HNWI Brochure

THE CAYMAN ISLANDS:

Profile of the wealthy

The HNW population

Choosing a location for residency

The Cayman Islands home: Attracting HNW families to the Cayman Islands

Benefits of a Cayman Islands lifestyle

Camana Bay, Grand Cayman

Jackie Doak President and Broker

provenanceproperties.com

Welcome to The Cayman Islands: A preferred address for high-net-worth (HNW)

families.

The wealthiest individuals in the world, classified as high-net-worth (HNW) – those having a net worth of US$1 million or more – are discerning when comes to choosing a country in which to reside; their geographic mobility enables significant choice. For those High Net Worth Individuals (HNWIs) considering the Cayman Islands, most are seeking residency through investment and need to consider several practical and lifestyle factors in order to consider making Cayman their base.

Through in-depth market analysis and research - The Cayman Islands: A preferred address of high-net-worth families explains the key characteristics of the HNW segment and evaluates how several attributes in the Cayman Islands - tax efficiency, geographical location and accessibility, annual residency requirements, safety, climate, lifestyle, healthcare, privacy, educational and family needs – contribute to their relocation decision. The report also highlights the second-to-none professional services sector on hand to assist families with their move.

Cayman has long held its reputation for attracting the very top tier of global wealthy to its shores due to its tax-efficient status – there are no corporate, income, inheritance, capital gains or withholding taxes in the Cayman Islands. Residents also benefit from no restrictions on foreign ownership of property, no alien landholding license requirements and no recurring property taxes. Importantly, there is a wide range of luxury property available for the most discerning buyers; from resort-style condominiums on Cayman’s award-winning Seven Mile Beach to single-family private estates and its world-class marine environment for fishing, diving and boating enthusiasts.

Over 70,000 people call the Cayman Islands home, representing more than 135 nationalities, and it is now home to several resident HNW and UHNW families, who enjoy not only the ease with which they can move to Cayman but also the protections and privacy it offers as a place to live and the opportunity to secure peace of mind in relation to long-term succession planning.

This research paper was compiled from in-depth interviews with professional advisors who advise HNW individuals – lifestyle consultants, residency and citizenship consultants, lawyers, trustees, tax advisors, asset managers and private bankers based in the following key markets: USA and Canada, Brazil, Mexico, Argentina and Colombia and the UK.

The Cayman Islands: A preferred address for high-net-worth families was produced in conjunction with Wealth-X and Barton Consulting – two global leaders in market data and research within the private wealth segment. Their first-class market knowledge, insights and contacts were integral to the compilation of this research report and we thank them for their support – alongside the professional advisors who kindly shared their insights with the research team.

Provenance Properties – a boutique luxury real estate brokerage that is the official Christie’s International Real Estate affiliate in the Cayman Islands – assists HNWs and their advisers who are considering a move to the Cayman Islands. We hope you find this report useful. Our team is available should you have any questions or require any additional information if you are considering a move to the Cayman Islands.

We look forward to hearing from you and to extending a warm Cayman Islands welcome!

Profile of the wealthy

The HNW population

The wealthiest individuals in the world are also the most mobile and the most demanding when it comes to choosing a place to reside. Many individuals who are classified as High-Net Worth (HNW) –which is defined as having a net-worth of $1m or more - are multihomers. A good number of them live in multiple countries around the world and, as individuals and families with resources to protect, they choose where they base themselves very carefully.

There are 37.8m individuals around the world who qualify as HNW, which is approximately 0.47% of the world’s population. This is an increase from last year of 3.4m. The largest regional population of HNWs is in the Americas. With 18.3m HNW individuals worth more

than $1m, this region represents 48% of the global total. The next largest region is EMEA with 10m individuals. Asia-Pacific is third with a total of 9.6m HNW individuals (25% of the global population).

