When a home goes on sale in the Cayman Islands, there are potentially 8 billion people eligible to buy it.

With no restrictions on foreign ownership, no annual property taxes and advertising that promises year-round sun and ocean views as standard, it is perhaps no surprise that the island’s property market has become a magnet for overseas investors.

While this situation has been good for sections of the economy and for government revenue, concerns are growing about a lack of affordable homes.

Despite a period of development which has seen construction elevated to a third tier of the island’s economy, demand still outstrips supply in almost every sector of the housing market.

Some believe that competition from holiday home owners, property speculators and work-permit holders is pricing Caymanians out of home ownership.

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And questions are beginning to be asked about the wisdom of a totally open market.

Other island communities, like Bermuda and Jersey, restrict home ownership – with few exceptions – to locals only.

More recently, larger economies are following suit.

New Zealand introduced legislation banning foreign property ownership in response to rising house prices in 2018.

Canadian Prime Minister Justin Trudeau has proposed similar measures as part of his re-election campaign.

Local critics of that approach say it would destroy the thing that makes Cayman great – its reputation as a low-tax island that welcomes investment.

They also suggest it would have significant repercussions for the economy.

Property industry advocates argue it would be smarter to design policies that help more Caymanians achieve home ownership, helping them share in the success of the real estate market rather than seeking to inhibit that prosperity.

At the last census in 2010, there was a roughly even split between renters and property owners in the Cayman Islands.

So policy actions which – either by design or default – cause prices to drop would have negative consequences for roughly half of the island’s population and, potentially, the economy in general.

Inequality a concern

Mushfiq Mobarak is concerned about the other half; the half that has seen rent and house prices escalate in the last decade and their chances of owning a home diminished.

As a professor of economics at Yale University he looks at how effective policy can lift people out of poverty.

Cayman’s current system, he suggests, is designed to do exactly what it has done – encourage development, attract outside buyers and perpetuate inequality.

Salaries have not kept up with the cost-of-living and the spending power and perceptions of quality of life of ordinary Caymanians have decreased in the past 20 years, suggests Mobarak.

“Housing is a big component of how expensive it has become to live on the island,” he said.

The influx of foreign owners, particularly along the Seven Mile Beach corridor, has led to ordinary Caymanians being pushed out of some neighbourhoods. Even parts of West Bay and South Sound have been impacted.

“It is gentrification on steroids,” warns Mobarak, who is married to a Caymanian and has a long association with the islands.

“There is a lot of property that remains unoccupied, with absentee condo owners uninterested in renting to locals. That artificially restricts the space for housing,” he said.

“The land comes off the market and it puts upward pressure on prices and on rents and Caymanians are forced to move elsewhere.”

Whether intentional or not, he says high house prices, significant development activity and the marginalisation of some Caymanians are an unsurprising outcome of the island’s current policy approach.

“This is not an accident. There are several government policies that facilitate that right now,” he said.

Mushfiq Mobarak

The absence of annual property taxes is particularly unusual in the global context. Cayman charges a one-off stamp duty of 7.5% of the purchase price at the time of sale, while most other jurisdictions levy a lower percentage on an annual basis.

“Someone may have paid a tax 25 years ago and now they can sit on their property and accumulate wealth with no benefit to Cayman,” said Mobarak.

A one-off stamp-duty policy also encourages new building and a constant churn of sales that keeps the money flowing into government coffers, he says.

Those taxes currently account for around 10% of revenue.

It’s a situation which creates an incentive to build more property and market it around the world, a strategy which conflicts with what he believes many Caymanians want for the future of the country.

Second-home ownership

It is difficult to quantify the extent of foreign home ownership in Cayman, says Jim Andrews, managing director of Integra Realty Resources’ Caribbean office.

There are no national statistics on, for example, how many properties are owned by non-residents or how many are left unoccupied and for how long.

It is clear, however, that interest in Cayman property is growing – a trend that only increased during the pandemic, says Andrews, a property market analyst.

