The National Association of Realtors released a report this month that pulls together data and trends on Americans living abroad. This kind of data is hard to come by making this white paper an important contribution to the field.
Download the paper here.
The data does not include Americans still living in the US who have bought second homes and investment property abroad. This number is likely to exceed the number who have moved abroad.
The four countries are Belize, Honduras, Mexico and Panama. Costa Rica also gets a mention as a destination attracting real estate investors. According to State Department estimates, some 6.6 million Americans live abroad - about 2.2% of the US population. The Brits are still far ahead in relative terms with 10% of the nation’s population living as expatriates. Read the full article.
by Chronicle Staff
Despite a new, leftist government led by President Daniel Ortega, executives in Nicaragua’s growing real estate industry remain bullish.
“The real estate market outlook continues to be positive,” says Claudia Gonella, director of the Nicaragua offices of U.S.-based real estate agency Coldwell Banker.”We are selling well out of both of our real estate offices, at approximately the same rate as this time last year.”
Timothy Thomas, owner and broker at ReMAX Monteverde, agrees. “I think [the government] will be OK,” he says. “Our investors met with Daniel Ortega after the election and he wasn’t the Danny Ortega of the 1980s, that’s for sure.”
Nicaragua is one of the key growth markets in Latin America outside Mexico for U.S.-based First American Title Insurance Company. “The market has not slowed down as people seem to be optimistic about Ortega staying the course when it comes to investments in the country,” says Turalu Brady Murdock, vice president of First American. “From an investment opportunity there are still very good opportunities in Nicaragua in the real estate market.”
The colonial city of Granada, Nicaragua
Promises property rights
Ortega has vowed to respect private property rights, the free trade agreement with the United States (CAFTA), agreements with the International Monetary Fund and continue with the same macro-economic policies of his predecessor, Enrique Bolanos. He has also gained some praise for appointing Arturo Cruz, a well-respected economist, as his ambassador to the United States. His new pledges stand in contrast to his last government (1979-90), when private property was expropriated, inflation skyrocketed and the economy went into freefall.
“The Sandinista party has actually been one of our strongest allies in the resolution of title claims caused by the 1980 confiscations, so I do not foresee any problem with property rights during Ortega’s presidency,” says Murdock.
Ortega assumed Nicaragua’s presidency last week, vowing to forge closer relations with Venezuela while continuing the country’s close relations with the United States. “The release of pro-Chavez rhetoric, which we expect to continue through the term of the new government, is unlikely to undermine a working relationship with the US as long as democratic principles are upheld,” Gonella says. “These next six months are crucial and provide an opportunity to sweep away once and for all the ghost of the Sandinista party that has hovered over the country for the last 15 years.”
Thomas sees the next two months as key to determine whether Ortega means what he has said. Gonella expects price stability for a few months and, assuming the new administration keeps to its verbal and written commitments (in support of DR-CAFTA, private property rights, tourism, free market etc), the market could come back strongly in the second half of 2007.
A new costa rica?
Nicaragua has seen significant growth the past few years, partly helped by inexpensive prices, a reputation as a safe country, growing tourism and increased flight connections with the United States. Some realtors dub the country “the next Costa Rica.”
“It’s close to America and one-fifth of the price of Costa Rica for the same properties,” Thomas says.
The real estate market is driven by both residential and commercial properties. On the residential side, many baby boomers from the United States are discovering Nicaragua as a less-expensive alternative to Costa Rica and Mexico, while banks and factories are helping the commercial market.
Banpro bank is constructing a new $15 million building across the street from Thomas, while a Korean investors is planning a $100 million factory to manufacture Levis. Meanwhile, a client of Thomas plan an ethanol plant in Nicaragua, while another one is expanding a chain of coffee shops in the country. Meanwhile, local real estate group is developing a major resort, Gran Pacifica Beach & Golf Resort, with hotels, apartments and gold courses on the Pacific coast.
Prices don’t fall
While the asking prices from developers and owners usually increase during high season (which runs from December to May), that did not happen this time. However, neither have they fallen, according to Gonella. “The major developers are continuing to roll out their master plans with no delay,” she says. “This is a sign of confidence.”
