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Some of the best vacation home opportunities for Americans lie south (and north) of the border
It has become a cliché to say that the baby boom generation has changed everything it has touched. But there’s a certain grain of truth to it, and the reach of the boomers continues to extend to entirely unexpected areas. According to Tom Kelly and Mitch Creekmore, co-authors of Cashing In on a Second Home in Mexico, the tastes of boomers are having a profound impact on the market for vacation homes and second homes, making it far more of an international playing field. “You’re talking about 70 million people who are the healthiest, wealthiest, and most adventurous to come down the pipeline,” says Kelly, who writes a syndicated column and hosts a radio show devoted to real estate. “These people will go and drive and fly for adventure. They’re not looking for their father’s vacation house on the lake.”
The boomers’ collective lust for adventure and new experiences has prompted many to look south toward Mexico, the Caribbean, and Latin America as well as north to Canada for second-home opportunities. What they’re discovering is that, beyond exotic locations, international real estate markets provide plenty of other benefits, including a perhaps unexpected level of luxury and significant investment potential.
As Creekmore, who is also a senior vice president and director of international business development for Houston-based Stewart International, notes, it’s much easier to get mortgage financing and title insurance abroad than ever before, factors that used to strongly dissuade Americans from looking beyond the domestic market for a second home. Add to that the strong asset appreciation many international buyers have seen recently, and it’s easy to see why so many Americans are looking at what might in the past have been considered unlikely locales for their vacation homes. “The level of appreciation in Mexico over the past five years is surpassing U.S. rates of return. That’s a big issue,” says Creekmore. “If you go into some markets, and they presell, and you take advantage of preconstruction pricing, by the time the unit is inhabitable it has gone up [in value] 30, 40, 50 percent.”
Still, although international markets are vastly more accessible than they were, say, 10 years ago, potential buyers still face some hurdles. Panama, for instance, forbids foreign property ownership in certain border areas and islands, and Mexico doesn’t permit noncitizens to directly own property along the coast, instead requiring that it be owned through a trust. Taking the time to ensure that the title on any property you’re considering buying is free of other ownership claims or liens is also a must. “Don’t be afraid to get competent [legal] counsel and ask questions,” says Michael B. Skalka, chairman and CEO of the real estate information and transaction management company Stewart International.
Here’s a look at some of the most popular markets for Americans buying a second home outside the United States.
Panama has experienced a surge of interest from real estate buyers, partly fueled by the beautiful views of the city center skyline.
The Panama Boom
You would be hard pressed to find someone more knowledgeable about the international market for second homes than Rodrigo Niño. As president of Prodigy International, a Miami-based company that handles sales and marketing for developers around the world, Niño’s business is to know where people from around the world want to buy property. Right now, at least in the Americas, the answer is simple: Panama. “I feel that Panama is the Dubai of this side of the world,” he says.
While that sentiment may be somewhat hyperbolic — after all, nobody has built an indoor ski resort in Panama yet — it does reflect an undeniable surge in interest from people, and Americans in particular, seeking either a vacation getaway or an affordable place to retire. Indeed, in 2005, the AARP ranked Panama as the No. 4 place in the world to retire. Certainly, Panama’s allure as a retirement spot is at least partially explained by the government’s generous pensionado program, which offers anyone over the age of 18 who can prove they have a guaranteed income of at least $500 per month ($600 for couples) big discounts on everything from entertainment to medical expenses to home-closing costs.
A rooftop view of Casco Viejo, in Panama City
Still, while obviously appealing, government incentives don’t fully explain the flood of interest in Panamanian real estate. A better explanation, perhaps, is simply that Panama offers visitors and residents a bustling cultural life in Panama City, as well as beautiful scenic coastlines and forests. “It’s got mountains, it’s got rain forests — almost-unexplored rain forests. It’s got the most beautiful white sand and crystal clear water on the Caribbean side,” says Suzan Haskins, the Latin America editor for Internationalliving.com.
