Will Rogers’ investment strategy is as sound today as it was nearly 80 years ago. The trouble is, in the intervening eight decades, people have been aggressively buying up what oceanfront there is. So…what’s left for you?
No question, it’s harder and harder to find coastline worth owning for sale at prices worth paying. However, our editors have identified six places where the beachfront is both special and under-valued:
1. Panama. You know the many reasons why Panama remains one of the best places to invest your real estate dollars (your retirement and second-home dollars, too).
The trouble is, Panama hardly qualifies as undiscovered. Could its beachfront possibly, therefore, be under-valued?
Yes, in particular regions. Not within easy commuting distance of the city. These weekend-getaway beaches have been climbing fast in value, trading hands back and forth among both local and foreign buyers for more than a dozen years.
And not in Bocas del Toro, on the Caribbean, where, again, the gringo developers, agents, and buyers have created a bubble for themselves.
Veraguas. That’s the place to look right now. This large province about three hours west of Panama City hides the best Pacific coast buys in all Central America.
Plus, remember, Panama uses the U.S. dollar as its currency, meaning no exchange risk.
2. Dominican Republic. Cheapest Caribbean beachfront you can buy today. I’m talking quintessential beachfront of the variety that, for many, defines the word. Soft white sand bordering gently lapping emerald water. The same white sand and emerald water you find at St. Lucia or St. Barts, only way more appealingly priced, be you a would-be second-home owner or a speculator looking to flip quick.
The best opportunities are on the Samana Peninsula. The spotlight is on Cap Cana (where The Donald is developing Trump at Cap Cana). That’s why you want to focus your attention northwest (to Samana) instead. This lush, green region boasts more than 20 miles of white-sand coast.
Look specifically around Las Terrenas, today little more than a small fishing village–which is part of the attraction. The expat community here of 2,500 is growing quickly. You can buy a condo right on the beach for $2,600 per square meter or one with an ocean view for $2,100 per square meter. Rentals yields are above average, at 6% to 8% net per year.
Undeveloped beachfront is remarkably affordable. Where else in the Caribbean could you buy prime white sand with services for as little as $40 a square meter? Hillside lots start as low as $20 a square meter.
3. Uruguay. Like both Panama and the Dominican Republic, Uruguay’s beachfront property market is not primarily dependent on American buyers, an important point to keep in mind if you’re shopping with an investment agenda today.
In Uruguay, we have two specific recommendations, the first for investment, the second for part-time or retirement living.
First, the investment pick: Rocha province. Tourists and buyers, both, have focused to date on Punta del Este in neighboring Maldonado province. Rocha, to the northeast, has equally attractive beaches. And, as Punta del Este and its surrounding resorts expand, it’s these Rocha province beaches to the north that will benefit from the spillover. Furthermore, for Brazilians (who make up a fair part of the Uruguay market) driving south to Uruguay’s safe, cheap beaches, Rocha means less travel time.
Second, the lifestyle play: Piriapolis, with its beautiful bay, quaint rambla (or boardwalk), café society, grand old hotels and casino, and first-class marina. Real estate values in Piriapolis will enjoy appreciation, we believe, in coming years; still, the attraction here, really, is the lifestyle. This is a safe, relaxed, friendly place, a throwback to small-town America a half-century ago.
Piriapolis is also home to the only private residential community of its kind in the entire country, the current project of friend David James. David’s Sugar Loaf Ocean Club and Spa is not on the ocean, but every resident will enjoy sparkling ocean views, as well as high-end services and amenities…at very un-high-end prices.
4. Ecuador. Ecuador’s coastal market, specifically around Salinas, Montanita/Olom, and Manta, is on fire. This is a place to shop for instant investment gratification. Properties, our on-the-scene contact reports, are bought and then flipped the following month for 20%, 30%, even 50% profit and more.
Right…that level of activity rings alarm bells. Keep your wits about you.
In Salinas, buy a condo, either finished or pre-construction, for both capital appreciation and rental return.
If you’ve got a little more patience, look to more remote coastal regions, where it’s possible to buy for as little as $3 to $5 per square meter. This translates to $30,000 to $50,000 for two-and-a-half acres of beachfront property. Beat that.
Remember, though, this is a much longer-term play. You’re buying in fishing villages, small, forgotten stretches of coast that will enjoy, our sources advise, considerable appreciation but that right now have no services and no amenities. You won’t see the upside here within a month or even a year. In places like Machala, Playas, Manglaralto, Canoa, and Jama, you’ve got to be willing to wait three to five years or longer to exit.
5. Philippines. Historically overshadowed by neighboring Thailand and Bali, the Philippines, with its powdery white-sand shores, clear blue waters, and year-round sunshine, is beginning to attract attention…and tourists.
For the past three years, and for the first time since the 1970s, the country’s economy has seen an annual growth rate of at least 5%, and, last year, the peso was the strongest-performing currency in Asia, an accolade it’s expected to earn again this year.
Meantime, the country continues to suffer from a case of bad press, thanks to political instability and bombing incidents.
In other words, this is just the kind of situation we contrarian investors look for.
Boracay, an island 200 miles south of Manila, is the play. The island’s first international resort, the Shangri-La Resort and Spa, opens this year, and Boracay is emerging as the jewel in the crown for the Filipino tourism industry. Investors in the region who have historically put their money into beach resort regions like Pattaya, Phuket, and Bali are today looking to Boracay.
Seven condo projects are being developed on the island as I write, a very small number compared with the 110 new projects under way on Phuket, for example. The government is keen to control over-development and has placed a moratorium on new construction until July 2008, by which time a master plan for development on the island is expected to have been completed.
This kind of limited inventory is, of course, further good news for the investors among us.
Right now, you’ll pay about $2,300 a square meter for an unfurnished condo. We expect prices to double in the next two to three years. (When buying purely for investment, this is the level of return I look for–a double in two to three years.)
Furthermore, this is a short-term rental market where demand far outweighs supply and net rental yields are running an attractive 11% to 12%.
6. The Caribbean coast of Costa Rica. I’ve ignored this side of Costa Rica since, 15 years ago (my most recent visit to Costa Rica’s “other” coast), my rental car was broken into and my knapsack and camera were stolen, midday, on one of the busiest streets in Limon.
Again, that was 15 years ago. Yet, I’ve been prejudiced ever since and have readily believed reports that this part of Costa Rica is too unsafe for wise foreign investment. Friends and contacts in the country today tell me my position is all wet. Or at least outdated. So I’m preparing to take another look.
I can tell you from memory that the beaches are beautiful, and I can tell you from recent reports I trust that they’re seriously less expensive than their Pacific coast counterparts.
Who’s buying, why, where specifically, in what volumes, and with what exit strategy in mind I can’t tell you yet. Watch this space.