For the past several years, the Cayman Islands has stayed on the radar of extremely wealthy people looking to invest in residential real estate.
Demonstrating characteristics that are desired by the financial elite, Cayman is one of only a handful of Caribbean destinations to appear consistently in the annual Wealth Report by Knight Frank and Citi Private Bank.
Cayman prices in context
Along with the small private island of Mustique in the Grenadines, only Cayman and Barbados have been included in the report in each of the past three years.
In the 2012 report, Cayman ranked 38th out of 63 locations for the price of residential real estate (at US$1,003 per square foot), just above Aspen, Colorado, in the US ($975) and Chamonix, France ($966), and just below Mumbai, India ($1,059) and Milan, Italy ($1,022).
Barbados, meanwhile, ranked 42nd ($901), above Cyprus ($808) and Tuscany, Italy ($808), and below Chamonix and Madrid, Spain ($938). Mustique ranked 24th ($1,802), above Verbier, Switzerland ($1,737) and Rome, Italy ($1,682), and below St. Petersburg, Russia ($1,877) and Shanghai, China ($1,821).
In 2011, Cayman ranked 40th out of 60 locations ($836), just above the British Virgin Islands ($780) and Edinburgh, UK ($762), and just below Tuscany ($892) and Valbonne, France ($845).
Barbados ranked 37th ($948), above Tuscany, and below Chamonix ($1,059) and Madrid, Spain ($975). Mustique ranked 19th ($1,997), above Meribel, France ($1858) and St. Petersburg ($1,728), and below Manhattan, New York City ($2,100) and Cortina, Italy ($2,007).
According to the 2012 report, the most expensive real estate was in Monaco ($5,416) and Cap Ferrat, France ($4,812), while the least expensive among the cities on the list was in Nairobi, Kenya ($158) and the Kenyan Coast ($195). Topping the list in 2011 were Monaco ($6,094) and London, UK ($5,230), while Gaborone, Botswana ($121) and Phnom Penh, Cambodia ($195) were at the bottom.
The British Virgin Islands did not appear in the 2010 report, but in the 2012 report, it ranked 45th ($799), above Telluride, Colorado, in the US ($762) and Auckland, New Zealand ($734), and below Tuscany.
The only other Caribbean jurisdictions to appear in the reports in any recent year were the Dominican Republic, St. Bart’s, and St. Kitts and Nevis, though no distinct prices were associated with those jurisdictions.
Miami, Florida, appeared in the 2012 list, ranking 53rd with an average price of $604.
Guernsey and Jersey in the UK’s Channel Islands appeared in the 2011 report, ranking 13th ($2,220) and 29th ($1,338) on the price list, respectively. Several locations in Switzerland appeared on the 2012 price list, including St. Moritz ($3,958), Gstaad ($3,707), Geneva ($2,964), Zurich ($2,220) and Verbier ($1,737).
What richers want
Many of the smaller countries and jurisdictions in the reports are more likely to be candidates for additional homes for the mega-wealthy, rather than primary places of residence. In addition to tax-friendly policies, those jurisdictions often feature natural enticements, such as proximity to the beach or mountains. As part of the 2012 Wealth Report, Citi’s wealth advisors were asked what their high-net worth individuals – with an average worth of more than $100 million – look for when making property investment decisions.
According to the report, 57 per cent of the wealthy individuals expected the size of their residential property portfolios to increase in 2012; 30 per cent expected no change; and 13 per cent expected a decrease. Broken out by region, 35 per cent of North Americans were looking to increase their residential property investments, compared to 85 per cent of Latin Americans, 56 per cent of Europeans and Russians, 90 per cent of individuals in Africa and the Middle East, and 42 per cent of people in the Asia Pacific region.
Only among North Americans did the Caribbean register as a popular location for second homes. The top five locations for North Americans were the US, UK, France, Mexico and the Caribbean. Among all individuals, the top five locations were the US, UK, France, Spain and Singapore.
According to the report, 40 per cent of high-net worth individuals already owned a beachfront property, and 23 per cent were interested in owning beachfront property. Among North Americans, 44 per cent already owned and 22 per cent were interested. Comparatively, 38 per cent of Latin Americans owned and 43 per cent were interested; 52 per cent of Europeans/Russians already owned and 20 per cent were interested; 38 per cent of people from Africa/Middle East already owned and 19 per cent were interested; and 24 per cent of people from the Asia Pacific already owned and 18 per cent were interested.
The proportion of individuals already owning or interested in owning beachfront property was greater across the board in comparison to their ownership of or interest in ski chalet properties. Overall, 16 per cent already owned ski property and 12 per cent were interested.
Regarding the most important factors when choosing second-home locations, 67 per cent said lifestyle, 55 per cent said investment, 40 per cent said safe haven for capital, 12 per cent said education, 6 per cent said tax, and 5 per cent said business opportunities. Among North Americans, 90 per cent said lifestyle was important and 50 per cent said investment. People from Africa/Middle East were most interested in having a safe haven for capital, with 55 percent saying it was important. People from the Asia Pacific region were the least interested in lifestyle (45 per cent), and the most interested in investment (67 per cent), education (24 per cent), tax (12 per cent) and business opportunities (9 per cent).