Another reason for optimism is that tourism also is seeing stable demand. Hotels in key tourism towns such as San Juan del Sur and Granada are experiencing high occupancy levels as would be expected at this time of year and tour operators have bookings well into 2007, according to Gonella. “Real estate and tourism sectors are closely linked here,” she says.
As more tourists visit Nicaragua, more people plan to come back to buy property, says Thomas. “Tourism is huge…and just getting bigger,” he says. This weekend, some 5,000 tourists visited San Juan del Sur thanks to four cruise ships, he points out.
Most of the real estate sales will take place in the residential sector focused primarily in key tourism destinations. “Investors will be looking for capital appreciation, but also for properties that they see as good candidates for rental income,” Gonella says. “The strong outlook for tourism visitors for 2007 will support this trend.”
Commercial investors wait
Coldwell Banker expects less activity in the commercial sector in the early part of 2007, as many investors will take a wait-and-see approach. “Commercial investors tend to invest on a larger scale than the residential buyer, and for the longer term,” she says.
In terms of geographical areas, the more “established” markets for foreign real estate investment such as Granada and San Juan del Sur are likely to be where most investor activity will continue to be focused, while newer, more speculative, cities and areas for investment such as the colonial town of Leon and Inland Mountains around Matagalpa, are likely to see less activity, at least for the first part of 2007, Gonella predicts. “Investors are likely to feel more comfortable investing in areas where a positive growth trend is already established,” she says.
Coldwell Banker has also seen good demand for its four-day real estate tours to Nicaragua scheduled for each of the next three months. The tours typically have between six and twelve participants to better tailor the group’s requests. “The tours offer a great way to make sense of real estate opportunities here,” Gonella says.
So far, the participants are mainly from the United States, but Coldwell Banker plans to boost its marketing to Europe to take advantage of the strong Euro and British Stirling, she says.
Source: Latin Business Chronicle
The word is getting out and recent years have witnessed a massive upsurge in investor interest in real estate in Central America. We have analyzed the investing pattern of real estate investors and identified 9 main reasons why investors are choosing Central America:
According to the Economist, the developed country real estate boom has created more than 30 trillion dollars between 2000 and 2005. This trend has given a lot of people a lot of buying power. Armed with this mountain of equity many investors are looking to diversify their real estate portfolio by turning their attention outside US where property prices are looking more attractive than ever.
Better information over the internet, globalisation, better airline services, a growing tourism and leisure industry are all factors that are supporting this growth in international real estate purchasing. It is not only the adventurous who are taking this step the attraction of cheaper properties and in some cases, warmer climes, is attracting the more docile investor.
“The foreign second homes market will continue to explode in the coming years, this is not a temporary trend” according to Jeff Hornberger, International market Development Manager at the National Association of Realtors quoted in a recent edition of 2nd Home journal. We agree, a slow down in the US market is likely to shift investor attention overseas as they look for better candidates for capital appreciation.
It remains to be seen how severe the slowdown will be. Cheaper international destinations may remain immune. But there may be a cooling effect on the luxury end of the international real estate market if the slowdown is severe.
There are no two ways about it, Costa Rica is booming and its property market is already an unmitigated success story; but fear not for there are a whole host of factors, including some about to come into play for the first time that will ensure that Costa Rica’s property market success will continue in 2007.
Despite the fact that Costa Rica has had an exciting property market for the past decade it is still considered to be an emerging market because of the record gains that are still achievable and also because its real estate market success has not yet been duplicated across the entire country.
While it remains an emerging market and yet one stable, secure and with so many factors ensuring its appeal, high gains will be made on properties bought and also on land banked in 2007.
Most indications point to the investment climate in Costa Rica remaining strong: latest reports indicate that the country is on target to notch a 6.5% growth in GDP for 2006 beating earlier predictions; Intel and Hewlett Packard plan to expand their Costa Rica operations over the next 18 months; and a plethora of new luxury banded real estate developments are ready to launch to accompany the existing Four Seasons and Marriott ventures. There is a real sense that the early risks have been taken and the ‘big boys’ are moving in. Costa Rica has more real estate projects by established international property companies backed up by high quality international marketing campaigns than any other country in Central America. A momentum has been building over the last three years, particularly in the Guanacaste province in the north of the county, with luxury launch following luxury launch, all in relatively close proximity to Liberia international airport.