Of the 37.8m global HNW individuals with more than $1m, 33.5m, around 87%, are in the bottom tier ($1m-$5m). Those who are in the tier above are classified as Very High Net Worth (VHNW) ($5m-$30m) and are a little over a tenth the size of this group, at 3.96m individuals. Those who are worth more than $30m are considered Ultra High Net Worth and are around 1.1% of the total HNW population, with a total population of 424,580, and increase on last year of around 7.6%.

The largest global population of HNWs is in the Americas

87% of the HNW population are worth between $1m and $5m

The global HNW population controls $150.9trn in total wealth. The Americas is the region that controls the biggest chunk of wealth, with $67.59trn (44.7%), which is around two-thirds of global gross domestic product (GDP). EMEA’s HNW population - which includes Europe, the Middle East and the continent of Africa - controls around $43.8trn. Asia Pacific has a collective HNW wealth of $39.5trn.

Those in the $1m-$5m tier, by far the largest population, control the largest amount of total wealth at $62.68trn, around 41.5%. However, though VHNW and UHNW populations are far smaller, their wealth control is huge. The 3.96m population of those with $5m-$30m control $39.31trn, and those in the $30m+ tier – who number less than half a million people – control $48.9trn, which is around double the US annual GDP.

Those with $1m+ in the Americas control $67.59 trn in total wealth

HNW wealth

Americas EMEA Asia-Pacific

Wealth-X: Total wealth (USD) of HNWs, by region (2022)

$39.5trn

$43.8trn

Choosing a location for residency

Choosing a base for your family, particularly if that location is different to the HNW individual’s home market or place of origin, is a balancing act. Very few individuals or their families choose a new location on one factor alone. For example, though for family-stage HNWs their children’s education can come near to the top of their priorities, it is rare that they are prepared to sacrifice other needs and preferences entirely for the sake of this.

Likewise, low or tax neutral jurisdictions are highly attractive to wealthy individuals, but many individuals do not feel they have to choose somewhere on taxation alone. Those advising the wealthy remark on how rare it actually is for clients to reveal they are moving solely for taxation reasons. There is an increasing consciousness of the importance of balancing risks to wealth with the reality of life. Exile is not an attractive prospect for today’s HNW but nor is the prospect of being penalized for wealth. What this means is that locations that have traditionally attracted wealthy individuals on practical terms are being judged more and more for the lifestyle they offer. And, equally, those locations that boast strong lifestyle benefits need to be wary of significant shifts in the complexity and competitiveness of their practical offer.

Practical considerations: tax

Tax remains one of the most important practical considerations for wealthy individuals’ in choosing a base for residency. And though few move on the basis of tax alone, it can make or break some locations. The importance of avoiding paying too much tax depends on the HNW’s mobility and sense of fairness. Those who are happy travelling, and who are relatively unaffected by the need to move from one place to the next throughout the year, are the most apt to prioritize tax, but also those who feel that their home or existing country’s tax regime is ‘unfair.’

On the other hand, if an HNW views a tax regime as ‘fair’ towards individuals with their wealth, many are quite happy to remain – even if this regime doesn’t save them the most amount of tax. This is where generous tax regimes, on their own, are limited in their appeal to the wealthy.

With many developed nations suffering from inflation due to the fallout from the pandemic and destabilizing global conflicts, and with sluggish economic growth in many quarters, the concerns about potential taxes on capital and wealth in particular – even in currently ‘wealth friendly’ environments – may start to grow and the sense of fairness may come to judgement.

...the burden of tax can be so heavy that they will move and live in countries simply because they’re so mobile. They will move and live in countries simply because the tax rate’s low. One client of mine just dips from country to country every x amount of years, because, for him, it makes no difference.

–HNW Private Client Accountant

…When a certain segment of the population is singularly ring fenced because they have more money in their pocket, to say, ‘You people are going to be able to get us out of an economic devastating hole,’ that’s when people start pushing back and say, ‘I want to pay my way but I don’t want to be paying too much.’ I think there are rumours about a one-off wealth tax, you know, a larger wealth tax for the first year and then following it up with a more normalised wealth tax thereafter and these rumours are really worrying people.

