Located south of Cuba and northwest of Jamaica, Grand Cayman is a popular tourist destination.
This island paradise is also one of the most expensive places for people to live and visit.
Little Cayman, Cayman Brac, and Grand Cayman are the three islands of this British Overseas Territory.
The Cayman Islands is a self-governing territory with fewer than 70,000 residents and a very high standard of living.
This territory has some of the most expensive places to live and visit anywhere in the world, with the highest prices on Grand Cayman.
Why Is Grand Cayman So Expensive? (Top 10 Reasons)
1. Tourism Is An Important Focus
Tourists enjoy visiting Grand Cayman.
Some of the top destinations include Seven Mile Beach, Stingray City, the Cayman Turtle Centre, and diving locations all around the island.
If one had to characterize the primary industry that employs most of the workforce on Grand Cayman, the biggest “factory” would be the sandy beaches, posh resorts, and many other establishments that support the thriving tourist economy.
In 2007, tourism represented 70% of the gross domestic product of this popular island destination.
The majority of arrivals came from the United States, Canada, and the United Kingdom back then.
Tourism has continued to grow in importance in the fifteen years since then.
The strong demand for travel to Grand Cayman has led to steadily increasing prices since the ability to expand supply is not limitless.
The coronavirus pandemic has taken a toll since 2019, however.
Lockdowns and the halting of cruise ship traffic had a strong impact on the local economy.
Many who relied on tourist traffic felt frustrated as the number of visitors declined.
Authorities on Grand Cayman want tourism to resume.
Knowing the value of visitors, Cayman tourist authorities regularly update travel requirements.
As restrictions have eased, more tourists have returned to Grand Cayman.
They arrive with pocketbooks full of money and credit cards, ready to contribute to the local economy.
2. Limited Availability Of Fresh Water
Although water surrounds the people who visit and live on Grand Cayman, they cannot drink much of it in its natural state.
Gulping down salt water will not quench one’s thirst.
With its highest elevation lower than 150 feet above sea level, there are no hills or mountain ranges to collect fresh rainwater.
Although a few freshwater ponds and lakes exist, there are no long and mighty rivers like the Arkansas, Colorado, Mississippi, or Ohio Rivers to transport potable water to areas throughout the island,
While a few wells may have been dug in earlier years, pioneer settlers often used cisterns and other gutter systems to capture water for their cooking, drinking, and cleaning needs.
Importing bottled water is costly and weighs heavily on the holds of aircraft.
The situation is even more challenging on Little Cayman, a much smaller island that lacks any substantial freshwater resources.
Those living on the Cayman Islands devised a better solution, one that involved technology and required a substantial financial allocation to get the water flowing.
Much of the water in Grand Cayman not imported in plastic bottles is supplied through desalination.
The reverse osmosis process used to desalinate substantial amounts of the drinking water on the Cayman Islands required an extensive financial investment.
This was a life-or-death decision for Grand Cayman’s economy and the growing demand for fresh water in hotels, resorts, swimming pools, restaurants, and homes.
At the present time, some water is pumped from below the earth.
Wells deep below the subterranean limestone provide some of the drinking water used today.
The seawater taken from this deep source does not have many of the contaminants found in surface seawater.
Reverse osmosis takes care of any microbial salts, dirt, or organisms that remain.
3. Importing Food From Elsewhere
The Cayman Islands have a wealth of seafood in the adjacent waters.
Some farms provide locally grown crops, dairy products, and meat.
However, this relatively small island lacks many of the manufacturing plants that create most of the processed food products consumed on the island.
Many edible foods arrive by cargo ship.
Some get transported by air or perhaps dropped off by cruise ships and smaller vessels.
Whether one lives on Grand Cayman or just comes for a visit, they should expect to pay a pretty penny to fill their bellies, cupboards, refrigerators, and freezers.
Tourists can expect high food prices at restaurants, with few low-budget options, even at destinations that are off the beaten path and fast-food franchises.
According to one recent post, tourists should expect to pay approximately $120 in Caymanian dollars for a full slate of restaurant meals each day.
That is over $146 in US dollars, or approximately $180 in Canadian dollars, as of late May 2022.
Budget-conscious tourists have to do their research.
Others might need to take out a second mortgage on their house if they want to eat like royalty.
To live on Grand Cayman full time, Caymanians may spend anywhere from $600 to nearly $1,200 in their dollars on monthly grocery expenses, or $725 to $1,450 in American greenbacks.
Although prices fluctuate due to tensions in the supply chain, a few examples from 2021 give an indication of how expensive some groceries are if purchased in Grand Cayman.
