Cayman Islands: Construction Costs, Land Prices and a Housing Affordability Crisis

Kingston, Jamaica — 7 February 2026

Rising construction costs, surging land prices, and restricted density allowances are combining to create an increasingly acute affordable housing problem in the Cayman Islands, according to industry figures and a new construction costs analysis released by Cayman-based property consultants. The findings, published in the Cayman Compass, show that while cost escalation in the construction sector has slowed from its pandemic peak, the cumulative increases of recent years have fundamentally reshaped what can be delivered at accessible price points for ordinary Caymanians.

Construction Costs: The Data

A new Cayman Islands Construction Costs Index, developed by chartered surveyor Kevin Drysdale of KastleCay using 15 years of Building Control Unit data, shows a sharp acceleration in building costs since the COVID-19 pandemic. Regional data from property development consultancy BCQS, published in its May 2025 market trend report, indicates that construction cost escalation in the Caribbean has averaged 4.4 per cent over the past year, down from 7.3 per cent in the 2023-2024 period, which itself followed pandemic-era increases averaging 9.6 per cent annually in the two years after 2020. The cumulative effect of these increases is significant: construction costs have compounded materially since 2019.

Larry Thompson, of A.L. Thompson’s, the Cayman Islands’ largest building materials supplier, noted that while some commodities such as lumber and rebar have normalised from their pandemic peaks, others remain stubbornly elevated. US tariffs have added additional pressure to commodity prices. Changes to government work-permit arrangements may also introduce upward pressure on labour costs, according to BCQS head of valuations Rick Riyat, though the full extent of that impact is not yet clear.

Land Costs and the Shift Toward Density

High construction costs are compounded by the cost of land, which continues to rise across Cayman. Realtor Kim Lund of RE/MAX noted that the only realistic pathway to delivering more affordable housing is now through apartments, condominiums, and duplexes rather than detached homes. “The only way to deliver more affordable housing now is through shared walls and shared roofs,” he said. “Detached homes have become much harder to make work at the lower end once you factor in land, materials and labour.”

Ben Tonge, developer of Downtown Reach, one of the more affordable residential projects built in Grand Cayman in the past decade, confirmed that it has become significantly harder to deliver housing at attainable price points over the past five years. The shift from single-family residences to apartment and condominium projects is already visible in permit data and in the pipeline of active developments on the island.

Density Restrictions: A Structural Barrier

The Cayman Islands continues to operate under a development plan last comprehensively updated in the late 1990s. Density restrictions embedded in this framework limit the number of bedrooms per acre, constrain multi-family development models, and make it difficult to pursue innovative accommodation solutions such as co-living arrangements for construction and tourism workers. Gary Gibbs, executive vice president for development at Dart, one of the island’s largest developers, has noted that allowing greater density would enable multi-family homes in single buildings, creating lower-cost entry points to homeownership similar to models that have worked in Germany and elsewhere.

The government is in the process of updating the National Development Plan and considering amendments to planning regulations including building height limits, density allowances, and zoning rules. However, the Cayman Compass has reported that uncertainty over the final shape of these reforms has prompted a wait-and-see approach from some developers, with larger investors holding off on new projects until there is greater regulatory clarity.

Government Response

The government has allocated 15 million Cayman dollars to the National Housing Development Trust in the 2024-2025 budget to support affordable housing delivery. At the Flamingo Point Housing Development, 8 homes have received certificates of occupancy with more under construction. The government has also broken ground on 60 homes under the West Bay Affordable Housing Initiative. In North Side, a separate affordable housing project is under way, with groundbreaking for additional units expected, though the project has experienced delays due to design refinements related to structural performance and humidity management in the island’s climate.

Across the Caribbean, the Cayman experience illustrates a dynamic now common to several island economies. The combination of post-pandemic construction cost inflation, land scarcity, density-limiting planning frameworks, and inadequate housing finance for lower-income residents is producing affordability crises with no easy short-term solution. The Cayman Islands’ relative wealth means it has more fiscal capacity to respond than many of its Caribbean neighbours, but the structural challenges are no less real.

Source: Cayman Compass, February 2026