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How to find your perfect master planned community in Central America

February 10th, 2010

find-perfect-community-central-america

OK so you’ve found a beautiful condo with a great view of a surf break. Or a luxury mansion where you can impress your friends with your lavish international lifestyle.

But can you really love your home if you don’t like your community, the surroundings or your neighborhood?

We don’t think so. So we encourage you to become a real estate community profiler. Start by figuring out exactly what you’re looking for, the kind of lifestyle you enjoy, the amenities you need and zero in on the community that delivers. Do this before you start comparing individual houses, lots or condos.

To get you started on your profiling, we’ve put together a list of 8 types of master planned community you’ll find in Central America.

1. Status communities

Status communities are at the top of our Price Rank. They tend to be beachfront, exclusive, and packed with community amenities - such as a golf course, marina, hotel, private club, fitness center, sports facilities, convention center, etc. If you’re in Costa Rica or Panama you may even see a top tier brand name associated with the community. Think Four Seasons, Trump, Ritz-Carlton… Properties in status communities tend to be large custom built houses or upscale condos.

2. Golfing communities

Completed golf courses in Central-AmericaYes, you’ve guessed it. Golfing communities have golf courses and attract golfing enthusiasts. The graphic shows the completed golf courses in the countries we cover. Costa Rica leads the field with 9. Of course many more are under construction or planned. Most golfers like to play on different golf courses so remember to look for the geographical clusters within (say) an hour’s drive of each-other.

3. Surfing communities

Walking barefoot out of your property, surf board in hand, straight out to the break is something surfers dream about. Luckily in Central America there are many property developments where this is possible. In fact we’ve found over 60 master planned communities located within walking distance to a surf break. Here’s the list and map. We also looked at developments within an hour from a break and the list is longer.

4. Historic communities

It’s really only Nicaragua and Panama that can boast ‘historic communities’. In Nicaragua these are clustered in and around Granada; purportedly the oldest continually inhabited city in the Americas. Nicaragua also has Leon, a city that rivals Granada when it comes to the colonial feel. But you’ll find more master planned communities located around Granada. If you’re in Panama, head straight for the Casco Viejo area of Panama City for colonial buildings with serious curb appeal.

5. Retirement communities

As North American retirees take stock of economic realities, it’s clear that many are looking for a more affordable life overseas. The retiree trend has not escaped the attention of real estate developers and we’re seeing a growing number of communities, or sections within communities, designed specifically to cater for the over 55s. Look out for on-site medical facilities and organized social activities such as bridge, painting, yoga and so on.

6. Escape communities

International real estate (and vacation homes in particular) are commonly marketed as a form of escape. An escape from the stresses of the modern world and the hustle and bustle of 9-5 living. Places where you can switch off your cell phone, unwind and embrace a simpler, less hurried lifestyle. Destination resorts have popped up all of the place, sometimes in very remote areas to cater to this need. The remoteness is repackaged as a benefit that delivers ’space and privacy’.

7. Urban core communities

Moving overseas is not always about fulfilling your escapist dream (See #6). Sometimes you want to be close to amenities and be highly accessible. Panama City stands out in this regard. It’s the most cosmopolitan of all Central American cities and a world class financial center. We’re not just talking about coffee shops, restaurants and nightlife but world class shopping centers, banking, theater and fine arts. The Central Valley area of Costa Rica probably comes in a close second.

8. Eco-communities

One of the characteristics of the post crisis investor is an interest in “contributions to larger concerns such as environmental preservation, the local community and sustainable approaches to building, water, and energy”. Recent years have seen a huge growth in master planned communities embracing the sustainability agenda ( and no, not just in Costa Rica). It’s sometimes hard to get past the green-washing but here’s a list of projects that have made public disclosures. The green trend is here to stay, we just need better ways of distinguishing the projects that churn out empty eco-cliches from the ‘intentional communities’ that are taking real action on the ground.

Now you’re ready to start finding a master planned community that fits your lifestyle. Are there any categories we’ve missed? Let us know in the comments. And once you’ve narrowed things down don’t forget to ask these 10 questions before you buy.

From Reveal Real Estate - charting international real estate trends in Central America.

After the storm: Pessimists vs. Optimists

February 1st, 2010

financial-crisis-international-real-estate-Central-America

The global financial crisis and its impact on international real estate is still discussion topic #1 among investment analysts, real estate agents and developers in Central America. Everyone agrees that 2009 was a difficult year. The tricky part is that the arguments being presented paint quite different scenarios for the future.

On the one hand, large-scale real estate projects, especially if heavily leveraged, have proven vulnerable. The suspension of the St. Regis project in Costa Rica in the wake of the Lehman Brothers collapse was the first high profile example. Other project closures and suspensions followed in 2009 including the Rosewood at Costa Carmel (Costa Rica), La Punta Papagayo (Costa Rica), Marea Alta (Nicaragua), and Orchid Residences (Panama City), to name a few.

But perhaps more important than the direct impact of the international financial crisis, the property pessimists argue, was the indirect effect of tighter lines of credit in North America - the main source of buyers for international real estate in the region. No longer is the market being carried by North American buyers flush with equity and easy credit. It’s easy to point to low sales volumes and falling prices to make this point.

