Cayman’s success has been built upon three main economic pillars – financial services, tourism and real estate.
It is well understood that the first two industry power houses have been mainstays of the economy over the years; however the real estate and development industry has been intrinsically linked to both tourism and financial services, providing the physical framework within which both can operate, while at the same time contributing significant sums to the Cayman Islands government’s finances and the country’s economy as a whole.
A look back in time
Over the years the Cayman Islands as a jurisdiction has worked incredibly hard to build up its financial services industry and likewise its tourism product. As both industries grew in the 70s and 80s, with financial services rapidly taking the number one spot from tourism during this time, the real estate third pillar of industry was still in its infant stages; but over the past couple of decades this industry has flourished, servicing the needs of both the tourism and financial services industries in spectacular fashion and in a multitude of ways.
There was a rapid development of hotels and resorts along Seven Mile Beach in the 90s and the new millennium in response to the equally rapid growth in Cayman’s tourism product, thereby increasing the quality and quantity of room stock available to the industry and elevating the product to new heights not even imagined previously.
The Grand Cayman Beach Resort (formerly the Hyatt), the Westin Casuarina and, of course, the five star resort of The Ritz-Carlton, as well as Seven Mile Beach condominiums, have rapidly enhanced to Cayman’s tourism product, in addition to resort development at Cayman Kai and general coastline development.
Likewise, following on from the financial services industry boom, a strong infrastructure in the form of homes and condominiums has flourished as a result, with more inland construction taking place in recent years, further bolstering the residential real estate market. This is quite apart from the construction of commercial real estate in the form of office buildings in and around George Town and in other significant pockets of development along Seven Mile Beach.
A billion dollar industry
Leading up to the present day, Cayman has seen unprecedented development in substance and size with Seven Mile Beach condominium construction in recent years packing a huge weight as far as investment is concerned. The figures are truly impressive, with a combined total investment of over half a billion dollars in just a handful of developments.
Luxury, high end projects that speak to the highly discerning investor including Water’s Edge, BeachComber, Sea Breeze, The Renaissance, South Bay Beach Club and, most recently, WaterColours, have all added substantially to the economy, creating investment for overseas buyers, homes for on-island residents and creating substantial inflows into the public purse in the form of stamp duty revenue to the government.
These developments should be viewed in conjunction with the development of the town of Camana Bay, in which the developers have already invested over half a billion dollars in infrastructure, commercial, retail and retained residential construction, all of which formed the initial stages of development.
All these substantial investments have assisted in the appreciation of land value, and have maintained Cayman’s construction industry over the years and boosted the economy, successfully highlighting over the last two to three years the fact that the real estate and development industry really is the third pillar in Cayman’s economy.
Sustaining the economy even in difficult times
Going forward, it is important that we assess how the industry and ultimately the island as a whole will fair during these tough economic times, with so many pressures being brought to bear on all economies around the world.
At present all indicators for the Cayman Islands remain solid, despite the doom and gloom emanating out of other countries in the world, with substantial projects in the pipeline or about to begin that will lead the economy through the next decade and beyond.
Camana Bay is committed to moving forward with its residential component of its development phase, which will mean 150 units will be for sale over two phases and they will be ready by the mid to late part of 2013. They are also nearing completion on a 50,000 sq ft commercial space where the anchor tenant will be the law firm MourantOzannes.
Other projects slated for fruition in the coming years will add to strengthen this segment of the economy. These include the rejuvenation of Cayman’s landfill site, the development of the Shetty hospital project (which is now further underway due to the developer’s recent purchase of land) as well as investment in the West Bay Road extension and the revamping of the former Courtyard Marriott hotel.
While in George Town the newest commercial building of 50,000 sq ft has broken ground at Cricket Square with the anchor tenant being the law firm Campbells. The Cayman Enterprise City Special Economic Zone is another important construction project that is anticipated to bring growth and development to the island in the coming years.
These projects will have a truly enormous impact for the island as a whole and stand the Islands in good stead for the future, especially when comparing this jurisdiction with our Caribbean neighbours and other countries further afield.
Everyone benefits from sensible development
Even if the public does not feel the direct benefits from such infrastructural developments, it should be appreciated that the added value will impact us all indirectly because of spin-off revenue spending on island by those who are working on such projects and ultimately those for whom the projects have been created.
The end result of such projects creates a much more vibrant and active marketplace which positively affects both residents of the Islands who live and work here as well as non-resident investors who may only call Cayman home a few times a year. Such activity will naturally create a positive influx of cash that can only cause market appreciation in the long run.
Sensible, well thought-out development projects should be embraced and welcomed by all for the critically important and valuable assets they are to the country. In this light the industry as a whole should be valued as the third pillar to the economy that it truly is.