Surprise! The best real estate buys aren’t where you might expect
Suzan Haskins has a tip for people interested in finding the world’s undiscovered beachfront property: follow the surfers. Long before any condo or resort developers arrive, surfers stake out remote beaches in their quest for good waves, says Haskins, who is the Latin America editorial director for InternationalLiving.com. “The surfers come first and then the mainstream follows,” she says.
During the past decade or so, the surfing crowd has been moving in to typically unexpected places like the Central American countries Nicaragua, Panama, and Honduras, as well as the Dominican Republic in the Caribbean. Even today, the beachfront idyll has yet to be disturbed in some of these spots. “The thing about Nicaraguan beaches is that they are just deserted. You can walk for miles and be the only person on the beach,” says Haskins, who recently relocated from Panama City to San Juan del Sur, an increasingly popular destination on Nicaragua’s Pacific coast.
Lately, though, word has spread well beyond surfer and backpacker circles about the appeal of these little-known beachfront escapes, prompting a wave of construction aimed at second-home buyers and retirees from North America. A number of factors have coalesced to spur this beachfront real estate boom. For one thing, American baby boomers, a generally adventurous group with significant amounts of disposable income, are far more likely than previous generations to consider a second home or even retirement outside the United States.
Perhaps equally important, particularly for those focused on a second home as an investment, is the relatively lackluster appreciation in recent years of vacation getaways in traditional U.S. markets like Florida, California, Nevada, and Arizona. “We have a phenomenon in the United States that occurred in 2006; the four principal second-home markets have gotten pretty flat,” says Mitch Creekmore, a senior vice president and director of business development f or the Houston-based real estate information and transaction management company Stewart Information International and co-author of the book Cashing In on a Second Home in Central America. “Second-home buyers still have the income and still want to invest, and they’re looking at markets outside the United States. And certainly Central America is viable.”
It has become more viable because the real estate markets across the region have matured. This makes it easier for foreign investors to get secure title insurance and, increasingly, mortgage financing. Michael Skalka, chairman and CEO of Stewart Information International, also points out how easy it is to get to and from these countries, and how welcome you are once you arrive. “And we are so spoiled in Houston. We can get anywhere in the Central American region in two and a half hours to four hours max,” he says.
Panama: A Beachfront Bargain
Don King had a dream. After working as a marine biologist in Micronesia for four years, King (no, not the boxing promoter) decided he wanted to open a resort in the tropics. So, along with a couple of college buddies, King started to scope out potential beachfront sites in Central America, including countries like Belize, Honduras, and Costa Rica. But he learned something unexpected during his research. “Both the ex-pats and the Costa Ricans themselves who live near the border were saying you should be looking in Panama,” he recalls.
The reason: Costa Rica had been so successful at making its beachfront real estate appealing to North Americans that bargains were becoming harder and harder to find. Panama, on the other hand, has many of the same attractions as Costa Rica — including mortgage financing, title insurance, and an easy process for buying a second home — but at much lower prices. King discovered this when he landed in Bocas del Toro, on the Caribbean side of Panama. Having come from south Florida, where oceanfront lots typically cost $1 million plus, he was shocked to find that he was able to buy a property with 300 feet of beach frontage for less than $50,000.
King was even more thrilled by what was available in the town itself. “I really fell in love with it. I am a marine biologist and there is a beautiful marine system here, a tropical forest, and two indigenous tribes,” he says. “I thought it was perfect.” Instead of opening up a tropical resort, though, King opted to set up a real estate company, Bocas del Toro Realty Services, which offers beachfront second homes and condos for as little as $90,000. The money King generates from his real estate company goes to fund a wide variety of local projects he’s launched, including a school to educate indigenous people, an experimental farm, and a number of environmental conservation initiatives.
Elsewhere in Panama there is plenty of activity in the beachfront second-home market, which has emerged seemingly instantaneously. “Three or four years ago we would not have considered Panama to be relevant in any regard; it wasn’t on our radar screen,” says Christopher Hill, CEO of Stewart Title Latin America. “And almost overnight it has become a major player.”
Part of that emergence is due to an aggressive upgrade of the country’s infrastructure, as well as the generous Pensionado program, an initiative developed by the Panamanian government to lure North American retirees to the country. Immigrants with a guaranteed income of $500 a month receive steep discounts on everything from entertainment to home-closing costs. “These draw the seasoned baby boomers who are tired of the cost of living in the United States or other more discovered countries,” says Asia Sherman, manager of public relations with Azueros.
The allure of Panama can also be attributed in part to the plethora of appealing coastal locations. There are a host of beachfront areas two hours southwest of the capital off the Pan-American Highway. As in Nicaragua, she adds, it’s possible to find modestly priced homes near relatively secluded beaches on this stretch of the Gulf of Panama.
Whichever country you decide to investigate, Stewart Information’s Creekmore believes there are plenty of opportunities to make a good investment and find a place that you love. “I see the region becoming the most viable second-home market coming up in the next two to five years, depending on what happens here in the United States,” he says. “Clearly, if things stay flat for an extended period, I think these countries will do very well.” — Chris Warren