The emergence of the post-crisis international real estate investor
January 12th, 2010
Well, 2009 has been an interesting year. The big headline was, of course, the global financial crisis and its aftershocks. Now, as we enter 2010, a sense of stability and predictability (a ‘new normal’?) is returning to the international real estate sector.
One of the most telling aspects of the new normal is the retreat of the speculator buying for quick re-sale profit. The speculator has been replaced by a new type of international real estate investor - a ‘post crisis’ investor - with a different mindset and goals.
14 characteristics of the post crisis international real estate investor:
- More informed and will demand better service from the industry
- Will not make decisions based on thin slices of information but will demand openness and transparency
- Skeptical of promises made by developers on their websites and brochures
- Wary of pre-construction properties, preferring to purchase completed real estate with amenities they can enjoy right now.
- Will want to understanding the financial health of the community before they invest
- Will expect substantial discounts on the market highs of 2007
- Will haggle, even when it comes to high-end properties
- Will be drawn to real estate that is a bit low key
- Interested in properties that generate revenue in the short term.
- Motivated by lifestyle factors (not just financial gain)
- Focused on regions with a low cost of living, good health care and safe streets
- Will avoid areas with over-supply risk and copy-cat developments
- Will seek safe haven investments and tax friendly environments
- Interested in contributions to larger concerns such as environmental preservation, the local community and sustainable approaches to building, water, and energy
With change comes opportunity
In order to succeed in 2010, developers will need to innovate their products and their marketing to embrace the mindset of the post crisis real estate investor. Those that do will earn their way out of trouble. Those that don’t will suffer.
Tourism and retirement as a business model for international real estate in Central America is not broken, it has just shifted. Yes the over-leveraging of the North American and European consumer has come to a halt and the debt in finances will have lingering consequences. But as retirees and investors take stock of their situations and consider their options, many will still be looking for a more affordable life overseas and safe, tax-friendly places to plant their money.
We’re looking forward to a healthier, more sustainable market for international real estate in Central America. One that is more open and transparent and less reliant on the rampant speculation of the past …
…but it may take all of 2010 to get there.
From Reveal Real Estate - charting international real estate trends in Central America.
3 trends in Central American real estate as developers and buyers respond to market conditions
April 4th, 2009
Times are certainly tough. But sometimes its the tough times that provide space for innovation and new ideas. Yes, some real estate projects in Central America are stalling, but others are responding to the tough economic news with new products and attractive incentives to persuade buyers to purchase. Here are 3 trends that we’re seeing in the Central America real estate scene.
1) Developers are going to greater lengths to woo buyers
Developers, particularly those at early pre-construction stages, are pulling out the stops to generate sales and maintain project momentum. From guaranteed rental agreements, free in-country tours where all expenses are paid, lot/home packages where the home is built at cost, to attractive seller financing, special programs for defaulting buyers and even buy-back guarantees.
As one real estate agent remarked, ”It’s a way sellers can drop their prices without really dropping their prices.” Developers know that momentum is king. A stalled project is hard to re-start and prospects quickly sense a lack of activity and progress.
2) Plans are being scaled back, pushed back and offerings altered
Months are being added onto construction time-lines for golf courses, clubhouses, restaurants and even basic infrastructure work. Developers are no longer emphasizing trophy apartments and ostentatious mansions. Instead they’re releasing simpler, smaller and more functional properties more in line with the current economic mood.
Some are fractionalizing existing real estate to offer a more accessible price-point. There’s also more focus on green building to appeal to a demographic whose decisions take into account social and environmental considerations.
3) Re-sale properties offered for less than developer direct sales
Existing owners who are feeling the pinch are motivated to flip their properties and some are pricing them well below developer prices. In situations where they purchased pre-construction, the price for re-sales can be as much as 30-50% lower. Re-sale properties are harder to track down and don’t always have the same marketing support as developer direct sales. But right now, it’s worth putting in the effort to dig them out.
What trends are you seeing in the market place? Let us know in the comments below or leave a review of a property hotspot that you are familiar with.
One thing is clear, change is coming
January 25th, 2009
In these difficult financial times we know a lot of people are re-thinking their investment and retirement future. Some are concerned about losing their jobs, others have been hit by severe stock market losses, and many are anticipating receiving retirement checks that will be far smaller than they had planned.