Any bright spots? Counter trends?

One can overdo the gloom.  The optimists point to sticker prices on the downside in Central America relative to more mature markets. The relatively low levels of lender mediated activity across the region meant that the market did not suffer the kind of foreclosure crisis we’ve become used to reading about in the US.

Second, international real estate markets, and Central America included, are increasingly being seen as tax-friendly, safe haven investments. The kind of places investors and retirees seek to shield themselves from the US financial system.

Added to this, is a new wave of lifestyle buyers looking for areas where the real estate is cheaper and, crucially, the cost of living more affordable. We included examples of developers, such as Montecristo Beach & Golf Resort in Nicaragua, Grand Baymen in Belize and Valle Escondido in Panama, successfully marketing to these buyers in a recent article for the International Property Journal.

The upshot?

The impact of the financial crisis has been mixed both within and between countries. Developers are having to adapt quickly to a new market.  Those that understand the mindset of the post-crisis real estate investor are best placed to succeed.

Investment activity is trending towards well-planned developments with good locations, quality products and a master plan that delivers against end-user requirements. Pre-construction offerings in weak locations face an uphill battle.

The property pessimists are right that the boom years are over for international real estate in Central America.  It’s a different market now, with buyers firmly in the driving seat. Welcome to the ‘new normal’.

From Reveal Real Estate - charting international real estate trends in Central America.

What’s the cheapest real estate you can find in a master planned community in Central America?

December 20th, 2009

central-america-international-real-estate-price-rank-2009

2009 has been a tough year for real estate sellers in Central America. Sales volumes are down, buyers are more risk adverse and financing is tight. The one bright spot is a growing group of ‘lifestyle buyers’ looking for cheap properties and a low cost of living. Many see Central America as an affordable safe haven and a way to side-step the worst effects of an economic downturn at home.

As it’s cheap real estate these lifestyle buyers are after, we thought we’d offer up a resource that highlights the lowest priced real estate in the four countries we follow: Belize, Costa Rica, Panama and Nicaragua.

Not surprisingly, the most affordable way into the market is by purchasing a lot or homesite. Our analysis looks at master planned communities targeting the international buyer. This means that a lot purchase comes with access to community amenities. Swimming pools, clubhouses and fitness centers are the most common. In some of the larger, resort-style communities, you’ll find golf courses, restaurants, shopping centers, racket courts, hotels and marinas.

So what’s the starting price point for lots in master planned communities?

We’ve built a ranking table to answer this question, giving the results in overall price and price/sqft for 2009. The table complements the earlier PriceRank we prepared for single family houses and condos. The columns are sortable letting you organize the list in different ways. If you want to know what amenities are offered by each real estate development, click through to the individual page for the answer. You’ll also see if the amenities are planned or completed.

A quick glance at the table shows two broad themes:

  • Real estate developments located in Nicaragua tend to rank lower (ie are lower in price) than those in Costa Rica, with Belize and Panama falling somewhere in between. This pattern mirrors the level of maturity of the real estate markets - from emerging (Nicaragua) to middle markets (Panama and Belize) to the most mature (Costa Rica). We’ve analysed this before by plotting ‘development curves’ to show the relative levels of each of the markets.
  • Generally speaking ocean property has a premium over other locations. Master planned communities on the ocean rank higher for the most part than lake/river and pastoral locations.

