Property Futures

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Ecuador residential real estate is an excellent investment for foreign investors.

Article: Low residential real-estate prices and a high standard of living characterize Ecuador.

If you are looking to buy property overseas as say a second home, give Ecuador serious consideration. According to InternationalLiving.com and International Living magazine, this South American country is presently the best overseas residential investment for buyers from the US.

Ecuador property investment market analysis

Ecuador real estate investment market analysis

International Living has been ranking retirement luxury properties for the last 3 decades based on criteria such as value for money, the potential for appreciation and income and the ease of buying. The reason for they rank Ecuador so highly is its north Pacific Coast, which is considered a sleeper in this category of property.

  • The drivers that are captured in the attention of potential investors are low property prices and the availability of quality housing.
  • The drive from Quito, the capital, used to take up to 8 hours, but a new road has reduced this to just over 3 hours.
  • Infrastructural development means that the potential for capital appreciation has been enhanced in addition to attractive rental yields.
  • Unlike other countries in the region, property taxes are not punitive and it is exceedingly unlikely that the government will expropriate your property.

Quito

  • Quito has often been referred to as the most beautiful city in South America and its majestic colonial architecture reflects the Spanish influence.
  • It only has a population of around 1.5 million people, so traffic is not too heavy except during rush hour.
  • The city has an excellent public transport system made up of buses, trams and taxis.
  • It is surrounded by the towering peaks of the Andes Mountains and many properties have outstanding scenic views.
  • The old colonial districts are being restored.

Cuenca

You will see plenty of material describing Cuenca as the best retirement destination in the world attracting lots of Americans and Europeans.  However, there are 2 major points to keep in mind.

  • Real estate is cheap by American and European standards, but prices have risen substantially in recent times.  In fact, they are more than 60% higher than they were in 2008.
  • The second point is that foreign buyers do not exert an undue influence on the market and number only around 3,000 opt off a population of half a million.
  • The market continues to be influenced by local and nonresident Ecuadorians and returning citizens account for around 30% of transactions.
  • The most popular investment for foreign buyers are the condos near the center of town.

Property values have risen steadily in 2012 despite the global economic problem and the rate of capital appreciation has been steady for the last five years at between 8% and 12% yearly with newer condos running at close to 12%.

  • The appreciation is expected to decline slightly in 2013 and the consensus view is 5% to 10% for the year.
  • There is plenty of construction activity with more than 35 condo projects in progress and the price of a new two-bedroom apartment would be in the region of USD $75,000 to USD $90,000.
  • In early 2013, new condos were priced at USD $675- USD $1100 per square meter.

The bottom line

While there is some buying by foreign investors, English-speaking people have preferred to rent and, in the last few years, renters have outnumbered buyers.  Ecuador continues to have a strong economy with a GDP growth of over 5% in 2012 and an inflation rate of 4.9%.

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