Remote working and policies to attract high-net-worth individuals to reside in warmer climes,  have accelerated demand for places like Cayman.

Seven Mile Beach property is a major draw for overseas investors.

While that has been good for many sectors of the economy – including construction, real estate and retail – it does take property out of the pool for locals and drive up prices, he warns.

This is not exclusively a post-COVID phenomenon. Investment for the short-term rental market, buoyed by services like Airbnb, has had a similar impact over the past decade.

“This is a phenomenon seen in many cities where only the wealthy can afford properties which drives up the values of real estate in general, decreasing the affordability of housing, driving up the wealth gap between income classes,” said Andrews.

Jim Andrews

He believes higher taxes for second homes could be a potential solution but warns that some Caymanians also benefit from investment properties, which provide retirement income for many.

Population growth a factor

Attorney Cline Glidden, of Ogier, suggests the influence of high-net-worth property buyers in Cayman is largely positive and has a relatively small impact on the local market.

With a $2.4 million investment required to qualify for residency, he believes these individuals are not competing directly with middle class Caymanians for homes. The luxury market is essentially a distinct niche comparable to the tourism industry, Glidden suggests.

Anyone looking for reasons for the surge in house prices, should look instead at population growth, he said.

With more than 1,000 people seeking permanent residence each year – and a points system that incentivises them to own property – he says it is not surprising that demand is outstripping supply for mid-price housing.

Cline Glidden

“The fact of the matter is that the shortage of properties is in the $300-$900K range and that is influenced by people coming in on work permits, intending to qualify for PR, and buying property,” he said.

“The situation is directly linked to immigration and population growth.”

‘Dangerous solutions’

While restrictions on foreign ownership may seem like an intuitive solution, Michael Joseph of Property Cayman argues there would be a significant downside.

“This is a seemingly easy and quick fix. However, it’s extremely dangerous and would have an immediately negative impact on several fronts, not least what makes Cayman attractive compared to other jurisdictions,” he said, urging government to consult broadly before contemplating such “drastic and far-reaching changes”.

Joseph believes Cayman’s status as a free market, low-tax island that welcomes investment is good for the majority of people in Cayman.

“The economic benefits that come from property investments flow far and wide,” he said.

Developer Morne Botes said many Caymanians had benefited form the growth in property prices, and policy interventions should focus on helping others be part of what he sees as a success story for the island.

“The challenge with the property market at the moment, is supply. We need a lot more homes, especially starter homes, to offset the demand.”

Botes, who has Caymanian status, believes home ownership is viable for the majority in Cayman and argues that inhibiting the property market will only stifle people’s opportunity to invest and profit from their island’s success.

“An individual has the opportunity to buy a home, enjoy it and sell it for profit,” he said.

“As a Caymanian, I am proud to say we have the best islands in the world and our free market is a big reason for this.”

‘Restrictions are ineffective’

Realtors and developers are obvious benefactors of property investment, but lawyer Ian Jamieson says there is another reason not to tinker with Cayman’s open property market.

Jamieson, a partner at Bedell Cristin which operates in Jersey, Guernsey, British Virgin Islands, London and Singapore as well as Cayman, says his experience of restricted property markets is that they discourage necessary development and real estate transactions, and are ineffective as price-control measures.

Ian Jamieson

“It is not a surprise to me that those jurisdictions which have restrictions on foreign ownership have a much more stagnant property market and the quality of build is much lower.”

In Bermuda, which tightly regulates foreign ownership with the exception of multi-million dollar homes, he said the result had been a two-tier system that had restricted housing supply and kept prices high for locals.

Jamieson argues that foreign home ownership has major benefits for Cayman – bringing jobs, investment and discretionary spending.

“During lockdown, we had a number of individuals looking to bring themselves, their families and, in some cases, their businesses and staff here to Cayman as the requirements for PR, coupled with the high quality of residences on islands and excellent standard of living, made this an immensely attractive proposition,” he said.

“Many of these individuals are now looking to make Cayman their permanent home, which can only benefit the island as a whole,” he said.