–HNW Trust Professional

Practical considerations: safety

For many wealthy people in highly developed nations, personal and family safety is often taken for granted. However, in nations with high levels of crime, political corruption and large disparities in wealth, safety is not as assured. Many HNW individuals who make their fortune in such places feel the need to protect themselves and their family with personal security teams, advanced home security systems and armored vehicles, all of which impinge on their sense of freedom and a sense of normality.

Even those that feel strong ties to their own country end up leaving and basing themselves in places where personal safety is expected. These individuals tend to focus on moving to locations with low crime rates and where there are less severe disparities in income, which, they feel, could lead to wealth resentment and potentially attacks.

For those with children, family safety becomes particularly important and risks such as kidnapping can be significant if the wrong base is chosen. This is one of the major reasons why wealthy individuals choose to locate themselves in places where other wealthy people live, to avoid a feeling of conflict.

I’ve seen people walking up a road in Mayfair… when I knew them in Moscow, they were constantly in a car with protection, drivers and they’d have multiple cars. They want to make life easier and as normal as possible. And of course, walking around town is normal. And something that they wouldn’t do in Moscow.

–HNW Lifestyle Advisor

Beyond practical considerations, the most important question that arises with choosing a base in which to reside is ‘What kind of life am I going to live?’ Even for those who plan to travel consistently and only live there part-time, a location has to have an attractive lifestyle with, above all, choice. Choice of dining establishments, choice of activities, sports, special events and live entertainment –the more that is available, the more attractive the location will seem, even if the individual concerned may never avail themselves of what is on offer. The presence of choice makes them feel they are spending time wisely; the absence of choice often exacerbates a feeling there is somewhere else they should be.

...an apartment in Switzerland, something quite small. Could be something quite big, just because they happen to like Switzerland. But more often than not, usually something that’s a bit like a post office for them, in the sense that it ticks a box. And then, for example a place in the south of France is something that would be used, but probably for an extensive four-week period in August. But probably won’t be used much out of that. And then they’ll have a place where real life happens, and in my experience that’s usually a place like London...

– HNW Lifestyle Advisor

First and foremost, the climate needs to be one which is appealing to the individual and their family. Whilst temperate climates such as those found in Europe are popular, others prefer places with yearround sunshine and warmth. When the residence is a part-time one, the individual concerned will assess their needs alongside their existing residences and activities and achieve a balance, planning when throughout the year they may use each one. There is a need for at least one base to be considered the one where ‘real life’ happens, which can often be a cosmopolitan city.

Urban locations in highly developed countries appeal to those looking for a more vibrant experience, promising a broader and more prestigious social network as well as excellence in arts, cuisine and entertainment such as musical performance and opera in particular.

After the pandemic, these city locations lost some of their allure due to the lack of outdoor space and freedom during legally enforceable lockdowns. However, they have bounced back to some degree and there has been no abandonment of residences in premier tier global cities like London, New York or Paris. However, non-urban residences in more remote locations – where not already owned –have become more valuable from a lifestyle perspective.

In non-urban locations, the lifestyle is more about outdoor life and HNWs judge a place on emotional elements such as natural beauty, wildlife, views and the availability of high-quality outdoor activities for themselves and their family.

A review of the available residential real estate and its quality and value won’t necessarily sway a decision to move on its own, but it helps to visualize life in the location and see its merits. When a location is less well known, some exploration and discovery is essential to understand what life would be like and to establish whether the location is one they could spend time in.

Activities and services available need not be entirely comprehensive if the residence is being considered as a part time one, but the presence of a social life in the community that they can engage with is highly appealing. Membership clubs are valuable, though again not essential if the residence is not a full time one, and many individuals see private clubs as belonging to certain cultures and cities where there is a greater need for exclusivity and separation from others.