Rank Real estate development Country Location Location type Median price ($) Median price/sqft
1 Camino Del Rio Belize Belmopan Lake/river 20,000 2
2 Lomas de Santa Rosa Costa Rica Tamarindo Pastoral 21,200 6
3 Club Alegria Nicaragua Granada Pastoral 21,500 2
4 Better in Belize Belize Belmopan Lake/river 23,000 1
5 Prana del Sol Nicaragua Tola Ocean 25,000 3
6 Rancho Las Lomas Costa Rica Parrita Ocean 26,500 4
7 Villa Davina Panama David Lake/river 28,400 3
8 Casa Llanta, Nicaragua Nicaragua South of San Juan del Sur Ocean 30,000 1
9 Congo Hills Nicaragua San Juan del Sur Ocean 30,000 3
10 Rancho Los Suenos Panama Espave Pastoral 31,000 2
11 Waterside Belize Flowers Bank Lake/river 31,730 1
12 Progresso Heights Belize Corozal Lake/river 34,816 3
13 Rancho del Oro Nicaragua San Juan del Sur Ocean 35,000 2
14 El Camino del Sol Nicaragua San Juan del Sur Ocean 38,175 5
15 Apanas Lake Estates Nicaragua Matagalpa and Jinotega Lake/river 39,900 2
16 Rancho Papayal Nicaragua San Juan del Sur Ocean 40,000 2
17 La Vista Nicaragua Nicaragua Tola Ocean 40,000 2
18 Consejo Shores Belize Belize Corozal Ocean 42,500 2
19 Seahorse Tropics Nicaragua San Juan del Sur Ocean 44,200 4
20 Villa Lagos Nicaragua Granada Lake/river 45,240 5
21 Parque Maritimo el Coco Nicaragua South of San Juan del Sur Ocean 48,600 7
22 Las Fincas de Escamequita and Las Haciendas Nicaragua South of San Juan del Sur Ocean 49,000 1
23 Belize Reserve Belize Cayo Pastoral 49,950 2
24 Paraiso de Amelia Nicaragua San Juan del Sur Ocean 50,000 4
25 Tamarindo Beach and Ocean Estates Nicaragua Central Pacific Nicaragua Ocean 50,000 5
26 Bella Mar Nica Nicaragua Tola Ocean 52,561 5
27 Cerros Sands Belize Corozal Ocean 53,500 5
28 Dreamscapes Belize Belize Dangriga Ocean 54,111 5
29 Finca Java Nicaragua Matagalpa and Jinotega Lake/river 55,000 0
30 Selva del Mar Nicaragua Tola Ocean 55,000 5
31 Bella Vista Guasacate, Nicaragua Nicaragua Tola Ocean 59,000 12
32 Altos de Maria Panama Chame Highlands 59,100 3
33 Club Vistalagos Nicaragua Laguna de Apoyo Lake/river 64,000 4
34 Cantamar Playa Yankee Nicaragua South of San Juan del Sur Ocean 65,000 4
35 Montanas de Caldera Panama Boquete Highlands 67,500 4
36 Finca del Mar Nicaragua Central Pacific Nicaragua Ocean 70,500 4
37 Hills of Santa Marta Nicaragua Tola Ocean 72,000 6
38 Turtle Cove Lake and Yacht Club Costa Rica Arenal Lake/river 72,720 4
39 El Encanto del Sur Nicaragua San Juan del Sur Ocean 73,500 4
40 Costa Dulce, Nicaragua Nicaragua South of San Juan del Sur Ocean 82,000 6
41 Starfish Reef Panama Bocas del Toro Ocean 84,000 3
42 Hacienda Los Molinos Panama Boquete Highlands 84,660 6
43 Pacific Marlin, Nicaragua Nicaragua San Juan del Sur Ocean 85,000 7
44 El Club del Mar Nicaragua South of San Juan del Sur Ocean 89,000 7
45 Papagayo Golf Lots Costa Rica Playas del Coco Ocean 90,000 1
46 Remanso Beach Resort, Nicaragua Nicaragua South of San Juan del Sur Ocean 92,792 12
47 olcan Springs Ranch Estates Panama Volcan Highlands 97,250 4
48 Bahia Lomas Estates and Marina Panama Bocas del Toro Ocean 98,499 4
49 Balcones de Majagual Nicaragua Marsella / Maderas Ocean 99,000 6
50 Mansions at Banyan Bay Belize Ambergris Caye Ocean 101,000 15
51 Paradise Dreams Panama Bocas del Toro Ocean 103,333 10
52 Boquete Country Club Panama Boquete Highlands 107,189 5
53 Valle Verde Costa Rica Central Valley Highlands 107,685 1
54 Boquete Plantation Panama Boquete Highlands 110,000 7
55 Rio Oria Estates Panama Azueros Peninsula Ocean 112,000 1
56 Cala Azul Nicaragua San Juan del Sur Ocean 117,000 11
57 Orchid Bay Belize Corozal Ocean 119,000 9
58 Finca las Brisas, Costa Rica Costa Rica Nicoya Ocean 120,750 2
59 Montanas y Mar Costa Rica Quepos/Manuel Antonio Ocean 122,500 1
60 Cheetah Chombo Costa Rica Cahuita Ocean 125,500 1
61 Cerro Grande Estates, Costa Rica Costa Rica Tamarindo Ocean 126,250 1
62 Placencia Yacht Club Belize Placencia Ocean 130,000 18
63 Gran Pacifica Nicaragua Central Pacific Nicaragua Ocean 132,665 21
64 Montecristo Beach and Golf Resort Nicaragua Central Pacific Nicaragua Ocean 133,833 10
65 Rancho Santana Nicaragua Tola Ocean 136,750 5
66 Residencial La Esmeralda, Costa Rica Costa Rica Tamarindo Ocean 137,500 4
67 Hacienda Iguana Nicaragua Tola Ocean 140,417 7
68 Tierra Pacifica Costa Rica Playa Junquillal Ocean 145,000 2
69 Sanctuary Bay Estates Belize Belize Stann Creek Ocean 146,500 3
70 Bosques de Vista Marina, Costa Rica Costa Rica Playas del Coco Ocean 150,000 6
71 Playa Santa Rosa Nicaragua Central Pacific Nicaragua Ocean 155,563 13
72 Costa Paraiso Nicaragua South of San Juan del Sur Ocean 159,000 7
73 Rancho Villa Real, Costa Rica Costa Rica Tamarindo Ocean 171,000 3
74 Portasol Costa Rica Dominical Ocean 180,500 2
75 Sittee Point Belize Hopkins Ocean 193,500 13
76 Lobster Cove Panama Chuchecal Bay Ocean 208,750 8
77 Pura Jungla, Costa Rica Costa Rica Paraiso Ocean 209,275 2
78 Lomas del Mar, Costa Rica Costa Rica Playas del Coco Ocean 212,500 3
79 Brisas del Pacifico, Nicaragua Nicaragua San Juan del Sur Ocean 217,174 9
80 Eagles View, Costa Rica Costa Rica Nosara Ocean 224,900 5
81 Valle Escondido Panama Boquete Highlands 227,140 7
82 La Reserva Camaronal, Costa Rica Costa Rica Samara Ocean 233,475 18
83 San Buena Golf Costa Rica Southern Pacific Ocean 234,400 11
84 Ladera del Mar Costa Rica Playas de Coco Ocean 237,000 4
85 Villas Cabo Vela Costa Rica Playa Grande Ocean 247,000 3
86 Sunset Point Bocas Panama Bocas del Toro Ocean 255,000 10
87 Manuel Antonio Estates Costa Rica Quepos/Manuel Antonio Ocean 284,000 5
88 Cabo Caletas Costa Rica Costa Rica Esterillos Ocean 285,000 18
89 Cocoplum Belize Belize Placencia Ocean 305,250 11
90 Sonidos del Mar, Costa Rica Costa Rica Nosara Ocean 306,667 28
91 Coco Bay Estates Costa Rica Playas del Coco Ocean 311,250 12
92 Balcones del Lago Arenal Costa Rica Arenal Lake/river 315,000 4
93 Rancho Playa Negras Costa Rica Playa Negra Ocean 337,112 22
94 Lora Hills Costa Rica Costa Rica Playa Ostional Ocean 498,877 11
95 Hermosa Heights Costa Rica Playa Hermosa Ocean 565,000 48
96 The Four Seasons Papagayo Peninsula Costa Rica Papagayo Ocean 950,000 31
97 Hacienda Pinilla Costa Rica Tamarindo Ocean 970,983 45
98 Isla Viveros Panama Panama Isla Viveros (Pearl Island) Ocean 993,866 18

