International Real Estate: Markets to Watch in 2007

International Living has a lengthy history in predicting which international real estate markets are ready to increase in value, but this is the first time the organization has produced a comprehensive forecast report.

One of IL’s first predictions, made more than 20 years, was to buy in Dublin, Ireland. Today, Dublin has some of the world’s most expensive real estate. Other prescient predictions include Costa Rica (20 years ago); Costa Maya, Mexico (15 years ago); and Panama (10 years ago).

International Living's new report - Markets to Watch in 2007 - focuses on seven real estate markets that currently have a special combination of economic, political and other factors that give them attractive investment potential for 2007. The report provides great detail into the specifics of the seven markets and how investors can best seize the available opportunities. (Below are extracts from the comprehensive report. The complete 81-page report is available here.)

The markets International Living is watching for 2007:

Calabria, Italy

Calabria forms the toe of Italy’s elegant boot. Last stop before Sicily, this 160-mile long peninsula is one of the country’s least-explored regions. Encircled by clear, silver-blue sea on three sides, it’s one of its warmest and sunniest too. Even in mid-October, temperatures remain in the upper 70s.

International Living first profiled Calabria almost two years ago. We told subscribers about its dramatically rugged coastline (almost 500 miles of hidden coves, long sandy beaches, and towering cliffs). We told them about small medieval towns undergoing restoration; about its history of ancient Mediterranean civilizations; about village trattorias and pizzerias with genuine wood-fired ovens where you can eat well for under $5. And we also told them about rock-bottom property prices that included studios in the seaside town of Scalea for $15,000.

Back-boned by wild mountains, Calabria still offers an incredibly affordable alternative to Italy’s northern and central regions. Even today, prices mostly remain under $120 per square foot. While it’s amazing to find coastal properties anywhere in Europe (let alone in Italy) at such low prices, this isn’t the only reason why we predict that this unknown corner of the Mediterranean is poised to take off.

Ciudad Vieja, Uruguay

Ciudad Vieja: Montevideo’s original historic center. Montevideo is Uruguay’s commercial, educational, and cultural center. The southernmost capital in the hemisphere, it is situated on the northern shore of the Río de la Plata, about 120 miles east-southeast of Buenos Aires. The city has all that Uruguay offers with respect to culture and convenience. There are numerous schools of dance, music, and art, along with 35 radio stations, good cable TV, and high-speed Internet services.

Today the property market in Ciudad Vieja is on the move. The sector embarked on a renaissance back around 1995, and began to really hit its stride in 2004 through 2005. Now the mainstream realtors and developers are starting to notice what’s going on, and are turning their attention to Ciudad Vieja. New projects are starting, and new real estate offices—of realtors who had shunned this market only a year ago—are moving in. True, the Uruguayan city of Colonia enjoys a solid market, with lots of opportunity; and Punta del Este continues to appreciate rapidly while providing the country’s highest rental incomes. But when it comes to capital appreciation in Uruguay, Montevideo’s Ciudad Vieja has the edge. The time is right in Ciudad Vieja; it’s time to make your move.

Flamingo Coast, Mexico

Costa Flamingo is the area of coastline that runs, roughly, from Celestún to Rio Lagartos, along the northern edge of the state of Yucatán, bordering the Gulf of Mexico. Several small beach towns dot the coastline here, the largest of which is Progreso, at the midway point and just about 12 to 19 miles due west of the modern metropolis of Mérida (and its international airport). If you are looking for an authentic Mexican experience in a clean, peacefully-quaint fishing village that boasts no gigantic hotels and no hustle or bustle whatsoever, then these little beach towns are for you.

Progreso is the largest of these towns, with a marina, a cruise-ship dock and several beachfront restaurants. This is a popular area for winter snowbirds (although not nearly as much as other Mexican beach areas)—it’s truly a place to relax and enjoy a tropical, laid-back lifestyle.

This part of Mexico isn’t for everyone, it’s true. The water isn’t crystal clear like it is on the Caribbean side, nor is there the lush jungle foliage you find on much of Mexico’s Pacific Coast. A steady wind blows from the north most of the time. And it’s quiet here. Very quiet. There’s not as much tourism infrastructure along the Flamingo Coast as there is at other Mexican beach locations. In fact, there’s hardly any.

Malaysia

Seeking a Western-type lifestyle in exotic southeast Asia? Well, Malaysia has lots going for it…powder-white beaches, crystal-clear waters, and virgin rainforest teeming with wildlife; bustling cities, modern infrastructure, and quality health care; inexpensive seafood and cheap spa pampering; sailing, snorkeling, diving, fishing, golf, and island-hopping; a melting-pot of Malay, Chinese, and Indian culture.

Home to over 25 million people, Malaysia is one of southeast Asia’s most advanced and prosperous countries—and a relatively easy introduction to the region. For one thing, its days as a former British colony means that English is widely spoken. For potential expats, one big attraction is the Government-sponsored “Malaysia, My Second Home” program.