To Haskins, who lives in the Casco Viejo neighborhood of Panama City — an area with a French influence that reminds her of New Orleans — the urban offerings are equally compelling. “It’s a very cosmopolitan city, and a lot of people say it reminds them of Miami because of the high-rises that ring the Bay of Panama,” says Haskins, who points to the city’s casinos, racetrack, baseball stadiums, and concerts as big draws. “There’s a vibrant city feel.” Not surprisingly, developers have created projects to appeal to both urban and rural tastes. Prodigy International, for example, has the Yacht Club, a 57-story high-rise in Panama City located in the heart of Panama’s business center, as well as Playa Blanca Beach Resort, Spa & Residences.
Nestled within walking distance of downtown Panama City, with views of the ocean, Sky Waterfront Condominiums offers residents the kind of high-end amenities one might expect at a Four Seasons, including a bellman, an infinity pool, a gym, a private cinema, and concierge service.
The Art of Living in Mexico
Before she moved to Panama City, Haskins was based in San Miguel de Allende, in the Mexican inland state of Guanajuato. It was a lot like living in Europe, she says: “It’s colonial architecture at its finest. It looks like a little town in Spain or Italy and it’s perched on the side of a mountain, so it’s got these little winding cobblestone streets, and beautiful colonial mansions that have been converted to stores, homes, and restaurants. They are all painted these beautiful gold and amber and rose-colored earthtones.”
Colonial-style buildings surround the Jardin Principal (“main garden”) in San Miguel de Allende.
San Miguel de Allende’s popularity as a second-home location for Americans has soared, so too have some home prices. Still, Haskins points out, while elevated from what they once were, costs are still relatively attractive. “For people coming from the West Coast or the East Coast, they think they’ve died and gone to heaven, the prices are just so reasonable,” she says.
The area’s picturesque surroundings are obviously one of the biggest draws for Americans to live in and visit San Miguel de Allende. In fact, thousands of Americans reside in the city full-time or part-time. For many, the big draw is the thriving artist community that Haskins says has been luring Americans since not long after World War II. In particular, people have been flocking to the Allende Institute, an arts center co-founded by Stirling Dickinson, an American painter and engraver who visited the city in the 1930s and fell in love with it. Many more have since followed. “U.S. GIs came to San Miguel to study art because they could live and study cheaper on the GI Bill at that time,” explains Haskins. “Since then, the institute has anchored the community. It has a chapter with lots of artists, sculptors, and painters, but there’s also a huge group of writers who live there.”
Whether it’s the many murals or the sight of painters working on their canvases in the Jardin Principal, reminders of the importance of the arts are everywhere.
But even nonartistic types will find something quite appealing about San Miguel de Allende: the weather, at around 74 degrees all year round, is hard to grouse about. “When it gets to be 80 or 82 they’re upset,” laughs Stewart International’s Creekmore.
Urban Deluxe, Canadian Style
Moviegoers around the world have seen a lot more of Toronto than they might realize. Thanks to generous tax incentives from the Canadian government, and much to the frustration of California-based film crews, Hollywood often beats a path to Canada’s largest city when it’s looking for a low-cost location that can stand in for New York.
The Lake Ontario area in Toronto offers sailing, great restaurants, and entertainment.
The very fact that Toronto can be passed off as the Big Apple says a lot about the city. “It’s very cosmopolitan,” says Don R. Campbell, author of Real Estate Investing in Canada and president of the Real Estate Investment Network.
For Americans eager for an international second home in a bustling, vibrant place that’s not too far from the United States geographically or culturally — and where Campbell says real estate prices have appreciated at a nice clip of 6 percent to 8 percent over the past few years — Toronto may be worth exploring. “If you want a big city, get yourself a condo overlooking Lake Ontario, where you can sail, and where you can go down to great restaurants, and see a great show all at the touch of your elevator button,” he says.
As upbeat as Campbell is about Toronto, he’s even more bullish on Calgary, which hosted the 1988 Winter Olympics and is perhaps best known for its annual Stampede, a celebration of the city’s cowboy roots. Describing it as a Denver without the sprawl, Campbell says the capital of Alberta combines the best of urban life — it has excellent restaurants, with everything from sushi to the very best steak, raised in the province — with easy access to wilderness recreation. “In [under an hour] you can be in the middle of nowhere, where there’s fantastic skiing and hiking,” he says.
