Headlines - International Herald Tribune - "Retirees see value in Latin locales"

Real estate: Retirees see value in Latin locales

By Carolyn Whelan (IHT)
Monday, May 17, 2004

As Latin American bourses swoon over fears of interest rate increases and an overheating Chinese economy, one sector seems to be bucking the trend: residential real estate, particularly purchases by expatriate Europeans and North Americans.

"Americans are looking at everything noncash outside the U.S., particularly property," said Steve Sjuggerud, who advises some 60,000 subscribers on opportunities through his weekly newsletter, True Wealth.

Sjuggerud is considering buying an apartment in the chic Buenos Aires neighborhood of Recoleta, trailing earlier property purchases in Nicaragua and Belize.

Low land, labor and living costs, tempting tax breaks and the region's geopolitical distance from global strife are big draws.

Preferred spots these days, according to real estate agents, are Panama City; Granada, Nicaragua; and Ajijic, on a picturesque lake near Guadalajara, Mexico.

Fourteen years after Manuel Noriega was forced out as president of Panama, and just four after the country regained control of its canal, international investors are buying up luxurious Miami-style waterfront condos in central Panama City and century-old homes in the colonial center of Casco Viejo.

The draws include U.S.-style infrastructure and comforts, a sophisticated banking system, a hiatus on taxes for new property of up to 15 years, and retiree benefits that include lower prices for medical care, movies and hotels.

For those and other reasons, AARP, the American retirees' lobby group, selected Panama in 2001 as one of the most pleasant and cheapest places to retire.

Unofficial estimates of U.S. citizen residing there hover around 25,000, up a third in only three years.

A posh apartment in Panama City sells for around $1,500 a square meter, or about a third the price of a comparable property in Miami.

For colonial architecture, expats head to Granada, Nicaragua, the oldest such city in Central America. A pro-tourism president since 2002 and a recent debt forgiveness by international creditors have bolstered confidence in the economy.

Nicaragua's cliffs and coves along the Pacific coast, a Malibu-like stretch of white sand, are also a draw.

Don Columbus, a doctor from Texas, just bought a quarter acre, or a tenth of a hectare, of ocean-front land for $85,000. Comparable California property might cost 10 times that, he said - assuming it were available in the first place.

"It's a wise investment,” he said.

Sandy Perkoff, a real estate agent in Granada, said the number of expats who own homes in Granada had grown tenfold, to 100, in the three years since he moved there from Costa Rica.

Though values of smaller homes have doubled or tripled, he still sees room for appreciation in properties over $100,000.

An estimated 500,000 North Americans live in Mexico at least part-time. Ajijic, a charming town on Lake Chapala, a half-hour's drive from Guadalajara, is a favorite.

Some 10,000 expats reside around the lake in winter and more seem to be following. Ajijic Real Estate said it sold twice as many homes in January through April as in the first four months of 2003. Prices are about $700 per square meter.

International Herald Tribune