One liter of milk costs $5.35 in US dollars.
Sounds expensive, until one realizes that one gallon is 3.78 liters.
That is over $20 for a gallon of milk.
It makes the gas you just put in your car seem like a bargain!
More recently, the price of milk dropped to about $18 a gallon.
Other goods have similarly high prices.
A dozen eggs can cost upwards of $5.50, and expect to spend $4.25 for a loaf of bread in some markets.
Look at the bright side, however.
Some of the local foods—such as cassava cakes, conch stew, turtle stew, and Johnny Cakes—are quite popular.
You can fill your belly, even if you lose some weight in your wallet.
4. Importing Almost Everything From Elsewhere
With few manufacturers on Grand Cayman, most household goods, business supplies, and even tourist trinkets, are manufactured elsewhere and brought to the island.
This means Caymanians have to struggle with shipping delays and supply chain issues like the rest of us, but without another superstore or warehouse club a few miles away, they lack a wide variety of shopping alternatives.
Manufacturing represents barely 3% of the gross domestic product in the Cayman Islands.
One thing that is manufactured in the Cayman Islands is the popular Tortuga Rum Cake, though a person probably could not live on it alone.
Much of the “manufacturing” on Grand Cayman involves manufacturing memories for the throngs of tourists who visit.
Another very large chunk involves the manufacturing of lucrative opportunities for overseas investors.
5. Real Estate
Owning a home near the world-famous Seven Mile Beach on Grand Cayman is a dream for many.
This is a very high-priced dream, indeed, as opportunities to purchase prime real estate have declined in recent years.
There are no bargain basement bungalows or inexpensive fixer-uppers in George Town or any other settlement on the island.
Prices rose by 11% in 2020 on the average price of pre-construction projects near Seven Mile Beach.
They have now surpassed $1,400 per square foot.
Expect to have plenty of cash to build your dream home near a dreamy beach.
Homes in high-tone areas such as Crystal Harbour begin at over $2 million.
One thing to look forward to if a person can afford to purchase a home in the Cayman Islands is that this place does not assess an annual property tax.
No restrictions prohibit foreigners from purchasing real estate on Grand Cayman.
They should, however, expect to have enough disposable income for the higher cost of supplies, services, and that very expensive gallon of milk they have just placed in the refrigerator that has just arrived from overseas.
6. Attracts The Super Wealthy
The natural beauty of Grand Cayman, along with its comfortable year-round climate and high-end amenities, has attracted a wealthy class of visitors.
These are not the type of people who think that getting more shrimp and imitation crab on their plates at a cruise ship buffet is a way to save money.
On a per capita basis, the Cayman Islands is one of the wealthiest locations in the world.
Similar to Bermuda, Singapore, Luxembourg, and Liechtenstein, these three Caymans attract a high-class clientele.
The most common imports and exports entering and leaving the Caymans tell the story.
In recent years, the top five imports into the Cayman Islands have been recreational boats, cargo and passenger ships, refined petroleum goods, gold, and passenger vehicles.
Recreational boats are by far the most valuable import, amounting to over $2.7 billion.
Next on the list are cargo and passenger ships, which amounted to only about $100 million.
Compare these categories with exports.
The top five exports from the Cayman Islands have been recreational boats, gold, refined petroleum products, cargo and passenger ships, and broadcasting equipment.
Once again, a huge gap separates the value of passenger boats from the runners-up.
Do you see a trend here?
Big water ships for wealthy folk come and go to the Cayman Islands.
Most stay on Grand Cayman, the richest of the three islands.
While staying in Grand Cayman, these wealthy tourists and business people purchase many luxury items and visit very exclusive resorts and destinations.
Although a few of them most certainly purchase Tortuga Rum Cakes, that homegrown specialty appears nowhere in the top 10 export commodities.
7. Cayman Currency Is Tied To The US Dollar
The Cayman Islands dollar (CI$ or KYD) came into existence in August 1972.
This currency replaced the Jamaican dollar that was previously in use on the islands.
For most of the 50 years of its existence, the Caymanian dollar has had a parallel relationship with the United States dollar.
Under the Currency Law of 1974, the CI$ was set to be valued at US$1.20 on April 1, 1972.
This is no April Fool’s joke.
The value of the American dollar has a direct impact on the value of their dollar, which is the legal tender in the Cayman Islands.
This means that $1 in Cayman Islands currency has the same value as $1.20 in the United States.
Thus, $1 in American currency will get you approximately 85 cents in Cayman coins.
