Since the early 2000 Central American counties have been receiving increasing numbers of international property investors. Most arrive from the US and Canada. In this article we categorize these buyers into 4 types to help both sellers and buyers understand the market in more detail.
- 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. Looking across the region, real estate in Nicaragua stands out as an attractive option for this buyer group given the very low prices.
- 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. Real estate in Belize and Costa Rica that is located in prime tourism areas stand out as top purchasing destinations for this group.
- 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. Costa Rica and Belize stand out as good bets for this group as well as the more established parts of Panama.
- 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 centers. 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. This group focuses in on the specific benefits and incentives offered to retirees.