The political situation in the United States will always have a direct effect on the Cayman Islands economy because of our currency connection, our physical proximity and therefore frequent travel to and from the U.S., our reliance on imported goods from the U.S. and the fact that our tourism industry is so heavily supported by the U.S. market. Our financial services industry plays a crucial part servicing the global economy, helping banks and corporations to lower their costs which will ultimately be passed on to the U.S. consumer.

Ensuring we have a positive relationship with the United States means our economy, which of course includes our real estate industry, can continue to thrive. Our own economy is therefore tightly interwoven with that of the U.S.

The transition of U.S. presidency from President Obama to President Trump will therefore be watched with close scrutiny by all of us in the Cayman Islands.

 

An historical perspective

It is difficult to ascertain exactly what the impact will be on the Cayman Islands once Trump is the U.S. President, as, at the time of writing, he has not even yet been sworn in as president, so I thought it would be useful to start by assessing how the Cayman Islands has traditionally fared under successive previous U.S. presidencies.

The two sides of the U.S. political spectrum differ vastly in their philosophies as they relate to offshore.

Generally speaking, I believe that the Cayman Islands has done well under a Republican presidency. The reason for this is the Republicans better understand the benefits a tax neutral environment has on business and as a result how the public at large can benefit from this type of environment. Offshore financial centers such as the Cayman Islands provide corporations with the opportunity to reinvest their capital and returns, ultimately providing better share returns for investors and thereby allowing U.S. corporations to compete in this global market place. Employing tax neutral strategies gives U.S. companies the opportunity to afford to hire expensive local labor, benefitting the man in the street and bolstering the American economy. U.S. pension funds invested in offshore funds benefit from their investment’s tax neutral environment and the Cayman Islands is the leading jurisdiction for healthcare captives, representing around a third of all captives, and a very large percentage of this is focused in the main within the North American market. Republicans mostly understand and appreciate all the benefits the offshore financial services industry brings to their own economy.

 

Negative effects of a Democrat presidency

What usually happens under the Democrats is a clamping down on tax neutral environments in an attempt by the U.S. government to hold on to tax revenue from corporations and individuals, thereby making it harder for offshore financial services to operate and compete with the U.S.

It is interesting to note that, over the past eight years under the recent Obama administration, I have witnessed grave concerns by U.S. investors who have are looking to invest in Cayman Islands real estate. In the main, these investors did not appreciate how their government was spending their tax dollars and they were not happy supporting an environment where monies were taken from those who provided the taxes and revenue, and given to those who did not contribute to the U.S. economy via taxes. Instead, they preferred to look at attractive and secure locations such as the Cayman Islands to make property investments that they felt were sound and would offer steady returns for the long term. This has therefore caused a marked interest by overseas investors looking to expand their property portfolios into Cayman Islands real estate.

There is no denying that President Trump is pro-business and it has been his mantra to grow business and ‘make America great again’, but without a clear stance from the new American president on his administration’s views on the offshore financial services industry, it is difficult to make any predictions as to how this jurisdiction will fare. Time will tell as to whether our relationship with our influential mainland neighbor will benefit from the new Trump presidency.

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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.

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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. 

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215B West Bay Road
Grand Cayman

Mailing address:
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Grand Cayman KY1-1201
Cayman Islands

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