Going Eco-luxe in Costa Rica and Belize
Ecotourism has become one of Costa Rica’s biggest industries.
For decades now, Costa Ricahas been a popular destination for Americans interested in visiting, witnessing, and protecting some of the world’s most spectacular rain forests and beaches, as well as birds and other species. Ecotourism has become an important staple of Costa Rica’s — and more recently, nearby Belize’s — economy. Indeed, the two countries boast some impressive natural resources. The longest barrier reef in the Western Hemisphere sits off Belize, and Costa Rica, with just 0.03 percent of the world’s total landmass, holds approximately 6 percent of its biodiversity, a truly stunning number. In addition, about a quarter of Costa Rica’s land lies within a national park or some other protected area.
The opportunity to snorkel, hike, swim, and ride horseback alongside plants and animals found nowhere else has been a big lure to visitors to both countries. And it’s helped fuel a real estate boom.
One luxury development is the St. Regis Resort and Residences Costa Rica, a combined hotel and vacation home project on the Central Pacific Coast in Playa Coyol that’s set to open in 2008. The ultra-luxurious hotel will feature a large spa and fitness area, access to a world-class golf course adjacent to the property, and a “presidential suite” located at the top of a cliff, with its own pool. The condos and residences, which will start at about $700,000, will include access to the resort’s many facilities.
Snorkelers explore the Lighthouse Reef in Belize.
Even in the pricier developments, environmental awareness is a priority. “The people who are visiting Costa Rica do so because they have some kind of relation to the ecosystem and nature,” says Martin Elortegui, vice president of marketing and sales with Lionstone Development, developers of the St. Regis project. The location of the project caters to that affinity, he adds. “You’re in the middle of the forest, with your own private beach. It’s beautiful. You can’t beat the setting.”
Belize’s natural wonders are, arguably, as enticing as those of Costa Rica’s. But what’s quickly separating the two countries is the maturity of the real estate markets. Costa Rican real estate has long been on Americans’ radar, and consequently, the industry is more developed than in Belize. But with that comes elevated prices. Belize, on the other hand, is less mature, with more attractive prices but a less solid industry infrastructure. Belize also has the distinction of being the only Central American country in which English is the official language (thanks to its origin as a British colony), which has some real estate industry experts thinking the country might be poised for a real estate boom.
Living the Sporting Life in the Dominican
Windsurfing off of Cabarete in the Dominican Republic
If your ideal Caribbean vacation consists of basking on a beach towel under a hot sun and sipping fruity drinks, the increasingly booming real estate market along the north coast of the Dominican Republic might not be right for you. Long enjoyed by European vacationers and backpackers, the deserted beaches and mountains clustered around Puerto Plata and Cabarete are perfect for people whose idea of a good time involves an elevated heart rate and sweat. While mountain biking and scuba diving are popular, windsurfing is king; it’s so good in Cabarete that the town, which has hosted the World Windsurfing Championships, boasts that it’s the windsurfing capital of the world.
Not all the activities favored in the Dominican carry with them the risk of bodily harm. Golf is quickly taking hold, with a host of courses designed by big names already open, and still more in the works. In Cap Cana, on the eastern shore of the country, Nicklaus Designs is building three of its Jack Nicklaus Signature courses. Taking advantage of the stunning Caribbean location, the company is putting many of the holes along the coastline. Nearby, Prodigy International is developing a residential project with more than 400 units.
As of yet, few Americans have purchased vacation homes in the Dominican Republic — a relatively simple transaction for foreigners here. But the combination of so many sporting activities with reasonable prices is spurring increased interest. For now, though, Internationalliving.com’s Haskins says the cost remains comparatively low and the beaches and waters beautifully uncrowded. “I don’t know if it’s because they share the island with Haiti, which I can tell you is not an issue,” she says. “But it’s one of the least expensive places in the Caribbean to buy real estate. It has been overlooked.”
— Chris Warren