We’re continuing to sort through the data we collect, looking for the best ways to present and dig out the facts. We’d love to have your ideas and suggestions. They’ll be more price rankings to follow. We also plan a “Master Plan Completion Index” to give a sense of how far along real estate developments are with their master plan - a piece of information that savvy real estate investors should follow with care.

Stay tuned by subscribing to updates.

From Reveal Real Estate - charting international real estate trends in Central America.

Scouting international real estate in Central America requires a fair bit of bumping along unpaved roads

November 9th, 2009

I seem to spend a lot of my time bumping along unpaved roads in Central America on my way to see how real estate developments are progressing.

Sometimes this can give you the feeling that you’ve arrived at a secret paradise, miles from anywhere, when the bumpy road suddenly opens out to sweeping vistas, lush gardens and well appointed homes. Ahh, you think, no one except other discriminating investors like myself will take the time to reach and assess this opportunity so I’m guaranteed exclusivity, privacy and maybe somewhat of a discount due to the access.  But, more often, the bumpy trip can leave you tired and grumpy and heaven help a developer who doesn’t then have a cool drink on hand and something worthwhile to show you as an investment opportunity.

It’s important to be prepared before you set out - to know exactly where the project is located, how long it will take to get there and on what sort of road. So on RevealRealEstate we include a location map for each real estate development and answer these 3 questions:

  • Is the road paved from the nearest international airport? (if it’s not paved, we’ve estimated the amount of driving time on unpaved sections)
  • What is the total driving time from the international airport?
  • How long does it take to drive to the closest town with a decent sized grocery store?

This data is useful on a project-by-project basis when planning a trip, doing a price comparison, or for tossing up real estate options; but there’s also something to learn from aggregating the data and analyzing by country.  So here’s the picture for Panama, Costa Rica and Nicaragua.

Is the road paved from the nearest international airport?

international-real-estate-paved-roads

In broad terms the data reflects the level of investment each county has made on its infrastructure and the remoteness of the main property purchasing destinations.  Panama leads the field when it comes to paving.  You can drive in comfort, on paved roads, to most of the real estate developments featured on RevealRealEstate, including of course all the condo projects in Panama City.

Costa Rica follows close behind with over 70% of the developments having paved access. We haven’t yet seen the new section of road between Quepos and Dominical, but this should improve driving comfort further.

In Nicaragua be prepared for a bumpier ride.  Only 20% of the projects on RevealRealEstate have paved access.  But if the planned coastal road from the border with Costa Rica heading northwards following the ribbon of development ever gets off the drawing board, this would change the picture quite dramatically.

How long does it take to drive to the airport and the nearest grocery store?

international real estate driving time

The pattern between the countries is similar when it comes to driving times.  Real estate developments in Panama and Costa Rica have a shorter driving time on average to the airport and to a decent sized grovery store than those located in Nicaragua.

If you need to pop out to a grocery store with a decent range of items you’re looking at a 9 minute drive, on average, in Costa Rica.  In Nicaragua, your grocery run is 23 minutes on average.    Of course this varies considerably for each real estate development. Check each development page for individual driving times.

What about Belize real estate?

belize-paved

We’ve included the Belize data separately as it’s not directly comparable to the other countries.  The terrain is quite different, particularly on the coast, and visitors mostly get about by taking short internal flights and then getting in a golf cart for the final stretch.  Many of the projects on Ambergris Caye for example do not have paved access but in practice all this means is a short golf cart ride on a sand road.

