uying in Central America - January 10th 2007

When Steve Carl steps out of his three-bedroom beach house in Ambergris Caye in northern Belize, snorkeling at one of the largest barrier reefs in the world is just a short swim away and going to dinner means leaving footwear behind.

“Everything is barefoot here,” Mr. Carl said. “There are fantastic restaurants nearby and I can walk in there with bare feet for white-linen service.”

Mr. Carl visits his vacation home in Belize with his family four or five times a year. The cost of labor in the country is low enough that he and the five other homeowners in his community can house two full-time caretakers in the development to keep watch over the homes and manage renters. Also, property taxes are “virtually non-existent,” Mr. Carl said.

Low real estate prices combined with the allure of life at a tropical retreat have long drawn second home buyers to Costa Rica, but increasingly other countries in Central America, from Panama to Belize and even Nicaragua, are seeing foreigners snap up oceanview condos and beachside homes.

Buying a home overseas requires navigating what are often complicated rules on foreign ownership. The good news is that more real estate agencies in Central America are catering to international buyers with English-speaking staff. They readily refer buyers to local lawyers who can assist home buyers through the closing process.

While Mexico is well known for restricting land ownership of beachfront homes and property near the coast, the rules in some Central American countries are less restrictive. In Belize foreign buyers can purchase property without restriction, while in Nicaragua, land, even beachfront property, can either be leased or purchased depending on the local municipality.

Real estate agents in Nicaragua, however, caution buyers to secure a good lawyer to guide them through the title process.

“The title history here can be more complicated than in the States,” said Zach Lunin, an agent with Aurora Beach Realty, in San Juan Del Sur, Nicaragua. Because of the political history in the country, there is the danger of purchasing a property that may have been confiscated during the Sandanista era; the original property owner may never have received compensation.

In Panama, property falls under two legal definitions: “titled” or “right of possession.” Foreigners can buy titled property but cannot purchase right of possession property, which is legally owned by the government, said Frank Morrice, a broker at Century 21 Semosa Realty in Panama. However, on Panama’s mainland, right of possession property can be changed into a titled property. This is a year-long legal process that then enables non-Panamanians to buy the land.

On Panama’s islands, however, this transfer process is not allowed, and since the majority of property on the islands is right of possession, foreigners can not purchase it. But, change is on the horizon. Last year a law was passed in Panama that could be implemented as soon as this summer, that will make it possible for foreigners to begin purchasing island property.

In Costa Rica, international buyers encounter restrictions only near the coast, where the country requires the majority of an investment to come from Costa Rican residents. But even with restrictions near the coast, Costa Rica is booming among foreign buyers.

Chris Simmons, who owns two Remax real estate agencies in Costa Rica and recently purchased the franchise rights for two more, is seeing the high end of the market grow even loftier to include properties selling for $4 million. And while real estate prices have no doubt jumped in Costa Rica, property taxes remain low, at just a quarter of one percent: The buyer of a $500,000 house would pay $1,250 a year in taxes.

Mortgages can be difficult or impossible to obtain from a local bank — there is only one bank in Belize, for instance, that will lend to foreigners — so buyers often buy with cash or secure financing through the developer at higher rates of interest than a traditional mortgage.

Panama and Nicaragua have some of the lowest prices in the region. A two-bedroom oceanview condo in Panama City averages $250,000, while a house just outside of the city, but still close to the beach, may run closer to $350,000. In Nicaragua the high end is around $500,000, but most second-home buyers are looking to spend $200,000 to $300,000 for a house, Mr. Lunin said.

Developers in Nicaragua are selling quarter-acre beachside lots in Costa Dulce from $90,000. Two-bedroom, 1,600-square-foot fully furnished homes at the Villas de Palermo, a development just outside of San Juan del Sur, are going for $249,000.

But perhaps the biggest draw to this region is simple tranquility. “A lot are buying surf investments,” Mr. Lumin said. “They are buying to be on the perfect wave. And the perfect wave is the empty wave.”

 

Source: The New York Times   

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