Health and wellness is increasingly important to HNW families and they look for the availability of good emergency healthcare – should it ever be needed – as well as health clubs, high-quality gyms (where home gyms are not feasible) and sporting activities. Sports such as sailing, golf and tennis are highly popular with the wealthy.

…private members’ clubs are very important in a place like London. It actually makes perfect sense for them, perhaps even more than it does for the average member of a private members club. There’s lots of reasons why it works quite nicely for them. Additional privacy, a place where you can go where it’s unlikely you’ll be a victim of crime in any way. And yes, a sense that people don’t necessarily know what’s going on there, a sense that they can relax. But in somewhere like the South of France? They’re not bothered about that then. Then they’ll just go to restaurants and top bars…

–HNW Lifestyle Advisor

Emotional considerations: educational and family needs

For those with children, there needs to be a very high degree of comfort with the education system in their main place of residence. For many, this is about academic excellence and a pathway to a high-quality further education and the potential it brings. HNW families feel their children’s development is extremely important and they will often prioritize educational needs.

The food, the eating out, that is what wealthy families like to do together. And I think the schools, if it’s relevant and they’ve got families, having good quality private schools, is vital.

–HNW Advisor

There is also a focus on the quality of life for the children during educational years and a great number of HNW families increasingly prefer to be present in their children’s lives. For some however, particularly those who need to live elsewhere but have a focus on high quality, independent secondary education establishments for their children, boarding is the only choice and is even preferred when there is a desire for the child to grow up in that particular culture and not in their culture of origin.

In addition to education, the overall needs of the family are considered as a whole. Hobbies and sports outside of school that the children currently pursue – or are likely to pursue – should be available. Potential friendship circles for the young are important, though less so in places where the focus is on family time and the residence is more part-time. Similarly, the head of the family will also consider the activities and interests of their spouse or of absent family members (such as adult children) who may come and visit.

Photos: Cayman International School, Grand Cayman

Kimpton Seafire Resort + Spa, Seven Mile Beach, Grand Cayman

The Cayman Islands home

Attracting HNW families to the Cayman Islands

In considering the Cayman Islands as a home, whether on a full or part time basis, a HNW individual will need to be attracted to its particular offer. Island living does not suit all HNW individuals and some may view the remoteness of living in Cayman as inconvenient for their needs.

To begin with, most of these targeted individuals will be seeking residency through investment, and not citizenship. Though some individuals from some parts of the world, particularly those with weaker passports, are simply seeking a straightforward way to acquire a second citizenship, the targets that are relevant for the Cayman Islands are seeking the benefits of residency, not of a second passport.

However, with their advisors, all HNWs would assess what Cayman offers on both a practical and emotional level. For some, its practical advantages in areas such as tax and physical safety will be sufficiently appealing in contrast to their home country or place of current residence. Others will want to know more about the lifestyle possibilities, transport links and the minimum stay requirements for residency, in order that they can take advantage of using it as a base but not always as a place where ‘real life’ happens.

Close to home or close to heart

Wealthy families are often highly international and a good number own properties in different countries around the world. Their lives are often a nomadic existence of travelling between these properties at various times of year. The vast majority, however, typically choose somewhere for a base that is either close to their home country or favourite residence, or that is close to heart – a place where they have often dreamed of having a home. However, there are complications to owning multiple properties and a number of individuals have been slimming down their portfolios.

I think they realise that by having multiple properties, that they complicate their lives. Because it is another complication, even if you have people managing it.

–HNW Lifestyle Advisor

Photo credit: Lisa Reid Photography

Wealth-X: Population of all $1m+ individuals, by country (2023)

Wealth-X:

USA and Canada

Attractions to the Cayman Islands

• Geographical location and time zone

• English language

• Tax neutrality

• Low crime rate

• Reliable telecomms

• Attractive real estate market

• Lifestyle – marine enviroment

Cayman, lying in the Caribbean Sea, offers a convenient location for those who are currently based in nearby countries to retain a connection with that location. Therefore, HNWs in the Americas region are a key target group, particularly the USA, Canada, Brazil, Mexico, Columbia & Argentina. Of the 37.8m HNWs in the world, 18.3m live in these countries, with the largest group residing in the USA.

