Emerging real estate markets tend to follow an S shaped development curve. Knowing where on the curve a particular market is helps you to decide whether the risk/reward profile is right for you. At the top of the curve lie the more ‘mature’ markets with more speculative or ‘pioneer’ markets found at earlier stages.

Markets early in the curve tend to be good candidates for short term capital appreciation. But inherent risks are high and infrastructure quality tends to be low. More mature markets, located at later stages in the development curve, have a lower risk environment based typically on an established tourism (and retirement) market and strong sense of economic and political stability. Strong rental possibilities exist in property hot spots and luxury (often branded) offerings can be found on the market. Middle markets fall somewhere in between - not really emerging but also not quite fully developed.

We plan to plot counties in Central America on this graph and also dig deeper into individual regions. There may be instances that a property hot spot in a particular country has the characteristics of a ‘mature’ destination while the county as a whole appears to have ‘pioneer’ attributes. We have our ideas but would be interested in your thoughts on where you would place different counties and regions on a development curve such as this one. It is also possible to draw some general conclusions on the main types of buyers active at different stages on a development curve for Central America.