Central America continues to attract investors and tourists alike.  But not all countries have the same pulling power. 

The graph below shows which countries rack up the highest number of searches for real estate online based on the generic country-followed-by-real-estate search phrase.  As you can see, there are more searches made for “costa rica real estate” than for “el salvador real estate.”  And every day the search term ”belize real estate” is typed into search engines more times than “guatemala real estate.”

The results that underpin the graph above are for July 07.  But the trends have stayed the same for a number of years.  Perhaps we will see the numbers of searches for “Panama real estate” and “Belize real estate” catch up with “Costa Rica real estate.”  At the moment though, Costa Rica is the leader for real estate searching online.

The real estate opportunities available in Central America span a range of risk / reward profiles.  There is real estate on offer to suit different investment goals.  Properties that are good candidates for short term capital appreciation exist as well as properties in lower risk environments with the promise of an immediate rental income. 

Of course there are markets within markets so the graphic provides only a general representation of relative position of the country as a whole. The Costa Rica real estate market is the most mature, Panama and Belize real estate represent classic middle markets - not quite emerging and not quite developed - with Nicaragua, Honduras, El Salvador and Guatemala at earlier stages of the development curve.  We plan to dig a little deeper and highlight the relative positions and profile of different real estate areas within each country.  More on this to follow…

National real estate associations exist for most counties in Central America.  And, given the sharp growth of real estate investment in the region, these bodies seem to be getting more active. There are some big ticket items on the table not least the question of licencing, code of ethics and ultimately (maybe) development of an MLS.   The associations are as follows:

• The Costa Rica Chamber of Real Estate (CCCBR), Costa Rica Global Association of REALTORS® (CRGAR),
• Camara Salvadoreña de Bienes Raíces (CSBR),
• Asociacion Nacional de Agencias de Bienes Raíces de Honduras (ANABIR),
• Camara Nicaraguense de Corredores de Bienes Raíces (CNCBR),
• Asociacion Panamena de Corredores y Promotores de Bienes Raices (ACOBIR),
• Camara de Corredores de Bienes Raices de Guatemala (CCBRG)
• Association of Real Estate Brokers of Belize
• Federation of Real Estate Associations of Central America and the Caribbean (FeCePAC) - an umbrella organisation that ties the other bodies together with a focus on integration and networking.

The recent activity is a good sign.  The FeCePAC and CNCBR conference held in Managua, Nicaragua last week had a strong turnout with some key action steps to take for more regional integration of real estate approaches and standards.  We were also pleased to see the recent announcement that the Association of Real Estate Brokers of Belize will be working together with the government to establish a code of conduct and general property industry standards.   The US National Association of Realtors (NAR) currently has bilateral agreements with real estate associations in Costa Rica, El Salvador, and Panama and is affiliated with the Federation of Real Estate Associations of Central America.

Most of the foreign buyers for real estate in Central America are from the US - with California and Florida leading the way.  The graph adds the detail to this trend.  It includes not only buyers but people researching Central American real estate markets over the internet.  The last two years have seen a slight but perceptible shift with more buyers appearing from Europe and South Asia.  Many of whom are likely to have business interests in, and/or spend time in, the US.

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.

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.