If all of this seems confusing, one can take comfort in knowing that nearly all establishments gladly take American dollars.
They will do the math and figure out the exchange rates on their own.
This direct relationship can become a problem for the Cayman Island economy and prices on these islands.
Unlike most currencies that have fluctuating values, this direct connection means that when the value of the American dollar increases, the same thing happens to the Caymanian dollar.
It also means that in times of inflation, adverse fluctuations that affect the value of the United States dollar will have some level of impact on the currency of the Cayman Islands.
Rather than taking a different course than the American dollar, they share a similar fate.
Exact values may briefly fall a penny or so above or below this proportional rate, but they quickly correct themselves.
Thus, the already high prices for all of the items purchased on the island will escalate even higher due to inflation.
Residents will have to pay more to other nations for the food and supplies that they need as well.
8. High Import Duties
One of the biggest selling points about life on the Cayman Islands is that this British Overseas Territory does not assess sales tax (Value-Added Tax, or VAT), along with taxes on income, property, capital gains, corporate earnings, or inheritance.
Until 1985, there was a modest CI$10 head tax on adult residents that continued until they reached the age of 60, though it has been repealed.
People born and raised in Grand Cayman do not have to fret about preparing and filing income tax returns each year.
Instead, they can spend their mid-April enjoying a tropical drink and a Tortuga Rum Cake.
While their economic system lets them eat their cake, many Americans spend that time of the year worrying about whether they should file an extension.
If the government functions so well without these forms of taxation, one might wonder how Grand Cayman collects enough revenue to maintain its infrastructure.
After all, the Caymans have incredibly good infrastructure, clean settlements, low crime, and great mass transportation.
Parking meters are almost as scarce as winter cold fronts.
There are no casinos like those found throughout the United States, either.
In fact, commercial gambling is illegal throughout the Caymans.
Leave the scratch-off tickets and bingo cards at home, though a wager over a game of dominoes may be permissible.
Tourism taxes exist, which explains in part why tourism is expensive.
The main source of taxable revenue comes from business registration fees and import duties.
This helps to explain why products are so expensive in Grand Cayman even though no sales tax is levied on them.
Since importers have to pay a handsome fortune to get them into the Cayman Islands, these importers then pass along this expense to consumers and tourists in the form of higher prices.
Import duties and tariffs usually range from between 22% to 27%, very high by global standards.
Many countries impose import duties to protect domestic manufacturers.
Since few things are manufactured in the Cayman Islands, this duty is not to protect home-grown businesses.
Instead, it is a way to get the revenue necessary to fund many governmental functions.
Even with these high duties, the Cabinet understands the long-term effects of coronavirus on the population.
For that reason, in December 2021, a waiver on duties for some essential products for children and adults with some medical issues was put into effect.
9. High Financial And Banking Fees
Since many wealthy people enjoy Grand Cayman as a preferred place to vacation, this destination understands that fees on certain transactions will generate a lot of revenue.
If a person banks at a Cayman Island financial institution, they should expect frequent maintenance fees.
Checking fees are very common.
Loan rates and other banking fees are disproportionately high when compared with other countries.
In addition, the government levies a 7.5% stamp duty on most “immovable property.”
This includes real estate, something already mentioned as being particularly expensive.
Stamp duties also extend to mortgages on real estate.
Mortgages under CI$300,000 have a 1% fee.
Mortgages for more than that will have a 1.5% fee.
Since most mortgages have higher values, most people are responsible for the higher fee.
10. Expense To Travel Elsewhere
While it is expensive to vacation or to live in Grand Cayman, those who live there have another expense to consider.
They need to get on a boat or plane to go anywhere away from their island home.
While a flight to Miami or Atlanta might not be incredibly expensive in comparison with the cost of living on Grand Cayman, residents of that beautiful island do have to set aside funds to go anywhere.
Coronavirus travel restrictions have thrown another wrench into this situation.
Enhanced travel restrictions, fewer flights, and a decline in boating traffic have limited travel opportunities during the last couple of years.
Residents of Grand Cayman can expect one other expensive travel-related matter.
When they return to the Cayman Islands from their overseas trip, they have a relatively low duty-free allowance to avoid taxes.
In most cases, this duty-free allowance is CI$500.
Anything above the duty-free limit is subject to a tax, usually at 22%,
They should carefully organize their receipts before returning.
When they arrive, they will need to make declarations to the island’s Department of Customs and Border Control.
If they are wise, they will drink all of their milk before getting back to Grand Cayman.
We already know how expensive milk is!
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