Cayman Islands is probably the most developed country in the Caribbean. It’s got a booming real estate market, so the residency side again is investing in real estate there. [I think ] you will see a lot of wealthy North American expats buying real estate there, settling there for lifestyle reasons because it’s a slower way of life.

–HNW Trust Professional

Further afield, individuals from the UK and Russia will be attracted to Cayman’s location in the Caribbean and the prospect of relaxed, waterside living.

The relationship between the UK and the status of the Cayman Islands as a British Overseas Territory is also appealing to both groups. For UK families, the tax-neutral environment and Caribbean lifestyle of Cayman is particularly attractive and running a single-family office from the location means living in close proximity to the US, as well as living in a safe, English-language location. The connection of Cayman to the UK – relying on its defense and foreign policy – is appealing and reassuring to Russian clients who already trust the British rule of law and rights of property in protecting them as private citizens. This is now perceived as potentially even more valuable and legitimate since the actions taken by the British Government regarding the citizens of Hong Kong.

I think it is important. I think that the UK, the privy council thing, the fact that there are crown dependencies, I think, is important for people. I think people like the UK judicial system for litigation, and arbitration, and all sorts of things.

–HNW Private Client Accountant

The Caribbean is also a significant draw for both groups, despite it being far from home it has long been a pit-stop in the cold of European winters, particularly those who are yachting enthusiasts, who charter vessels to the area at the end of December for the celebration of the New Year.

Russia & UK Attractions to the Cayman Islands

• Tax neutrality

• English language

• Safety and low crime rate

• Attractive real estate market

• Lifestyle – marine enviroment

Brazil, Mexico, Argentina and Colombia Attractions to the Cayman Islands

• Geographical location and time zone

• Tax neutrality

• Low crime rate

• Stable economy

• Legal system

Camana Bay, Grand Cayman

Benefits of a Cayman Islands lifestyle

Those seeking tax efficiency, wealth control and low executive responsibility

Those who end up living in Cayman will not solely base their decision on tax neutrality but the group that will be most attracted to living in the islands will be highly concerned about high levels of taxation. There is also a concern from those in countries such as Brazil, Columbia, Mexico & Russia about wealth control, as well as taxation. Cayman would be seen as a far more trustworthy place in to reside.

Typically, this group will have high levels of liquidity and a number may have recently had a significant liquidity event and are looking to the future to protect their wealth. Across the markets identified

– with a collective population of 20m with $1m+ net worth – those with a liquidity of above 40% of that net worth number 12m – which is around 60.5% of the total.

I think you can never underestimate the tax tail wagging the dog. The reason lots of people live in the UK isn’t because London’s fantastic. Although London is fantastic, it’s because of the tax. They would live anywhere, as I said to you before, these people are mobile, and it doesn’t really make that much difference to them.

–HNW Family Office Accountant

Another factor in choosing Cayman Islands will be how much responsibility the HNW individual concerned has for being in a ‘real world’ position of executive responsibility. Those that are required to regularly attend an office based elsewhere may find commuting from Cayman to be too much of a hassle. However, those who are owner-investors of business or in positions of lower responsibility – emeritus positions that require less frequent site or office visits – are not encumbered by such concerns. In addition, the pandemic has made home and remote working entirely normal

and it is conceivable that even those who are required to attend an office, site or conduct meetings elsewhere more frequently may do so using video technology instead, making Cayman a more realistic long-term option.

Across the relevant markets, 19.92% of the HNW population are in positions of low executive responsibility. Russia has the largest proportion at 40.3%, followed by Brazil and then Argentina with 23.6% and 22.8% respectively.

One of the most attractive elements of the Cayman Islands place to live is the quality of life it affords. Not only is it a safe, low-crime country, it is also a place with a multitude of activities available, in Cayman itself and across the broader Caribbean.

