Cayman’s economy holds strong in the Caribbean

The Caribbean is gradually recovering from the economic downturn of the past few years, principally because the region’s tourism market, the greatest source of income to many Caribbean countries, lies in the main, in North America.  

Our economies therefore are extremely dependent on North America’s successes, where an increasingly affluent population keen on spending again is ultimately to our benefit, as Americans look again to holidaying in the Caribbean and perhaps even to purchase a second home here, for investment or purely pleasure purposes.

Economic growth for the region 

Caribbean-based Integra Realty Resources recently produced an interesting Caribbean Market Update 2015 Mid-Year Report, written by James V. Andrews, in which the author discusses the increase in growth for the region based upon World Bank predictions.

While growth in the greater region of Latin America and the Caribbean slowed to 0.9 percent in 2014, the World Bank noted forecasted growth for the overall region to an average of 1.7 percent from 2015 to 17 based on the ongoing recovery among some of the advanced economies. What is interesting is that the World Bank singled the Caribbean specifically for a projected growth of about 3.7 percent in 2016–17.

But even though growth is predicted, it is worth analyzing in more detail the economies of individual Caribbean countries. For example, Andrews stated in his report that the sovereign debt ratings in some Caribbean countries continue to be downgraded. In Puerto Rico, the General Obligation and Guaranteed bonds were downgraded by Moody’s to Caa3 from Caa2. Andrews noted this follows the announcement that Puerto Rico will not be able to meet its long term debt obligations.

Moody’s also downgraded the government bond rating of Trinidad and Tobago from stable to negative (from Baa1 to Baa2), on the basis of declining oil prices and limited economic diversification, his report said.

Cayman leads the way 

By contrast, in February 2013, Moody’s Investors Service affirmed the Aa3 government bond rating of the Cayman Islands, in which they stated that the rating outlook remained stable.

According to Moody’s Investment Services credit rating analysis report on the Cayman Islands of December 2013: “…the country’s strong institutions further support the rating. A long history of policy consensus and a sensible macroeconomic approach explains its high economic development and still low debt burden. Cayman scores highly and outperforms most of its peers in such measures as the World Bank’s governance indicators. The United Kingdom (Aa1) provides further institutional support through fiscal oversight and ultimate judicial review.”

Cayman’s economy is based upon three separate but essential sectors – tourism, financial services and development. Our economy is broader than others within the region and thereby supports our high credit rating.

This is also supplemented by our excellent public/private sector relationship and overseas territory status with the U.K. Development has played an integral role in strengthening of our economy, especially over the past 18 months or so. According to the Economics and Statistics Office, planning approvals rose from $311.7 million in 2010 to $404.1 million in 2014. Property transfers rose from 316.4 million in 2010 to $562.8 million in 2014, while growth for the economy as a whole went from 2.7 percent in 2010 to 2.1 percent in 2014.

It is worth noting however, that the Moody’s report does state that it did not see an improvement to our credit rating in the foreseeable future. Instead it noted: “We would consider a positive outlook in the event of a significant reduction in the overall level of government debt and changes to the policy framework that make it unlikely debt will rise materially again.”

It is good to note therefore that the Cayman Islands government is working hard to do just that, as highlighted in Finance Minister Marco Archer’s 2015/16 budget address in which he said that government was looking to a $121 million surplus, the debt burden would fall and government would be in full compliance with all principles of responsible financial management by the end of June 2016.

A solid investment 

So, what does this solid credit rating and a firm grip on the country’s finances mean for the Cayman Islands as a whole? It is just another reason why investors ought to feel safe in the knowledge that Cayman is a great location for a second home.

A considerable number of overseas buyers have already recognised the benefits of purchasing property in Cayman. Not only is it a solid investment which should show steady growth over time, it’s also a fantastic location for a brilliant vacation for all the family.

Cayman’s highly sophisticated infrastructure continues to flourish further with recently completed developments such as The Watercolours (beachfront luxury condos), with only a handful of units left for sale, as well projects on the go such as the a recent push by government to upgrade its roads, the development of the new Kimpton Hotel that is rapidly taking shape and looks to be an impressive resort and the rapidly expanding Health City Cayman Islands, which also continues to offer an increasingly broad amount of first class medical services for local and overseas patients.

The development of our main airport, the Owen Roberts International Airport in George Town, is set to positively impact our tourism industry in a huge way, permitting larger aircraft from further afield to access this destination.

I am delighted to note that phase one of the redevelopment and expansion of the Airport broke ground in September. In addition, Dart continues with its ambitious $300 million investment in the expansion of Camana Bay, already a central draw for residents and visitors alike, while the volume of other construction and development projects around the island continues to soar.

I am excited for Cayman’s future. Sensible financial management by government, developing infrastructure, coupled with an improving U.S. economy all point towards Cayman’s economy leading the region in the months and years to come.

 

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James Bovell
James has been a part of the real estate industry in the Cayman Islands since 1991. Born in the Caribbean and educated in the UK, he has achieved great success in listing and selling many of Cayman’s choice homes, waterfront condominiums and developments, land parcels and investment opportunities.  James has received many of RE/MAX International’s awards including The Circle of Legends, (the highest career achievement within the RE/MAX international network with fewer than 200 inductees to date).
James Bovell
Broker/OwnerRE/ MAX Cayman Islands
PO Box 30189 Grand Cayman
KY1-1201 Cayman Islands
T: +1 (345) 945 4000 E: james@bovell.ky W: www.bovell.ky 

RE/MAX

RE/MAX, which stands for 'real estate maximums', was founded in the 1970's by Dave & Gail Liniger in the United States of America. They developed a unique franchise system that allows real estate agents to maximise their potential by having the security of a franchise and at the same time having the individual freedom to run their own business. Today the RE/MAX network comprises over 6,000 offices with around 90,000 associates in 85 countries.

RE/MAX Cayman Islands is such an independently owned and operated office within the real estate network of RE/MAX International and RE/MAX Caribbean/Central America. The office at 7 Mile Shops on West Bay Road unites 21 real estate professionals and 9 administrative staff under one roof. All our associates and administrative staff are highly experienced and constantly expand their knowledge with ongoing training. Within the office, our associates use the synergy potential. Not only synergies within the office are important but we also work closely with RE/MAX offices all over the world as part of our international referral system.

Locally and internationally we are dedicated to maintain a high degree of visibility which will benefit our highly valued customers and clients as well as our Sales Associates. A comprehensive marketing strategy across all media including print and internet ensure our consistent exposure.

We are well established in the Cayman Islands real estate market as a strong office, capable of producing outstanding results. Referrals from satisfied buyers and sellers are a proof of it as well as the many awards the office has received. 

Physical address:
Seven Mile Shops
215B West Bay Road
Grand Cayman

Mailing address:
PO Box 30189
Grand Cayman KY1-1201
Cayman Islands

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