Infrastructure is steadily improving in Belize.  The paving of the 16 mile road along the Placencia Peninsula is underway with the section from Maya Beach to Placencia Village already completed.  So the only bumping we’ll do on our next trip to Placencia will be over speed-bumps.

So what does all of this mean for pricing?  Does paved access lessen a development’s exclusivity?  Does a long driving time from the airport or grocery store mean that prices will be lower for comparable real estate? We’ll be looking at this in our second post on accessibility.  Stay tuned.

From Reveal Real Estate - charting international real estate trends in Central America.

The current state of international real estate in Costa Rica

October 6th, 2009

costa-rica-real-estate

Between 2005 to mid-2008, property developers in Costa Rica witnessed enormous increases in property launches and sales as vacant land on the ocean and in the highlands was developed into second homes for North Americans and Europeans.

There were three key factors supporting the boom:

  • Political stability – Costa Rica has had over half a century of uninterrupted democracy, making it one of the most stable countries in the region.
  • Its long-standing as an eco-tourism destination – Costa Rica’s express commitment to environmental conservation and it’s rich biodiversity have enabled it to develop a unique “eco” travel product.
  • US retiree haven status – With more US citizens venturing abroad, Costa Rica has benefited enormously from its retiree haven status.

The morning after

But since the global economic collapse the Costa Rica real estate landscape has changed.  Large scale, ultra leveraged properties have suspended operations, others have stalled or cut-back on the more ambitious aspects of the master plan, and prices have been cut for the first time since the boom.

Still, asking prices in the luxury end of the housing market (ie: master-planned communities, resort developments and condo projects catering to the international buyer) have held up relatively well compared with the sharper declines experienced in the developed world.  Our year-on-year numbers to September 2009 show relatively modest fall of 8.75% for serviced lots, 3.73% for condos and 8.92% for single-family homes across the main master-planned communities.

So what are the takeaways from this?

Optimists will find some solace in the fact that Costa Rica has been shielded somewhat from the collapse in house prices witnessed in the developed world. It’s relatively underdeveloped mortgage market, formerly considered a weakness, has meant that it has avoided the rampant foreclosures that have tugged at the bottom of the market in the US.

But property pessimists will doubtless point to the high profile project suspensions such as the St Regis Project, the Rosewood Residences at Costa Carmel and La Punta Papagayo in Gunacaste. They may also insist that with re-sales (sales from end-user to end-user) continuing to undercut developer direct prices, the data under-reports the extent of the decline and there are more falls to come.

We’d love to hear your views. Leave a comment below or write a review on one of Costa Rica’s international property hotspots.

From Reveal Real Estate - charting international real estate trends in Central America.

10 questions you must ask the real estate developer before you buy

September 16th, 2009

international real estate in Panama, Costa rica, Belize and Nicaragua

Master-planned communities in Central America come in all shapes and sizes - from small condo buildings to developments covering thousands of acres offering resort style amenities.  Many offer pre-construction sales where you buy before you see the finished product.   Great gains can be made as properties are offered at a discount.  But you have to be confident that the developer will deliver.  The starting point is getting answers to these 10 questions below, before you sign the contract.

  1. Find out what kind of title the developer has to the land and ask to see the master title insurance policy.  Ensure the legal due diligence on these documents is carried out by a good quality attorney.  The developer may recommend their own attorney, but it is always safer to conduct an independent review of the documents before signing.
  2. Ask whether the development masterplan has been approved by all relevant authorities.   In particular, check to see if environmental impact statements have been submitted, and approved.   Authorities across Central America are getting increasingly stringent in their environmental regulation.
  3. Investigate whether the developer has the capital to move the real estate development forward or if they are relying on sales revenues.  Remember that limited financial flexibility or low project sales can adversely impact the timely completion of a project.
  4. Do some research into the past experience of the developer and and ask to be put in touch with previous buyers.  Try and get background information or bios on the entire developer team including builders, architect, marketers, operators and master-planners.
  5. The builder being used is a critical component of the development team.  If the developer is using a well respected local firm that has a track record in the type of construction required by the master plan, this is a good sign.  If possible try and see examples of buildings that have been completed by the builder so that you can get a real sense of the quality of their work.
  6. Find out how much time of the year the developer spends in-country.  If the developer is foreign, but lives full-time in the country where the real estate project is located, this is a positive indicator for their long term commitment to the project and country.
  7. Find out about the water source and whether the developer has ensured that there will be enough supply even when the development is fully built-out.  Ask how sewage is being handled and does the process comply with local regulations.  Check to see if power lines will be underground or overground.
  8. Read the Codes Covenants and Restrictions (CC&Rs) carefully.  CC&Rs in some international real estate developments can be highly restrictive, down to what you can or can’t grow in your garden, what pets you can have, the architectural style that is allowed, or the color of your roofing tiles.  Make sure you know what you’re getting into. In most cases the CC&Rs will be enforced by a Home Owners Association (HOA) - a legal entity which allows the developer to transfer ownership and management of the community to the homeowners after it has sold a predetermined number of units or lots.  Ask to see a copy of the Association bylaws and budget.
  9. Don’t forget to find out about after sales service such as property management, rental management and marketing support for re-sales.  Make sure you are comfortable with the level of service that the developer intents to provide after the sale.
  10. Find out if the developer is addressing the social and environmental impacts of the development and whether there are any programs in place to support the local community.  Efforts to protect the environment, treat employees and suppliers fairly and ensure that the local community is benefiting are all good signs of a ‘responsible’ approach to development over the long term.