One thing is clear, change is coming.
But at the same time we’re remembering that with change often comes opportunity.
We’re seeing this in our users - people interested in researching real estate in Central America. There’s a renewed willingness to explore new options and an increased openness to reinvention and change. Some are actively seeking destinations that offer a lower cost of living and more affordable healthcare, while others simply wish to move a percentage of their assets outside the US.
In these turbulent times it’s more important than ever to access reliable information for decision making. Yet people often don’t get the information they need.
The basic problem in Central American is the lack of consistent and objective data on property prices. Market comps are hard to come by and there’s not much in the way of data available from property institutes, registries or central bank database. You won’t find the equivalent of zillow, redfin, or trulia serving up market comparatives, neighborhood statistics and price trends. This means that investors often have to rely on information supplied by self-interested, and sometimes ill-informed, vendors and real estate agents.
Filling the data gap in international real estate
It’s into this information gap that investor guide sites like Global Property Guide and expert weblogs such as the Panama Investor Blog and Overseas Property Blog have launched. And it’s in response to the lack of reliable market data in Central America that we built our database of real estate developments in Panama, Costa Rica, Nicaragua and Belize with standardized price comparisons; collated market data and reviews of overseas property hotspots (see for example for San Juan del Sur, Nicaragua and collected country indicators relevant to real estate investing (see for example for Costa Rica real estate.)
The International RE.net has still got a long way to go, but the good news is that the improvements are coming at the right time – just when finding good value, in the right location and within budget is more important than ever. Armed with better information than before, international real estate investors can make decisions with more confidence.
Increased transparency is coming to real estate in Central America and that kind of change can only be a good thing.
7 hot buttons that underpin the demand for real estate in private residential communities
January 26th, 2007
What emotional drivers are you responding to when you buy real estate in a private residential or resort community?
- the aspiration to be in an attractive location or interesting setting
- the desire for a change of scene, to unwind and experience a change of pace
- the motivation to be stimulated and entertained through recreational interests such as diving, hiking, fishing, water sports and so on
- the expectation for rental income and capital growth
- the enjoyment of local culture and environment
- the sense that everything is being taken care of
- the desire to belong to a community of like minded individuals
- the wish to fulfill an escapist dream
When assessing real estate offered in private residential and resort communities, don’t let emotions override your decision making. Our own starting point is to use the criteria in the box below. Yes, it may be a bit cut and dry but it is worth pausing to consider these factors as they well help you to determine the overall positioning of the product on offer. Remember, the list of characteristics is longer for real estate products positioned at the luxury end.
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Real estate goes beyond the Internet listing
January 23rd, 2007
By Nancy Beth Jackson
When shopping for real estate across borders or across continents, how would you like to tap into the local news and gossip, have a virtual tour of the area and chat with potential neighbors before buying a ticket for a personal visit?
Just as Web listings transformed international real estate a decade ago, new Internet tools are making even more information available — and not just from real estate agents.
Increasing numbers of potential buyers and investors are exchanging information in online forums, downloading video and audio reports, tailoring Internet maps to their needs and reading blogs for news and opinion.
And what is in cyberspace today is only the beginning, says Mark Lesswing, chief technology officer and senior vice president of the Chicago- based National Association of Realtors, which recently entered its first international joint venture with its Mexican counterpart.
“What we’re going to see goes beyond listings,” he said. “We’ll see blogs take off, maps take off, research-driven things like trends in the market, more tools on social networks.”
Chatty online forums like those at Internationalliving.com, Yahoo and Google already have had effects on international real estate, but the blogging “gold rush” is just beginning, Joel Burslem, who blogs about the future of real estate marketing from Portland, Oregon, believes.
In the United States, blogs like Curbed.com, started by an under-30 New York journalist chronicling his own neighborhood, started attracting attention just three years ago, Now, real-estate-blogs.com provides a directory of dozens of blogs related to the real estate industry in the United States and Canada, and encourages visitors to vote for their favorites.
Web activity by international real estate professionals and laymen started picking up only last year. Sam Taliaferro, an American developer in Panama, now spends three hours a day on a half-dozen blogs that range from events in his highlands development to general investment trends and life in the country.
