| | | | | Saturday, October 31, 2015 | |
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Eric Fry, daydreaming about beachfront real estate, reports...
According to Ronan McMahon, editor of the Real Estate Trend Alert, "The best way to prosper as a buyer of foreign real estate is to invest along the 'Path of Progress.'" He cites examples like Cancún:
Back in the early '70s, Cancún was just an almost uninhabited sandy spit of land. Air travel was just taking off for U.S. middle classes. Fonatur, Mexico's tourism promotion body, honed in on Cancún as a locale with tourism potential.
Fonatur backed Cancún, but not with an advertising campaign in inflight magazines and some trade shows. They went the "Full Monty" and provided the infrastructure to facilitate the development of a world-class tourism industry. They knew they had a stunning stretch of white sand and great weather.
An international airport was built. Fonatur became, in effect, a master developer. It made plans and brought infrastructure to hotel and condo plots. Then international groups were invited in to develop... and the rest is history.
Those who invested in Cancún real estate made a killing. That's the power of getting ahead of the Path of Progress.
Opportunities like Cancún are easy to see in hindsight, but are a bit more difficult to see ahead of time. Fortunately, "difficult" is not the same thing as "impossible." Ronan makes it both his profession and his passion to scout the entire planet for "Path of Progress" opportunities.
One such opportunity that has caught his eye is Tulum, Mexico. "The Path of Progress is well on its way down the coast from Cancún," says Ronan. "Playa del Carmen was a little fishing village 40 miles down the coast. Then the Path of Progress came. Today, Playa is high-end with luxury resorts and $500,000-plus condos."
"Now this Path of Progress is headed farther down the coast to Tulum," Ronan predicts. "Here's the investment kicker. Once this Path of Progress gets to Tulum, it will hit a brick wall. The Sian Ka'an biosphere reserve encompasses 2 million acres of protected lands. Development will stop here - making real estate a scarce commodity as demand soars from an already high base."
Another "Path of Progress" locale that interests Ronan is Nicaragua's southern Pacific coastline. I'm no real estate expert, but I know a little something about this particular stretch of coastline.
I first visited Nicaragua's southern Pacific coast 13 years ago. I spent most of my visit at the beachfront development of Rancho Santana. The destination was unquestionably beautiful. But it was also unquestionably primitive by U.S. standards. No Internet. No satellite TV. No cell service.
Back then it was very rare to see a local kid surfing, or a villager on any mode of transportation other than two feet or an old bicycle. But today, the local kids "own" the waves and the villagers are usually scooting around on motorcycles. And yes, high-speed Internet and every other sort of technological amenity is as available as it is in the States.
And now, finally, a new international airport is opening. As recently as five years ago, almost no one would have believed that an airport would open in the region. But it's true... And this airport will make getting to and from the area much easier.
Obviously, the airport doesn't guarantee that property prices will increase, but it is one more sign that this stretch of coastline is on the Path of Progress.
The Path of Progress Rolls Through Nicaragua
The best way to prosper as a buyer of foreign real estate is to invest along what I call the "Path of Progress": anything that improves the accessibility of a piece of real estate increases its value. Think roads, rail lines, bridges, airports and airline routes.
Also, anything that improves amenities in an area will also increase real estate values. Amenities like major resorts, theme parks and conference centers. You can profit handsomely by positioning yourself ahead of such improvements.
To profit from a Path of Progress play, you need: - Credible research: In practically every locale that I scout, I hear tales of a new airport... or road... or bridge, etc. It's important to make sure the funds are in place to deliver the new infrastructure, and that the country or region has the capacity to deliver the project.
- Vision: You need to be able to detach yourself from what the area currently looks like and visualize what it could be with delivery of the new infrastructure and amenities. You need to be able to picture what that raw, unimproved landscape could look like if the plan comes off.
- Patience: Finally, you need to be able to stay the trade. By that I mean you need to be willing to sit on your investment for the medium term. Infrastructure projects take time, particularly if you are looking at a less developed country. Take a conservative timeline for exit... double it... and if you're happy with those timelines, great. Otherwise, walk away.
