Expert: John Gump - 10/13/2008

Question
I am curious about what steps would need to be taken to open and operating a retail business in Grand Cayman.  I visited the island and found that it was impossible to find clothing to purchase and the locals indicated that there were no places to shop other than the pricey ($150 and up for a blouse) or the extremely sub standard outlets that had limited apparel choices.  I was shocked.  Why do clothiers have such a difficult time making a profit when there is virtually no competition?
What is the average cost per square foot of renting a retail space along the seven mile island area? Are there any other costs to be considered?

Sincerely,
Tricia Stanley

Answer
Hi Tricia - thanks for your question.  This is not an easy question to answer as so much depends on so many factors, but let me see if I can give you a good summary and then point you to some resources where you may find a lot more detail from the Government of Cayman itself.

Expats wanting to work in Cayman must apply for a work permit.  These are expensive, and the costs continue to change (go up). I think it's good for 7 years.  On top of this you'd have to apply for permanent residency and at last check was over $15,000.

Now, if someone in the U.S. say wants to open a business on Grand Cayman, the business must be 60% owned by a Caymanian.  This means you'll have to find a business partner.  Now, one way around this lobsided partnership is to get 2 partners, granting each of them 30% ownership, leaving you with 40%, and thus you maintain majority ownership as an individual.  If after a period of time no Caymanian steps forward in interest, I believe you can get this waived but it'll test your patience.

Secondly, as job positions are opened up, Caymanians must be given first right of refusal before the position is allowable to grant to a non-citizen.  While this may seem over the top, as it turns out, it's not really that big an obstacle as you might think.  Caymanians are quite picky.

As for retail office space, well it's just the same as in the USA, location location location.  That being said I'd plan on between $100-$200 U.S. per sq ft, plus $25-$50/sq ft for build out (lighting, power, phone, etc. if not already built out). Higher prices are going to be along West Bay road in the 7 mile beach area and near the cruise terminal in downtown Georgetown. Of course on top of this is insurance, which after Ivan back in 2004, the costs have really skyrocketed.

The Caymanian gov't unfortunately is known for being "allegedly" corrupt in many ways.  Prices continue to rise and yet tourism is down.  The main industry on Grand Cayman, is banking.  There are over 400 banks on a 7x23 mile island!  Given this as a primary income source, and the international laws around guarding privacy, banking will continue to thrive there.  Tourism is down, but for some reason the gov't continues to allow fees to rise. Free market enterprise at its finest!?! Just check out a flight from Miami to Cayman on Cayman Airways, ridiculously expensive.  

I've never been able to figure out why the prices for things are so high.  I mean, duty on liquor/beer is right around 100%!  So it stands to reason that duty on all imports is probably running near as high. Because Cayman has no income tax is one of the major reasons for such high import duty tax and due to the fact that Cayman really doesn't have any quantifiable high-demand exports to offer the Caribbean economy.

As for clothing, my wife sees the same thing.  There are places to find some bargains on good stuff, but by and large, even bikini bathing suits are selling for near or over $100 for the good quality ones.  Crazy!  Also remember, Cayman is VERY wealthy. There's virtually no poverty as compared to other Caribbean islands.  There are many BILLIONAIRES who have homes and property there (Bill Gates for one).  Next time you're there, go have drinks (or one) at the Ritz Carlton or Hyatt, chances are you'll see some big names.  The goverment knows this and that the bigshots will pay the big bucks so everyone has to deal with higher prices.  I've seen Ferraris, Rolls Royce and Aston Martin cars there many many times.  

For more info and contact info on business opptys in the Caymans, check out this site.

www.newresident.ky

I hope this has helped you some. Please let me know if I can be of further help.  God Bless You!

John