“I am reading anyway, and it only takes a few minutes to add commentary and post,” he said.
Links to his blogs can be found at Primapassport.com, a marketing organization that he founded in 2005 to encourage North American and European investment in Panama. Housed in one of the new towers in Panama City, Primapassport also publishes a glossy magazine, produces video commercials, conducts surveys and offers travel incentives, all available through the Web site.
Taliaferro is working with the National Association of Realtors in North America and with Overseas Property Professionals in Europe to expand his marketing and blogging activities throughout Central America and Mexico in the coming year.
Kunle Campbell started blogging from Oxford, England, almost two years ago while researching his master’s thesis at Warwick University.
Campbell’s study — carrying out an e-marketing strategy for Property Frontiers, an international real estate consultancy — led him to set up an international property blog, www.overseaspropertymall.com, a kind of “news diary,” to help himself understand market dynamics.
After graduation from Oxford, he began a more specialized blog — bulgarianproperptyblog.blogspot.com — because he had been bitten by the real estate bug.
“I was priced out of the U.K. and looking for a Bulgarian ski apartment as a first step on the property ladder, and also as an investment vehicle to jump-start my entry into the U.K. property market,” said Campbell, 26, who was born in Nigeria.
He found a place, but then decided it was not a good investment. Now he is looking for a French leaseback or an apartment in Berlin, but he remains bullish on Bulgarian real estate.
His blogs only recently started earning money, what he describes as “a pittance” from Google advertising, but he is redesigning them this month to make room for banner advertising. He also plans to include commentary from a real estate researcher.
Podcasting, a format that has skyrocketed in the past couple of years thanks to the popularity of Apple’s iPod, also are proving popular for information related to real estate.
“Podcasts are a huge medium at the moment for many media consumers who like to digest their information in other ways than reading,” said Felicity Quigley, property editor at Buy Association, www.buyassociation.co.uk property. The site was started in September as “an impartial buying guide,” featuring fact sheets, articles and surveys as well as podcasts.
“A podcast, being audio, is quite personal. You can do other things on our site whilst listening or take it away to listen at your convenience,” said Quigley, an Australian journalist who ventured into international real estate herself six years ago, buying and reselling a Florida condo to pay for her wedding.
“It’s about gaining your information the way you want it, when you want it, all to suit your needs, rather than the needs of the media provider,” she said.
Podcast topics range from Cyprus to South Africa and run for 30 to 45 minutes.
The host is Adrian Mills, a British broadcaster who owns property in Thailand and Dubai. He interviews international property experts, often agents or developers, but Quigley says topics are based on consumer demand rather than plugging advertisers.
The audio programs also are syndicated in an online network that includes Aol.co.uk, Tiscali.co.uk, Rightmore.co.uk and PropertyFinder.com.
Quigley says the site plans to add forums, blogs, competitions and polls in the next few months; video will be added during the summer.
Video has started appearing on professionally designed real estate Web sites, offering a kind of virtual walk- through, but many people around the world are excluded from making or from playing such videos by a lack of technical resources and English proficiency, according to Tony Grey, a former Microsoft group manager.
For some months now, he has been developing software to make narrated videos available in several languages and to expand a multi-lingual Web site called Forsalebylocals.com, which he bills as a “new real estate approach.”
“We are building a Web engine that can create personalized user experiences in multiple languages across dozens or hundreds of Web sites,” he said on a blog associated with the site.
The number of videos narrated in English, Portuguese and Spanish on Forsalebylocals has been increasing steadily since the Beta version of the site was started in October.
The downloadable videos often have a YouTube home-video quality to them, but the accompanying commentary lets visitors know about the neighborhoods, whether a house roof can support a second floor, what amenities are included and agent contact information. Few of the residential properties on the site cost more than $100,000 and some are priced as low as $20,000.
To date, most of the featured properties are in Bolivia, where Grey owns property, but the site is to expand to Costa Rica this month. Anyone with a miniDV tape can post interviews and narrated videos on the site, which does not charge for video titles, digitalization and conversion to Internet format.
“We’re not trying to be agents,” Grey said in a telephone interview. “It’s really about building community.”
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