Another positive is the affordability of real estate. Although values have appreciated at around 15% to 20% over the past couple of years, you can still buy a 750-square-foot apartment in a smart part of the capital for $98,360. Split into two distinct parts by the South China Sea, the country comprises Peninsular and East Malaysia. Peninsular Malaysia (Malaya) borders with southern Thailand; East Malaysia (Sabah and Sarawak) occupies the top third of the island of Borneo which it shares with Indonesia and the small Sultanate of Brunei. Both parts of the country have extensive areas of dense jungle.

Montenegro

Lapped by a sea of translucent aquamarine, it’s one of the loveliest countries in Europe. Shadowed by towering mountains, its fishing villages come with red-tiled roofs and deep-green shutters. Enclosed by thick stone walls, small medieval towns are like treasure chests of a Venetian long-ago. And if you’re seeking a geographical curiosity, the mighty Boka Kotorska has the distinction of being Europe’s southernmost fjord. Seascapes are as stunning as you’ll find anywhere, but the country also has a spectacular interior of hills, rivers, high-pasture valleys, and over 35 lakes—often blooming with water lilies.

Around 60% of Montenegro is mountainous...and brown bears still roam here. Risan has Roman mosaics; Ulcinj has minarets and tales of pirate slave-trading; the Tara Canyon holds the record for being the world’s second-deepest gorge. This is also a land of island churches and monasteries slotted into narrow mountain crevices...of country markets, olive groves, and small ski resorts. Known to its inhabitants as Crna Gora, Montenegro’s name derives from the Italian phrase for “Black Mountain.”

The Italian connection comes from the country’s alliance with Venice in 1455. It resulted in almost two centuries of Venetian influence. In many walled coastal towns, you’ll still see that influence in palazzos, churches, and the street lay out. It’s a tiny jewel of a country of less than 700,000 inhabitants whose native language is Serbian. (It’s now fashionable to call the language Montenegrin, but it’s the same as what you’ll hear in Belgrade.)

Honduras Cloud Forest

The most beautiful and least explored forest reserve in Honduras is, without a doubt, the Pico Bonito National Park. This area of cloud forest, where sky, mountains, and clouds meet above the town of La Ceiba came to the attention of environmentalists the world over when the Lodge at Pico Bonito was discovered by National Geographic Traveler, who said of it, “…dramatically situated below the bright green face of the 8,000 foot Pico Bonito and its plumes of high white waterfalls. The grounds harbor a rich diversity of plants, animals, and birds (over 260 species) and also a special sanctuary where one can step into a fluttering rainbow of 40 species of butterflies.”

The attention of the Honduran government was also drawn to the region at that time, and it was part of the reason they decided to adopt geotourism* as their new mantra in the development of tourism across all of Honduras.

Besides all of the natural beauty of this area, one of the best things about these mountain forests is that they are just minutes from the town of La Ceiba, where you’ll find an international airport, shopping, banking, and a ready-made expat community. There is a small shopping mall with a movie theater, which shows first-run, English-language films for only $2. It is accessible by air from many U.S. destinations, in only two hours. The town is at the center of over 435 miles of virtually untouched white-sand beaches, and just a short boat trip from the legendary scuba diving of the Cayos Cochinos. At the water’s edge, La Ceiba’s Zona Viva is a mecca of small nightclubs, restaurants, and hotels. Plus, opportunities to purchase land here are really just opening up. We are now starting to see some larger pieces of property come on the market as either development properties or private homesites.

Cartagena, Colombia

White-sand beaches, world-class diving and snorkeling, and an ancient walled city crammed full of faithfully-restored and well-maintained examples of Spanish colonial architecture; more fine dining restaurants than you can count, where you can enjoy a complete dinner with plenty of wine for under $30 bucks; gasoline is cheap, the electricity is reliable, and you can still get a good 25-cent cup of coffee.

And, this market is on the move right now. The ball started rolling in 2003, and really hit its pace in 2006, with prices climbing as high as 50%. The Colombian Caribbean is an overlooked commodity with respect to the North American investor and Cartagena is a beautificul Spanish colonial city. It’s a walled city; it has beaches a few minutes away.

There are high-quality, “investment grade” properties, and the market is moving. In short, Cartagena has a lot of intrinsic value for the investor or second-home buyer. The remaining unrestored/undeveloped properties in the city are dwindling, and when they’re gone, their related investment options will have gone with them.

Getsemaní is a bargain today, but as investor attention shifts outside the wall, this won’t last long. Surprisingly, less than 25% of the visitors to Cartagena are international visitors1, with the remainder being Colombians…so far, very few North Americans. Now consider the rapid expansion that we’ve seen during the last five years, emanating from Costa Rica northward to Nicaragua and south to Panama. North Americans in these countries have moved in, and prices have risen dramatically. The logical question is, “Where is the next Nicaragua…the next Panama?” For many, the answer will lie a scant 293 miles east of Panama City. But in Cartagena you’re dealing with a limited commodity, so the opportunity won’t last long. Early 2007 is the time to act.