Finally, remember also to check out our 16 insider tips to purchasing international real estate in Central America.

From Reveal Real Estate - charting international real estate trends in Central America.

16 insider tips to investing in real estate in Central America

April 27th, 2009

1. Understand the link between tourism and real estate

There is a strong relationship between leisure markets and the market for vacation and retirement homes. Across Central America, the areas that attract most tourism numbers also generate the highest levels of real estate activity. Add data on tourism rates into your research and seek out areas that are experiencing growing numbers of tourist visitors. The real estate dollars should follow close behind.

If you dream of a vacation home in the truest sense of the word, a property that you can enjoy right now and not sometime in the distant future, then seek out established tourism destinations. You’ll also find that rental returns are highest in these areas. In fact tourism is one of the criteria we use to determine property hotspots on this site.

2. Read those codes covenants and restrictions (CC&Rs)

If you’re buying in a planned community make sure your vision matches that of the developer. You want a low density eco-development but they’re planning a high rise condo. Something has to give. And as an occupant in a new development you may be disturbed while building work continues on the site.

CC&Rs in some developments can be highly restrictive, down to what you can or can’t grow in your garden, or the color of your roofing tiles for example. For some this means a well managed community, for others a loss of freedom. Just make sure you know what you’re getting into.

3. Visit where you want to buy out of season

Visit the location out of season. For Central America this means visiting in the rainy season. The heaviest rains tend to fall between June-Novemeber. In Belize for example some tourism businesses close down during the months of September and October, the peak hurricane season. It’s important to make sure you still like the location and that you can access the local services that you need. For that matter, also visit at the height of the high season to see if you enjoy the crowds. December to February tend to the big months for North Americans and August for European travelers.

4. Consider making your investment green

We’re reaching a tipping point - where a critical mass of people understand that green investing is the most competitive thing they can do. We’re not talking about green-wash or empty eco-marketing messages but about finding the sweet spot where being environmentally responsible results in smart design, healthy living, reduced energy costs and enhanced asset value.

More developers are designing green properties where you can invest in a way that helps produce a healthy, livable world. In our research, we’ve highlighted developments that incorporate social and environmental best practices, see for example information on green real estate in Nicaragua.

5. Become and expert in investing in international real estate …before you invest

You should never make an investment decision on the back of one piece of information whether it be a glossy brochure, your agent’s number-crunching or a friend’s recommendation. Investing is about triangulating between many layers of information, perspective and judgment. Remember to seek legal advice as early as possible and understand the way of buying properties in other countries could be very different from what you are used to at home. Have a look at our country guides on the purchasing process - here’s information on Investing in Belize for example.

In reality, you can do much of the homework without even getting into a plane. This will help keep your feet on the ground when your reach the stage of considering individual properties.

6. Determine what market is right for you and focus there

Good investments can be found in every market but whether a particular market is right for you will depend on your investment goals – do you have a speculator’s stomach? Do you want immediate access to amenities and a sense of community or can you wait?

As a general rule, regions at earlier stages of a property development curve will have a higher potential for rapid capital appreciation than more mature areas but will also have a higher inherent market risk. In more mature markets, the infrastructure will be better quality and the tourism industry and associated amenities more developed providing more potential for rental income. Choose the risk/reward profile you are comfortable with and set your investment goals early. As Garry Keller notes in The Millionaire Real Estate Investor, when researching investment opportunities: ‘Think powered by a big why’.

7. Don’t assume you can finance your purchase

In many Central American countries getting a loan from a local bank as a foreigner is cumbersome and it’s easy to get lost in the bureaucracy. If you stick with the process and succeed, the interest rates are often not as competitive as what you would find in the US, Europe or Canada.

Panama stands out in this regard as competitive financing is relatively easy to obtain. In Costa Rica we seeing more developers structure standard mortgage arrangements with local banks to short cut the process for their clients. You’ll also find an ever increasing number of developers offering seller financing although normally for shorter terms than you can negotiate with a bank.

8. Buy only what you see

A solid piece of advice is to buy only what you see. Make up your mind on the inherent value of the property you are considering. Don’t factor in the ‘new coastal road’ the ‘new airport’ the ‘new hotel flag’ into the price. Certainly not if you are investing for the short term.

Don’t buy sight-unseen however good the sales presentation and virtual imagery may be. Remember you’re not just buying a property, you’re buying into an area and a country and it’s important to experience this first hand. By all means put down a refundable deposit to reserve your chosen property, but fly in before the closing.

9. Give something back

Investing responsibly makes a great deal of sense both for the country as a whole and for your individual investment. Central America is a warmhearted region welcoming to international visitors. In order for this sense of welcome to endure into the future, local communities need to benefit from the real estate and tourism activity that is going on in the country. As the community grows and develops so the foundation for real estate becomes more solid and sustainable.

Don’t lock yourself away from the community - be a part of it. Support charities, work with local business, provide employment and take part in everything that you can. Your life will be richer for it.

