He Speaks Softly, but Carries a Big Opportunity

Friday, June 13, 2008

Learn more about international real estate in International Living Postcards—your daily escape

I met Ronan McMahon four years ago on the shores of Lake Apoyo in Nicaragua on a real estate tour.

He was an International Living new hire back then, and I remember how out of place the tall, pale Canadian-born Irishman looked, blinking at the bright Central American sun from under a restaurant awning and gingerly nursing a cold La Victoria beer.

Since then, Ronan and I have seen a lot of water and local beers go under the bridge. And last year when he became the director of Pathfinder, International Living’s preferred real estate marketing resource, I realized that he had finally found his perfect niche.

His quiet Irish demeanor might fool you, but with Ronan, the wheels are always turning…usually toward the most intriguing real estate opportunity in the vicinity, and usually toward the one that no one else knows about yet.

He’s recently found one such opportunity in Panama City…something he says can deliver the strongest and most reliable rental returns he’s ever seen.

Ronan wrote about this opportunity for the June issue of International Living magazine, and you can get the full story there. But I want to share a little of it now; it’s a great example of how Ronan works. Here’s how he puts it:

“I have been a regular visitor to Panama City for nearly five years. Up to the middle of last year I would call one of my favorite hotels a couple of days before traveling. I never had a problem getting a room and never paid more than $128 per night. But those days are gone...

“Now there isn’t availability…and when there is, you would pay at least $180 per night. Last December I tried to book a hotel room for a visit in January. I was told that there was no availability until May at the first two hotels I contacted. An extensive search for an apartment rental was unsuccessful. I was lucky to find a hotel room for $285 per night.

“Panama’s visitor numbers are growing at a much faster rate than its supply of hotel beds, and to me that spells opportunity. Visitors are coming from the Americas and Europe for vacation, to buy Panama real estate, to do business, or to work. Multinationals are setting up regional headquarters in Panama and the big infrastructure projects are drawing in skilled labor and contractors.

“Official stats indicate that hotel occupancy for hotels of 100 rooms or more is running at more than 90%. There are about 10,000 new hotel beds in the pipeline, but it will take a couple of years to deliver them, and all the time visitor numbers will continue to grow. Assuming Panama continues on its current path (which I think it will), supply will be at least five years catching up with demand.

“Boom times for Panama’s hoteliers…and I think anyone can profit from the Panama City hotel boom, even without the capital, expertise, or time required to be in the hotel business.

“How? Buy a hotel room.

“Under a typical condo-hotel program, a developer will construct a hotel and sign an agreement with a hotel group to run the premises. The developer then sells the units to individual investors. Revenue from the hotel operation is pooled and divided between the hotel operator and the owners of the individual units. Splits between owner and operator can be as high as 70/30 in favor of the owner, although the big-name, high-end operators will typically take a bigger cut.”

Ronan makes it clear in his International Living magazine article that there are some pitfalls to watch out for involving choosing the right project, picking a room that fits the right target market, and checking out the background of the hotel operator in question. He also says he’s found a great project in Panama City that fits the bill for this kind of approach.

If you’d told me four years ago that the pale, soft-spoken Irishman blinking under that restaurant awning in Nicaragua was actually one of the sharpest real estate opportunity scouts around, I probably wouldn’t have believed you. But it didn’t take long for me to look past the quiet exterior to see those wheels turning. As his reasoning and research behind the opportunity in the Panama City hotel market shows, Ronan is one to watch.

Dan Prescher
Publisher, International Living

P.S. If you’re not already receiving International Living magazine, you can subscribe now and get access to Ronan’s full Panama City hotel boom article.

Read related articles:

- Apartments for Less Than $70,000 in Panama City

- Piping-hot Pre-construction Deals on Brazil’s Northeast Coast

- The Truth About Investing in Panama City