There has been a trend in recent years for many North American and European buyers to purchase real estate in what are seen as developing or emerging economies. In Europe much of the focus has been on the emerging economies of the former Soviet Union as well as Morocco and southern Europe. In North America the focus has been very strongly on the Caribbean, Central and Latin America. The US State Department estimates that about 380,000 Social Security cheques are delivered to beneficiaries outside the US each month. Almost four million Americans, not including embassy officials and the military, are now living overseas.

Many Central American countries offer impressive incentive packages for retirees. Coley Huggins describes the economic benefit of a retiree migration to Central America as a two way street. “Retirees get a lower cost of living, warm weather and cheap[er] housing and create a virtuous cycle in return: more retirees equals more local jobs, resulting in more economic stability and less political stability, resulting in more retirees”

A buyer typology prepared by Coldwell Banker Nicaragua Real Estate

Speculators / investors - a buyer group interested in making the most money on a minimum investment. They tend to buy lots/raw land early on in the real estate growth cycle of a developing country before prices rise as amenities are built, buying community grows and turnkey products begin to be offered. Many never build and most are interested in future, short to medium term resale of investment for a substantial profit to offset the risk of early investment.

Second home investors - a buyer group interested mainly in the rental income return of turnkey or built properties. They need to be convinced of the potential for rental income and so are focused on issues such as tourism growth, rate of sale of surrounding properties, access to amenities for potential renters, security and safety aspects. Condominiums, townhouses, house/land packages are popular with this grouping. The setting in which the home exists (ie its surroundings) is also a primary consideration. Many young professionals or entrepreneurs fall into this buying type.

Second home users - a buyer group focused mainly on personal use of the property they purchase. They are usually already affluent and own more than one home, often in different parts of the world. They are interested in escaping harsh climates for all or part of the year and want seasonal/vacation homes where the lifestyle and amenities/activities contrast with their primary residence. They generally do not rent their property and purchase lots/land in anticipation of future building or condominiums where available. A lifestyle, a sense of community and feeling of belonging, privacy and security are important to this group.

Retirement and pre-retirement buyers - These buyers are typically 5-6 years from retirement and are quite similar in overall characteristics to the second home user category. They do however, have more of an emphasis on the issues of security, availability of health facilities, access and proximity to urban centres. Privacy is less of a concern as many are interested in building new relationships and being part of a community. Typically have purchased lots but with the growth in turnkey product this profile is changing. They are often downsizing from larger family homes in country of origin and cost is a key consideration in any purchase.

Not for Uncle Sam buyers - this buying group cross-cuts the other groups and is characterised by a desire to ensure that they profit from investments outside their home country and these profits are not always repatriated to their home country. They are often interested in the freedom from restrictions (financial and otherwise) offered by many developing countries. As such their key focus is on price point and resale opportunities whilst buying something they can enjoy in the here and now.

Commercial investors - This final group is motivated by the return on capital invested and invests at a larger scale than the above groups and, generally, for the longer term. The type of commercial investor entering the market will vary greatly depending on the perceived maturity and stability of the real estate market in general and the wider legal, political and economic investment environment.

Changes in buyer profile for markets at different positions on a development curve

An understanding of the changes in buyer profiles over time can give an indication as to where buyers for different markets in Central America will come from in the future. The graph below considers the buyer characteristics at different stages in a development curve. Speculators make up the bulk of investors in markets at earlier stages with second home and retirement buyers representing a second and third wave of investing as markets develop and mature.

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