The Cayman Islands government recently revealed its budget for 2020 and 2021 and confirmed what we have been discussing for some time now – our real estate industry’s worth to the entire economy and the fact that, while our industry is so strong, our worth has been increasing.
Government’s operating revenues are forecast to be $824.2 million, which is $101.4 million higher than estimated in the original 2019 budget. The government said this better-than-expected performance was primarily attributed to strong growth in revenue lines from import duties, stamp duty on land transfers, banks and trust licence fees, partnership fees and tourist accommodation charges. It is interesting to note, therefore, that three out of the five growing revenue lines are directly a result of a successful and flourishing real estate industry.
Stamp duty on land transfers has an obvious correlation with the real estate industry, while increases in revenue from import duties can be attributed in huge part to the construction industry and speaks to the unprecedented level of construction currently under way in Cayman. I think this will continue given the projects that are up and coming over the next few months and years. Tourist accommodation charges is another strong income stream for government directly related to our industry, with further growth predicted with hotel and condominium projects coming on board in the next three to five years.
I believe the fact that government has specifically outlined tourist accommodation charges as an important revenue stream justifies why the Cayman Islands tourism industry ought to be focussing on stayover tourists. This is government’s own statement on the importance of our stayover visitors to our economy as a whole, which are adding tens of millions of dollars into our economy, as they spend in our hotels and condominiums, restaurants, tourist attractions, taxis, supermarkets and retail stores, let alone purchase property and pay stamp duty, which goes directly into the coffers. They also enjoy our pristine beaches, clear waters and exemplary diving.
Having read Guy Harvey’s eloquent letter to the Cayman Compass, in which he warns us not to ruin what makes Cayman unique, I believe it was a very well-balanced argument for Cayman to take a close look at capacity when it comes to the volume of tourists this island can adequately cater to. Without a doubt, Cayman’s cruise visitors bring some value into our economy but we must consider the pressure on our infrastructure and how larger volumes of visitors will impact the quality of life for residents and stayover visitors alike.
Dr. Harvey wrote about all the great things that entice visitors to our shores, such as the amazing diving, high quality of our beaches, Stingray City and land-based attractions.
“Then there is browsing the waterfront, shopping the jewellery stores or making a trip to Camana Bay. Our modern topside infrastructure, including great restaurants, condos and hotels, all add to making the Cayman Islands unique,” he wrote. “By adding so many extra cruise tourists, we risk that reputation.”
These are all extremely important attributes which I have been writing about for the past few years. Let us ensure they remain as attractive as ever for our stayover visitors, which will in turn keep government’s revenue streams looking as healthy as they do for 2019.
What I have seen over the last 25-plus years is that stayover tourism is the greatest contributor to our vacation and investment real estate market. Our natural resources and beauty are among the top reasons travellers visit the Cayman Islands. It is a unique and coveted travel destination which should be protected for our future and that of our children.
James Bovell is broker/owner at RE/MAX Cayman Islands.