10. Make title insurance a non-negotiable

We recommend taking out title insurance for all your purchases in Central America. Though the process can at times be bureaucratic and cumbersome (and some realtors like to remind you of this) it can unearth potential problems with your title before it is too late. Seeking title insurance will force your attorney to delve deeply into the title history of your property and follow a set of criteria in their reporting.

Seek out well established title insurance companies that have a track record of offering polices in Central America, such as First American or Stuart Title. With both of these companies your insurance policy will be paid for in the US and any claims are made to the company in the US.

11. Choose a good attorney

The general level of credibility and professionalism that attorneys exhibit can vary considerably between different countries. When purchasing in a Spanish speaking country like Nicaragua, Panama or Costa Rica, it makes sense to find an attorney who speaks English (unless of course you are fluent in legal Spanish) and who commits to keep regular communications with you throughout the due diligence and closing process. Remember that you may be out of the country over this period and communication via email will be important. Always ask for a written title opinion. It’s surprising how many closings take place without one.

You can often get a list of good attorneys approved by major title insurance companies. Sellers have been known to try and persuade buyers to use their own legal team for property purchasing. Our advice is to employ independent legal advise at least to review (if not draw up) the purchase contract you are signing and check the title history on the property.

12. Don’t leave your brain at home

There never seems to be a shortage of people willing to sell you overseas property in Central America - from your taxi driver to the helpful person on reception. But remember there is very little regulation of their activities. Having said this, most of the problems we hear stem from a lack of care on the part of buyers rather than because of an unregulated market-place. When abroad, investors can forget all the things they would do if purchasing property at home. They get caught up with it all - ignore the basic steps like taking independent legal advice - and end up signing things they do not understand.

13. Don’t believe the hype

There’s no overarching multiple listing service (MLS) for real estate in Central America and little centralized tracking of the price properties have sold for in the past. There is no local equivalent of www.zillow.com for the regional real estate market. This means that the market is particularly prone to exaggeration and hype, sometimes in both directions. This lack of reliable market data is a key driver as to why we set up this site.

Research sites like this one before you leave home and set about building a good network that will allow you to contextualize information that you receive. Learn from professionals and be skeptical about claims that you can flip your property for 100% more “when the next real estate tour comes into town in a few weeks”.

14. Understand the pros and cons of buying off-plan

If you’re prepared to buy before you see the finished product, you can get as much as 30% off the asking price of a new property. Not only is it cheaper to buy off-plan, but you could find that your new property is worth more by the time you move in. Expect to pay in installments against key construction milestones.

You’re going to have to trust your imagination. Even with virtual tours and full presentations, it can sometimes be difficult to visualize all aspects of your new home and its relationship to neighboring properties. And when it comes to timing, remember that you may have to wait longer than you anticipated to move in. Progress can be delayed and you’ll rarely be given a fixed date in the contract for completion.

15. When buying for rental income think hard about the end-user

If you plan to let your property for profit, think hard about what kind of person is likely to sign the lease. If you’re buying in a golf community for example, will your property appeal to golfers if it’s not directly on the course? Do your guests get a break on the green fees? What kind of properties do surfers look for and what months are the best for surfing. Can you tap into the local rental market or is your property only going to appeal to a foreign vacationer? Find out whether the developer is set up to manage and market the property on your behalf or if you need to hire a local property manager.

16. Check traveling time to the nearest international airport

Our directory includes an estimate of travel time to the nearest international airport for all developments in our database. Remember it’s rare to find major hospitality brands further than 90 minutes from an international airport and their presence practically always has a positive impact on property prices. In fact most major chains like to be within 60 minutes and with fully-paved access. Also, the closer you are to the international airport, the more likely you’ll be motivated to visit, even when you’ve only got a short amount of time available.

Have you invested in real estate in Central America? If you have, we’d love to learn from you experience. Leave a comment below or write a review against one of our property hotspots.

Are real estate prices stickier in Central America?

April 15th, 2009

costa-rica-blog

We’ve just started a new round of data collection for 2009 covering Nicaragua, Belize, Panama and Costa Rica.  When we have this collected, we’ll present a trend analysis - showing how prices have changed since 2008.

Kirk Hankla, owner of International City Mortgage, on a recent trip to Nicaragua, put forward the view that we would find property prices in Central America to be stickier on the downside than in the US (or other more mature markets).

The argument for stickier property prices

The argument being that people who buy in Central America are typically making cash purchases and are usually not effected to the point of having to liquidate assets in order to meet demands. This characteristic, of not being highly leveraged, generally speaking, is how they conduct their lives in their home country as well.

Even if they were looking for financing, they would be hard pressed to find the kind of financing products commonly available in the US.  This is because Nicaragua, Costa Rica, Belize and, albeit to a lesser extent, Panama do not have capital markets developed for the selling of mortgage backed debt instruments.

So due to the lack of financing, there is no debt load and the fact that property taxes are low across the region, the buyers are not backed up against a wall to meet a monthly debt service which has required that they liquidate.  The result being that prices are stickier on the downside.

Regional variances will exist

We’ll see if the numbers bear this out, and we’ll dig into the regional variances.  Some real estate areas, such as Panama City for example, have seen significant levels of financed purchases.  And some heavily leveraged large scale projects have suspended operations - the St Regis project in Costa Rica in the wake of the Lehman Brothers collapse was a case in point.