The southern Pacific coast of Nicaragua, now known as the Costa Esmeralda, is one foreign locale that is clearly on the Path to Progress. A wide variety of important improvements and amenities have come to the region. More are on the way.
Nicaragua's capital, Managua, has been accessible for several years by short nonstop flights from Miami and Houston. But now, a new Delta nonstop from Los Angeles flies straight down the Pacific coast to a location that looks very similar to the Southern California coastline... of 100 years ago.
This 4 1/2 hour plane ride from the snapped-up beachfront and million-dollar mansions of the Golden State brings you to deserted beaches, lush, jungle-clad hills, and low-cost real estate that has to be seen to be believed. Locals still spearfish for lobster, snapper, and mackerel here (you can buy it for as little as $2 a pound and have it grilled on the beach). Monkeys swing through the trees and hundreds of colorful birds flit past.
Along the shores of Nicaragua, you'll find one of the few frontiers of Pacific coast left - certainly this close to the U.S. - and something big is happening there. This small country is becoming a hip destination... like Costa Rica in the 1980s.
[Editor's Note: Just this week, Forbes featured Nicaragua's Rancho Santana as one of its seven "Most Luxurious Beach Vacations."]
You can see Nicaragua's new place in the travel world on the streets and in the cafés and galleries of Granada. In my hotel, I met groups from Costa Rica, Eastern Europe and Spain. Sipping an espresso outside, I saw backpackers from the U.K. and glamorous-looking Italians. And you'll find plenty of U.S. expats, too.
There are signs of progress everywhere: newly paved highways, big renewable energy (wind and geothermal) projects, and commercial-agriculture ventures. The signs of the new consumer are also easy to see: the highway-side billboards... the new restaurants... the shiny new private hospital and corporate HQs.
You may be surprised to read that it's the safest country in the region. After all, there's a civil war in recent memory and a former revolutionary, Daniel Ortega, is now el Presidente.
But to fear Nicaragua is to misunderstand it. You won't meet warmer or kinder people anywhere. You are always greeted by a kind smile. And the former revolutionaries are pragmatists: businessmen who now want to do deals to move their country - and their own interests - forward.
I have been hopeful for little Nicaragua since I started visiting nine years ago. And the potential I saw back then is now being realized. One 20-mile stretch of coast in the Tola area will be the big winner. Just 50 miles as the crow flies from the high-end resorts and million-dollar real estate of northern Costa Rica, you'll find the nicest and most dramatic part of Nicaragua's coast. And it's being transformed.
The road south from the colonial gem of Granada takes you through Rivas and then Tola. Not too long ago, when you passed through Tola toward the coast, the road would turn to dirt. In the rainy season, even the strongest SUV had to zig-zag around potholes. In the dry season, passing traffic would throw up great clouds of dust.
But today, beyond Tola you transition onto a paved road of interlinking cobblestones. It's smooth and comfortable. And work is continuing to bring this road farther along the coast. The infrastructure story doesn't end with the road. A new airport is opening for business in just two weeks - bringing short-haul flights directly to the region from Managua and Costa Rica.
[Editor's Note: This airport is making quite a splash in the local news media. If you speak Spanish, you can check it out here.]
A 15-minute drive from the new airport sits Rancho Santana - a community with five beaches, 2,700 acres and more than two miles of this stunning coast. The new, grand Spanish colonial-style Inn opened earlier this year to rave reviews. The adjoining beachfront restaurant, La Finca y El Mar, is top class.
Ocean-view lots in Rancho Santana start from about $95,000 - the best bang for your buck along this stunning coast. From time to time, home resales come on the market as well.
Property values are definitely perking up along Nicaragua's Path of Progress, but there are still great values to be had.
Good investing,
Ronan McMahon
For The Non-Dollar Report
P.S. Ronan will be joining us at the Inaugural Beyond the Dollar Summit, which takes place at Rancho Santana next January. Several other global investment experts will also be sharing their insights and guidance. We hope you'll be able to come on down!
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