Is That Brad Pitt I See Following Me?

Date: 06/22/2007

International Living Postcards-- Saturday Edition

Saturday, June 23, 2007

"If you can get a local celebrity to buy a house in your development, then the demand from locals can be tremendous."

So advised a real estate agent to a developer I know launching a new project on the coast of Panama. It is a tried-and-true marketing strategy. I've noticed Erik Estrada pitching otherwise unsellable property in Washington through infomercials recently.

Indeed, celebrities buying into a development, city, or country can generate a lot of press. But it doesn't guarantee appreciation.

Take Manzanillo, Mexico, for example. Manzanillo is the town where the Bo Derek movie 10 was filmed. The city sits on the country's Pacific coast, has nice beaches, and, in the 1980s, enjoyed a time as "the" hot spot for globe-trotting celebrities and jet-setters. Celebrities have short attention spans, and it wasn't long before they decided to move on to another destination. Overnight, Manzanillo acquired has-been status, a position from which it's never recovered.

Real estate agents like to play on celebrity cache. "Mel Gibson is buying a ranch just over that hill," an agent in Panama told me during a recent scouting trip. He meant to assure me that I was making a smart choice…just like Mel. Even if Mr. Gibson did buy where the agent pointed (according to another agent, Mel decided to buy in Costa Rica instead), what do I care long term? The appreciation potential of a piece of property depends on raw natural beauty, ease of access, amenities, market supply, local competition, infrastructure, and broad-based desirability. None of those things are likely to be influenced by a celebrity…unless the celebrity is a developer like Donald Trump.

Buying a piece of property because Brad and Angelina are rumored to have purchased in the same area isn't an investment strategy. Brad and Jennifer were rumored to be buying in Ireland when I was buying there…then, more recently, Brad and Angelina were rumored to be buying in Paris just after I bought an apartment in that city.

Now that I think about it, maybe Brad's real estate agent is pointing out to him where I'm buying. He and Angelina are most recently rumored to have invested in Panama.

Your trend-setting property scout,

Lief Simon
For International Living

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P.S. The people to chase in an emerging market are the politicians. Infrastructure improvements are a very visible way for a politician to show progress to his constituency. You can be assured in Latin America, especially, for example, that the infrastructure will be improved in the regions where the current president and his family own property. If a dirt road leads to the just-elected president's house, you can bet that one of his first orders of business will be to have it paved. If there's no hospital in the town where his family lives, watch for a clinic opening. New air strips, schools, improved electricity…the president's current place of residence and boyhood home town both probably will enjoy them all. And from the improved infrastructure will follow appreciating real estate values. Viva el presidente!