But regionally we’re not seeing the waves of foreclosures that have swept across the US.  There are of course motivated buyers who are lowering their prices, some of whom are having their hand forced by a debt burden in their home country that must be satisfied.   But that may not be enough to add up to the heavy across-the-board price falls we’ve seen in the US.

We’d love to hear your views. Let us know what you think in the comments below.

From Reveal Real Estate - charting international real estate trends in Central America.

The real estate market in Central America: In graphics

March 28th, 2009


Whether you’re in the market for real estate in Central America, or you are selling, market data matters more than ever.  Without data how can you determine fair value, track where the market is heading or feel confident that you are making the right investment decision?  Trouble is, in Central America market data and comps are not readily available from property institutes, registries or central bank databases.

To try and fill this data gap, we’ve collected data from real estate developments in Panama, Costa Rica, Nicaragua and Belize and put this information online.  As part of our research we also collected country-level indicators that shed light on the investment climate.   Here are some highlights from what we have found:

Real estate developments targeting the international buyer

Costa Rica has the largest number of real estate developments that target the international investor, with 34% of the total in our database.  No surprise really.  It’s been on the international real estate map for longest.  Panama follows close behind.  This is largely due to the explosion in condo projects in recent years in Panama City.

Percentage of real estate developments per country

The price for an ocean view condo

The order from most expensive to least expensive country to buy an ocean view condo is Costa Rica - Belize - Panama - Nicaragua.  The data looks at median price per sq.ft.

The ordering is what you would expect given the different levels of maturity of the markets and level of infrastructure. But did you think the differential between Costa Rica and the other countries would be greater?  We did.

The average size for an ocean view condo in Costa Rica tends to be larger than in other countries, which may explain part of this.  We’ll be publishing more data in later posts to dig into the comparatives further.

Condos in Costa Rica, Panama, Nicaragua and Belize

Internet searches on Google

There were more searches for ‘Costa Rica real estate’ on Google than for ‘Panama real estate’, ‘Belize real estate’ and ‘Nicaragua real estate’ combined.  We predicted the order, but again were surprized by the differential between Costa Rica and the other countries - this time in the other direction.

Real estate searches for Costa Rica, Panama, Belize and Nicaragua

Cost of living

Nicaragua stands out as offering the lowest cost of living.   Using purchasing-power-parity (PPP) data we can determine what US$1,000 ‘adds up’ to in different countries.  In the US $1,000 has the purchasing power of $1,000, but in Nicaragua it has a purchasing power equivalent to $2,629.   We have to be careful not to draw too much from these averages as they don’t apply to all product categories.  But for day-to-day goods and services your dollar will stretch further in all four countries than in the US.

Cost of living in Central America

Completed golf courses

There are several golf courses planned or under construction in the region. At least 3 in Nicaragua and 3 in Panama.  The data below is for completed golf courses that can be played on.  Before seeing the data, would you have guessed that there would be more than 2 completed golf courses in Nicaragua?

Golf real estate in Panama, Costa Rica, Nicaragua and Belize

The data is drawn from research done in 2008, see notes to the data for more information.  We’ll be updating for 2009 and charting the trends. Dig into our main site, run some searches, and check out the property hotspots and country indicators for Nicaragua, Panama, Costa Rica and Belize.

What’s your reaction to this data.  Any surprizes for you?

5 real estate bloggers in Central America you should follow

March 7th, 2009

If you are looking for news and views from the front line of real estate in Central America, here are 5 real estate bloggers you should follow.

1. Panama Investor Blog, written by Sam Taliaferro, is packed full of insight into the real estate market in Panama.  Sam has a long experience in real estate development and knows the business backwards.  He’s also got a knack at weaving global trends into a local analysis of the marketplace.  A must read for investors looking at Panama.

2. Destination Panama is an information packed guide to living in Panama written in a down to earth, engaging style. You’ll find posts on medical care, pets, travel and life on Taboga Island.  The blog roll is full of links to additional sources of information.

3. Guys in the Zone - I found this blog via their recent post on yodeling naked in Costa Rica.  In case your wondering it’s an indicator they’ve coined to measure privacy.  If you can - yodel naked that is - then you’ve found yourself a private spot.  A great source of local insight into the Uvita and Dominical property markets in Costa Rica.

4. Costa Rica Travel News - This is much more than a resource for hotels and travel information, the blog brings regular news on Costa Rica culture, tourism, real estate, jobs and retirement.  There’s also a directory for local businesses on the site.

5. Discovering Serenity - A well-written blog covering Nicaragua real estate.  We particularly enjoyed a post where they analyze the Index of Economic Freedom and per capita income of a country to determine whether a market is overvalued or undervalued.  The blog follows latest trends in Nicaragua like the discussions on a proposed Coastal Law currently taking place in the National Assembly.

    These blogs are well worth following.  We’re planning on building a map of real estate bloggers (and Web 2.0 sites) covering Central America, so we’ll be adding to this list.

    We would love to hear from you if you have any suggestions for blogs that are worth a closer look and we’ll add them to our list.

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