Three ways to own residential property in Cayman — Property Cayman

Three ways to own residential property in Cayman

Three ways to own residential property in Cayman
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Kate Ryley

Real Estate Agent

There are three main ways to invest in residential property in Cayman.

  1. Purchase an existing home
  2. Buy a pre-construction property
  3. Buy land and build a new home

Not sure which is the best fit for you? Each approach is very different, with unique benefits and requirements. And the right decision for your property journey comes down to your timeline and investment purpose or goal.

Purchasing an existing property in Cayman

Benefits

Time: The biggest benefit to purchasing an existing home is convenience. You can move in right away. And typically, the home is already furnished. Buying an existing property is the fastest way to obtain residential property in Cayman. You get the keys and go! Perfect for buyers who don't have time to wait and are not interested in renting or for those looking to obtain residency status via real estate investment.

Final Product: You know exactly what you are getting. You can tour the home before putting in an offer. And what's more your offer can be contingent on inspection.

Cost: You know the cost. Unlike other property investment options, the price tag is clear and upfront. The purchase price plus stamp duty and closing costs. Nothing else, nothing hidden or unforeseen.

Location: It's generally easier to get into the neighbourhood you're seeking, especially if you're looking for a single-family home. Most pre-con builds are condominiums, and there aren't too many empty parcels of land remaining around the most in-demand communities of Grand Cayman. So all you have to do is keep an eye on the market. But really, that is what a good agent is for.

Resale: An existing home will likely sell faster than a pre-construction home. I feel this is important to note as Cayman is comprised of nearly 50-60% expatriate workers, and not every developer will allow assignment sales of a pre-construction property. (Although a good agent will ensure there is a clause allowing you to do so for market value or higher.)

Potential Drawbacks

Home Condition: It seems obvious, but an existing home will not be new. You'll need to ensure it meets current planning and safety requirements. You'll want to check whether it has hurricane-rated windows and doors. Is the A/C working properly? You really have to do your homework to check on the home's health. And what's more, you might need to consider the idea of purchasing a home that may require repairs or even a renovation.

Perfect Fit: An existing home likely will not be exactly what you want. Maybe you would've preferred a bigger master bedroom or more bathrooms. Some things you can change but others, such as the overall floor plan, you can't.

Purchasing a pre-construction home in Cayman

Benefits

New: You're getting something brand new. No one else has ever lived in it. There is no wear and tear, and everything is in excellent condition, including the chattels.

Ease of Building: The developer handles the construction and the headaches that come with sourcing materials, planning, labour, etc. Purchasing a pre-construction property allows you to get a new home without being heavily involved in the day to day happenings. You pay the deposit, and off you go until the completion date.

Affordable Deposit Structure: The deposit structure for pre-construction homes is typically very favourable for the buyer. In Cayman, it's usually 10-20% down and nothing more until completion. This allows you to save money throughout the entire construction process, so you have more cash upfront at the time of closing.

Property Investment: Pre-construction homes are an excellent residential property investment in Cayman, even before construction completion. This is because of the strength of the island's housing market. For example, if you buy into a development before groundbreaking and the market value continues to rise (in the past 5-10 years, prices on average have doubled in Cayman), then your pre-construction property will be worth more than you paid for it, even before construction is completed.

Potential Drawbacks

Customization Limitations: Generally speaking, options are limited when it comes to floor plans and furnishings. You might have a handful of floorplans to choose from and a few options for furnishing customizations such as floors, countertops, backsplash, etc., but often there isn't a lot of wiggle room.

Timeline: With pre-construction properties, you are at the mercy of the developer and construction team to finish the development on time. They will provide an estimated date of completion, but there are no guarantees.

Property Type: Most pre-construction properties are condos or townhomes. If you're in the market for a single-family, standalone home, save for the rare outliers, there typically is not any inventory for you to choose from.

Purchase land and build a home

Benefits

Cost: Buying land and building could be your least expensive option to obtain residential property in Cayman. Surprised? Let's do the math. You buy a 0.3-acre land parcel in Governor's Harbour for $800,000. You build a 4,000 square-foot home at the average rate of $500 per square foot. Your construction cost is $2 million. This makes your total property cost $2.8 million. Right now, you can not purchase a comparable home in Governor's Harbour for less than $3 million.

Custom: You get exactly what you want. You can create your own floor plans, choose the furnishings, design the exterior – everything will be precisely to your liking.

Potential Drawbacks

Budget: Every step in the process will cost you money. You'll need an architect, designer, planning permission, etc., making it difficult to know your final cost going into the project. In addition, costs can change throughout the project. If your build takes two years, and the cost of construction materials increases over that time, your final construction cost will be more expensive than you originally budgeted.

Timeline: External circumstances can create significant unforeseen setbacks. The pandemic caused worldwide shipping delays and material and labour shortages, all of which affected the timeline (and cost) of individual construction projects and larger developments.

Location: It might be tough to find an empty parcel of land in the area you want. In popular places like Governor's Harbour, for example, there simply are not many land lots left to build on. Meaning you might end up paying a premium or having to purchase in an alternative location.

Labour Intensive: Building your own home is a very hands-on endeavour. It involves the coordination of vendors and materials. You're the one in charge of making sure construction is moving along at an acceptable pace and being done to spec. It is time-consuming and can be pretty stressful at times.

Investing in Residential Property in Cayman

Residential real estate on the island has roughly doubled in value in the last decade. What's more, we remain in a strong seller's market, making the purchase or building of a residential property in Cayman a smart investment.

Please reach out to me if you have any questions or want to delve more into any of these topics. I'm here to help you through your unique property journey.

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From property valuations to financing, and purchase offers, buying a home can feel overwhelming, but it doesn’t have to be. Island living, it’s literally what we do for a living.

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