Jamieson argues that the demand for housing created by an open market encourages developers to build high-end homes and amenities that benefit everyone.

“Any change to this would, in my view, have extremely negative consequences for the housing market and, in turn, the Cayman economy.”

He highlights increasing the threshold for stamp duty exemptions for Caymanians, concessions schemes that target affordable developers, and expansions to the pension withdrawal scheme as better policy interventions that could help people get on the property ladder without destabilising the economy.

What the future looks like

Mobarak acknowledges that Cayman’s current system has been good for some. But he questions whether it has contributed to an improved quality of life for most Caymanians.

Concerns about development, beach access and the degradation of the environment are interlinked with worries about the affordability of housing.

And he suggests Cayman’s current policies will only magnify those problems in the coming decades.

The island cannot build its way out of an affordable housing problem without contributing to a slew of other problems, he suggests.

He’s reluctant to advocate for any particular government action, but suggests a re-examination of current policies to ensure they align with what government and the people actually want.

“The broad point is not the specific design of the tax regime, it is the vision for what the country should look like,” he said.

“If we continue to rely on this model we know what it looks like. It looks like Miami, it looks like Waikiki, it looks like Malé in the Maldives. We can draw a picture right now.”


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  1. Stopping others from buying their home doesn’t improve the chances of you buying yours. If government really wanted to move the needle, it would drop all fees and duties for first time Caymanian home buyers for a primary residence and have a separate revolving loan fund using government backing for low or no interest. This would also include provisions to prevent “flipping” and low fixed dollar realtor fees. It never will be easy to buy a first home. All government can do is make it less difficult through direct incentives.

    • I agree in general. However, I would point out that one of your recommendations is already in effect. According to CIREBA:

      First time Caymanian* buyers pay zero Stamp Duty if the dwelling is to be owner occupied and the consideration or market value is below a CI$400,000 threshold.
      For undeveloped land, first-time Caymanian buyers pay no stamp duty on purchases valued up to CI$150,000 provided an owner-occupied dwelling will be built.
      For houses, apartments or other dwellings valued above CI$400,000 but not exceeding CI$500,000 the first-time Caymanian owner occupier pays Stamp Duty at a rate of 2%.
      For first-time Caymanian buyers buying bare land valued above CI$150,000 but not exceeding CI$200,000 the stamp duty is calculated at 2%.

      So there is some consideration for firs-time buyers, but with restrictions.

  2. Many of my Caymanian friends can remember when there was no public electricity on the island and doing their homework by candle light. The men went to sea and women bought up the children.

    We now have a first world economy with jobs for all who are prepared to work.

    This is a direct result of the free economy here. Why does anyone wish to change a winning formula.

    However there certainly should be help for young people trying to buy their first home. We have import duty waivers for developers building luxury hotels and hospitals, why not for those developers building more affordable housing?

  3. I love Bermuda but its ridiculous real estate ownership restrictions caused me to buy in Cayman ten years ago. I have spent many, many thousands of dollars in Cayman since then. Caymanian policies are good. Don’t kill the goose that lays the golden eggs….

  4. There is lots of Crown and Government owned land in the Cayman Islands. There are many large development tracts available here as well. Government could develop its own land and sell to Caymanians and it could encourage development of other large holdings in Cayman. We can’t house the Caymanians of the future without continued development. Cayman needs to open and grow more, not less to provide a dynamic economy for those Caymanians. The model should be more like Dubai’s or Abu Dhabi’s less like Bermuda or Jersey. We need more investment from foreign buyers not less to encourage growth and dynamism in our economy. The difference between Cayman and other places (including the Channel Islands) is Geography (we are out of the way of major cities), Infrastructure (we are still lacking in submarine cable capacity and other telecoms connectivity), Susceptibility to Disaster (see the damage from a simple trop-storm a few weeks ago. we are always one massive hurricane away from a complete reset); and Geology (we are perilously low to the sea). Any Country with those potential black swans lurking needs to sleep with one eye open and keep the investment and open-ness going.