For those who love the great outdoors, Cayman is a highly attractive location. As to be expected from a group of Caribbean islands, the exploration and enjoyment of the sea sets Cayman apart from urban and landlocked locations. Across the relevant markets total population of 20m, around 4.06m are known to enjoy outdoor activities. These include aquatic activities such as fishing, swimming, surfing, paddle boarding and jet skiing but also sports such as tennis and golf.

The lifestyle is fantastic. It’s the climate and the activities. The diving, the Cayman social life, the outdoor life.

–HNW Trust Professional

The Cayman lifestyle

The opportunities for fishing in the Caribbean Sea will be attractive for just over 2m of those in the relevant countries who consider it one of their top hobbies. Of all the individual outdoor activities relevant for Cayman, this is the largest group.

Of course, for many wealthy individuals, a world-class marine environment is something they appreciate due to their connection with sailing and yachting. Of those in the key markets in the Americas, the UK and Russia, 290,719 are interested in yachting and sailing. Cayman would provide these individuals with an ideal base from which to explore the Caribbean.

With two golf courses, Cayman will also attract golfers and 1.4m HNWs in the relevant geographic markets are keen on the sport. Though many will still travel in order to play, the availability of having a choice of courses for the time they spend on Cayman will be persuasive, particularly as this activity is not always readily available in comparable locations.

Target market HNWs who enjoy outdoor activites 4.06m

Wealth-X: Amount of those with $1m+ net worth who have a hobby or interest. Total across USA, Canada, Mexico, Argentina, Brazil, Columbia, Russia, UK (2023)

If you like the sea, and you like boating, fishing and scuba diving, it’s fantastic. It’s got all of those things, and it’s obviously peaceful.

–HNW Private Client Accountant

Fishing Golf Tennis Yachts

Trusted advisors. Thoughtful market analysts. Lifestyle consultants. Strategic relationships with high-net-worth advisors. These are the hallmarks of Provenance Properties Cayman Islands, the real estate brokerage for the Caribbean’s largest developer, Dart, and the exclusive Cayman Islands affiliate of Christie’s International Real Estate. The benefits of being associated with these venerable local and international brands is complemented by a passionate commitment to service excellence from this boutique luxury real estate brokerage in the Cayman Islands.

Provenance Properties’ sales specialists assist clients seeking residential properties for full-time residency, vacation or investment purposes. A carefully cultivated network of high-net-worth buyers and private wealth advisors, as well as collaboration with local and international realtors, provides sellers with a ready pipeline of potential buyers. Those seeking to relocate to the Cayman Islands for business purposes receive seamless service in finding commercial office space and residential properties to lease or purchase.

www.provenanceproperties.com

Grand Cayman, Cayman Islands

Barton is focused on consulting businesses in the luxury and prestige sectors, combining evidence and guidance to help these organisations and brands grow and thrive. Whether for business strategy, brand assessment, communication, trend analysis or thought leadership, Barton knows insight and evidence is vital, and that businesses need to have confidence in their decisions. The team has years of experience in collecting and interpreting insight on the luxury sector and its elite consumers.

Whether for small-scale, short-term advisory or expansive, long-term strategic involvement, Barton offers cross-sector knowledge in a responsive, agile way, combining creativity with pragmatism, providing the perspective needed to make informed decisions.

www.barton-consulting.co.uk

The global leader in wealth information and insight, Wealth-X partners with leading prestige brands across the financial services, luxury, not-for-profit and highereducation industries to fuel strategic decision-making in sales, marketing and compliance. Wealth-X boasts the world’s most extensive collection of records on wealthy individuals and produces unparalleled data analysis to help organizations uncover, understand, and engage their target audience, as well as mitigate risk. Founded in 2010, with staff across North America, Europe and Asia, Wealth-X provides unique data, analysis, and counsel to a growing roster of more than 500 clients worldwide.

www.wealthx.com