownership is being put further out of the reach of many Caymanians, the draft National Assessment of Living Conditions says, because of upward pressure put on the real estate sector by wealthy expatriates and investors abroad.
In response, the report has called for the creation of a ‘land bank’, to be funded through bond issues to prospective low and middle income home owners participating in the scheme.
‘Caymanians are falling behind,’ said Ralph Henry, a developmental economist with the Kairi group of consultants that carried out the report.
‘While the incomes of Caymanians may have increased, they have not increased to the same extent as the high end people in the developed world, who have much more, by way of discretionary income, to purchase a piece of space in the Cayman Islands.’
He pointed to similar problems being faced in the Turks and Caicos Islands and the British Virgin Islands, and warned: ‘you do not want to create a situation where people remain mere witnesses to what is going on in the area of real estate in their own country; in a very small country.’
Noting that a large percentage of those in poor quality housing are immigrant workers on short term contracts, the report also recommends the scheme include rental accommodation that could be made available to such workers.
While Mr. Henry argued against any move to prevent expatriates and foreigners from buying land in Cayman, he said government intervention is required to ensure Caymanians are not locked out of the market.
‘The land bank could also include [land] for commercial activity,’ he continued. ‘Land for tourism – land for hotels that could be leased for instance, so that the long term income generating capacity of the real estate can be retained with the government on behalf of the people of the country.’
A further housing related proposal contained in the report concerns the establishment of a real estate investment trust. Under the proposal, Caymanians would be able to invest and indirectly own shares in lands that are utilized in the resort accommodation sector.
The report suggests a development partner, such as the Caribbean Development Bank, could assist in lending technical support in the design of such a scheme.
Past efforts sporadic
The NALC report confirmed what many already knew – the cost of housing and utilities dominates the expenses of people across all levels of the economy in Cayman, accounting for almost 40 per cent of total expenditure.
It describes past government interventions to help low and middle income earning Caymanians as sporadic, and questions the effectiveness of the National Housing Development Trust that was established in 2003.
The report’s authors write it remains a moot point whether the present People’s Progressive Movement Government’s actions are enough to contain the cost of the provision of homes to lower-income groups in Cayman.
‘If the cost of real estate rises faster than the disposable income of lower and middle-income Caymanians, there is the real possibility that the standard of living accommodation available to many Caymanians will fall,’ it states.
‘The country may yet be in need of arriving at the institutional mechanisms for delivering decent accommodation for lower-income residents.’