Perhaps a little unexpectedly, tourism for the last 12 months to October 2006 is slightly down according to la Prensa Latina. For now, though, Costa Rica does appears to warrant its label in the CIA World Fact book as a ‘Central American Success Story.’
International interest in Panama has been strong for a number of years on the back of government policies encouraging foreign investment and tourism. Panama’s dolarized economy. close allegiance to the US and recent election to the UN Security Council are all factors that build investor confidence in the country. The October 2006 decision to expand the Panama Canal underlines the continued strategic importance that Panama has in the region - a key factor underpinning future investor activity. And Donald Trump’s involvement in the Trump Ocean Club International Hotel and Tower in Panama City has raised the profile of the country further.
What we have at the moment is a booming property market, sharp increases in real estate prices across the county and a construction frenzy particularly in Panama City. A recent Economist article asked the question whether all the building activity in Panama city is “Too much, too quickly?” Can demand keep up with supply? We will maintain a watching brief but so far the market indicators are positive.
Daniel Ortega has maintained a busy schedule of meetings with the foreign investment, banking and business communities since winning 38% of the national vote on 5th November 2005 on the back of a campaign focused on the twin themes of “Peace and Reconciliation.” In fact his first key meeting after the election was with representatives of the foreign investment. We attended the meeting and heard Ortega stress his commitment to foreign investment, recognizing it as one of the keys to continued growth and future prosperity for the country. He made clear his intention to support the DR-CAFTA and stated publicly that property rights would be protected.In a way this is not surprising. On a global level, the geopolitical scenery has changed significantly since the Sandinistas were last in power and this is well understood by the Sandinista leadership. Secondly, on a more local level, the current Sandinista party is very different to the Sandinista party of old. The members, by their own admission, have matured and mellowed. Many of them have substantial financial and business interests in the country and so have a very personal stake in the future economic success of Nicaragua.
In addition, the Sandinistas have been very involved in the governance of the country at all levels over the last 16 years. Having Sandinistas in government is not something new. Two of the biggest growth areas for tourism and foreign investment, the towns of Granada and San del Sur (along with the capital Managua), have had Sandinista local governments for a number of years now, presiding over rapidly growing and highly successful foreign tourism and investment markets.
Another factor to note is that although Ortega has won the Presidential seat, he has not secured a controlling number of seats in the National Assembly, the Liberal and Conservative parties (ALN and PLC) have a larger representation. This is an important factor in the new political landscape as the Assembly is equivalent to the US Congress and is the body responsible for passing laws, altering rules and establishing task groups.
If we look toward the long term, a Sandinista victory may well emerge as a positive factor in Nicaragua’s history, sweeping away once and for all the old concerns rooted in memories of the revolution that have hung over the country for over 15 years. In the short to medium term we are likely to experience some price stability as investors watch what Ortega does in his first few months in power. But after this period, as any uncertainty over Ortega falls away, the property market is likely to come back stronger.
Belize is managing to combine the opportunity for investors to participate in both a rapidly growing tourism market and an emerging second home retirement destination. Although more affordable than other Caribbean destinations, this is not at the expense of local amenities and services something that sets it apart from more speculative offerings elsewhere. Certain regions could be described as a “mezzo market” - a term coined by International Living to describe markets that are not quite emerging; not quite developed. The risk/reward profile is perhaps more comfortable than purely speculative real estate markets elsewhere in Central America.
As you might expect, continued growth in tourism, environmental preservation and infrastructure improvement are important factors in the future success of the real estate market in Belize. Indications are good. The country has a progressive Tourism ministry that has been successful in putting Belize firmly on the map as a tourism destination. As the 2005 Moon Handbook puts it, ‘Belize is the only country within the Caribbean to experience consistent increases with respect to overall tourist arrivals since 1998.’ This reach is expanding into the luxury end of tourism, a trend helped by a number of celebrity real estate purchases in the country. We will shortly be reviewing tourism data for 2006 which will help put the trends into context.
