The only way of finding the limits of the possible is by going beyond them into the impossible - Arthur C. Clarke
Things have now calmed in Central American property markets since the global economic crisis of 2008/9 with investors cautiously returning to the market on the look out for bargain deals. But things are not quite the same as before the economic downturn.
A significant change in the market is a reduction in the more speculative forms of investing. Speculators, mainly buying pre-construction property or raw land, underpinned much of the growth in markets like Panama City, Tamarindo in Costa Rica, Ambergris Caye in Belize and real estate in Granada, Nicaragua.
As the speculators retreated, vendors relying on this buyer type were left with stalled projects, and some closed down operations entirely. A business model where the master plan build-out is funded through pre-construction sales is proving to be very challenging in this post-crisis era.
Buyers looking at Central America now have a lower appetite for risk. Their focus is mainly on completed properties in mature developments that are advanced in the roll out of their master plans. Buyers are trending towards smaller, functional units and away from ‘McMansions’ and large, ostentatious property. Post-crisis investors are also focusing on quality and prime locations and away from the more emerging, undeveloped locations.
Buyers have a great deal of negotiating power and sellers are motivated. A formula, say the optimists, that results in great real estate deals. Special offers, incentives and discounts – you name it – developers are rolling out all the stops to attract buyers. There are also great prices to be found in the resale market, sometimes lower than those available directly from the developer.
Looking across the region, data from Reveal Real Estate places Nicaragua property as lower priced than property for sale in Belize, Panama or Costa Rica. Costa Rica emerges as the highest price country.
A new trend that nibble sellers are taking advantage of is a growing number of ‘lifestyle buyers’ looking at Central America. They’re attracted by the lower cost of living than the US (and the more affordable real estate of course).
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