Ease of property ownership, a stable government and tax neutrality make the Cayman Islands an attractive locale for foreign buyers, according to topics discussed at the 2019 Christie’s International Real Estate Owners Conference, which was held in Paris, France, from April 2 to 4.
“The ability for foreign purchasers to acquire property in the Cayman Islands was particularly appealing to delegates given the recent trend internationally for some countries to attempt to deter sale of property to offshore buyers,” said Dart Real Estate VP Marketing Sue Nickason, who attended the conference and appeared on one of its panels. “For instance, countries such as Australia and New Zealand have imposed restrictions on the sale of existing properties to offshore buyers and in the case of Australia, imposed a higher stamp tax on these buyers. Canadian provinces such as British Columbia and Ontario are also charging higher taxes on properties sold to international property investors. A realtor from Vancouver noted that once the new foreign buyer taxes were increased, her luxury real estate sales dropped by approximately 25 per cent.”
Government and jurisdiction stability was another hot topic, particularly in markets such as the United Kingdom where Brexit has caused the market to “stand still” for two years, according to delegates from that jurisdiction. Christie’s affiliates from France were able to point to the damage still evident on the nearby Champs-Élysées as a tangible impact on the performance of the French property market. “When people are worried about the stability of a market, whether it is personal safety or government stability, sales slow down. It’s that simple,” said one realtor from France.
Tax neutrality in the Cayman Islands was of interest to other realtors in attendance, given a growing trend by high net worth individuals who are looking for low-tax locations in which to establish residency. To that end, low-tax Monaco remains a highly desirable locale although the market is experiencing a challenge meeting demand due to a very limited supply of properties large enough to accommodate families.
The challenges faced in luxury real estate markets in other countries are creating opportunities here on Grand Cayman.
“At Provenance Properties, we are seeing increased interest from international property buyers due to our ability to meet market demand by providing a safe and tax neutral place to acquire property with ease,” said Nickason. “The conference reconfirmed our commitment to convey these key benefits of owning property in the Cayman Islands in our international business development outreach. We will be working closely with our colleagues in the Christie’s broker network internationally to introduce the Cayman Islands as a preferred locale.”
Other relevant topics in the conference included the impact of natural disasters on demand for real estate, although most realtors noted buyers have short memories and impacted markets usually bounce back fairly quickly.
The timing of the next recession was also covered. Economist Elliott Eisenberg forecasts it won’t happen in 2019; he predicts a softening of global economies but noted that major economies are still performing well. Eisenberg reported that the major economic concerns of 2019 that could prompt the beginning of a recession include geopolitical problems in the Middle East and North Korea, Italian bank failures leading to a European meltdown, a spike in energy prices, and a confidence-shattering decline in the equities market again, similar to what occurred in December 2018. He also expressed concerns about China debt levels and the end of the fiscal stimulus impact in the United States this year.
Eisenberg suggested the audience to take a close look at demographic changes and how to be prepared to meet these trends. He noted that for the first time in the history of the world the population is not growing in major markets such as the U.S. and China, and that Japan is now encouraging workers to work longer into traditional retirement years. He believes this trend will next occur in the U.S. and Europe and invited the audience to ponder what this could mean for real estate sales and opportunities in the future.