When it comes to finding the best real estate investment opportunities most people are looking in all the wrong places. They search frantically for the next big flip – the next big pre-sale opportunity where they can get in early. They think pre-construction is best and the only trick is to identify what the next Hot Market is going to be before the bulk of the buyers make it hot. In essence they are looking to win the lottery – make it big and cash in. The unfortunate reality is that this is the kind of thinking that keeps pyramid schemes circulating the globe along with shady condo deals and all of the other scams that grab opportunity seekers and take them for all their worth.
So, how does one really do it? How does one find the best places to invest in real estate without it being simply a huge gamble? The key is to look at larger trends and then circle in one turn at a time until a local opportunity matches. By global it can be literal – meaning looking at the world at large or it could be global in the sense of a particular country or even a particular region within a country. Let’s take a look at an example from Panama and then I’ll share my observations on what I see as the next opportunity in Panama Real Estate – the best place to invest in real estate now for solid returns in the not too distance future.
A Real Estate Investment Case in point
Global Trends: Baby Boomers approaching retirement age looking for a place to live the good life in their gilden years – maybe even sooner!
Needs & Wants: Physical Comfort; Easy Pace of Life; Lifestyle and Standard of Living
Market Beneficiary: The Tropics
While marketers the world over pushed the warm, comfortable lifestyles of living in Florida, the Bahamas and other tropical locals and few savvy entrepreneurs looked deeper into the real needs and wants of the market. Sure boomers had grown up with the fantasy of living the life on a beautiful sand beach while sipping rum from a coconut. But what a few recognized was that not many baby boomers were cut out for this kind of living. Sure the beach side bungalow fit the fantasy but the reality of the beach bunny lifestyle had a big bite: Showering multiple times a day; layering on sunscreen; wearing hats and all other manner to protection to ward off yet another surgery to remove cancer skin not to mention the annoying scars and rashes that accompany the sand flea bites or often just the excessive heat and humidity. This wasn’t the reality of living in the tropics the fantasy had promised.
Unseen Opportunity: Highland Living
Clever entrepreneurs like Sam Taliaferro of Valle Escondido in Boquete recognized and underlying trend long before consumers even knew they wanted it – living comfortably in the tropics meant moving up the hill. The comfort and health benefits of living at high elevations, in Sam’s case the Chiriqui Highlands, became the perfect solution to the baby boomers problem – wanting a life in the tropics but wanting it to be comfortable too!
Today it appears the massive growth in value for highland properties has reached a plateau. Yes, it is still in high demand but prices in many areas, Boquete in particular, have levelled off. Are there other as yet undeveloped and undiscovered highland regions in Panama? Sure, but more on those later. By the way – the Panama Summit this July will include a great presentation on highland opportunities still available in Panama. But, let’s move on to another trend which I believe will bring solid returns and will present as one of the safest and best real estate investments for decades to come.
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The Best Place to Invest in Real Estate Now
Global Trends: The World Population continues to grow and along with the demand for food. All the while the middle class is growing too and at an even higher rate than the population. We’re not just seeing this in countries like Panama which one would now be hard pressed to call ‘Third World’, we’re seeing it the globe over – from China to Africa to the Middle East and across the pond in South and Central America too. About the only place the middle class is either stable or shrinking is in the United States!
Needs and Wants: Food! and places to grow it. That brings us back to….
Additional Global Trends: Farming techniques may have increased yield, at least over the short term, but the supply of cultivated and/or cultivable land is shrinking rapidly. This combined with our growing population has resulted in a serious problem. The UN estimates the per capita amount of cultivated land has declined by over 40% in the last few decades. Now add in:
- soil erosion and ‘dead soil’ – many say thanks to those yield enhancing farming techniques;
- changing, unstable and unpredictable weather patterns – can you say ‘climate change’?
- shrinking supplies of clean water
- rising costs of food production and distribution, mainly oil prices, pushing more and more farmers out of business.
And that’s not all of it. Bring in the influence of money and monetary policy and the cocktail gets even scarier! We’ve got traders and bankers doing anything and everything they can to grow their bottom lines so we see more and more money being pushed into the market place which increases the cost of commodities, including agricultural commodities and real estate in developed countries which could otherwise be used for agriculture even higher. Yes, it’s true Jodi – they’ve paved paradise and put up a parking lot! OK, this is turning into a rant and I’m sure you’ve got the point. It ain’t a pretty picture and we’re all witness to the outcome – rising food prices. Now, trends and fads can be small or big but when it comes to food you’re looking at the BIGGEST. Historically food has changed the game over and over and through the ages. French Revolution to Arab Spring – before and after food is a game changer. And if you’ve been taking this all in context you have probably guessed the…
Unseen Market Opportunity: It’s not over priced beach front and it’s not comfortable highland property nope, it’s all of that in-between agri land that no one seems to want and as a result it’s still cheap. The best deals in the world right now on a risk adjusted basis for farmland or grazing land is definitely Latin America and Panama has plenty of it. If you look in the right places (we’ll show you) you can even find semi-highland land which is the best of all world’s. It’s warm but not excessively hot and humid like sea level property and a greater variety of things can be grown on this kind of land.
My pick for the best place to invest in real estate in Panama now is that in-between land no one seems to pay much attention to – those small and large farms that typically lie in the foot hills between the beach and the highland. Purchase a farm (finca) or a ranch and you’ll have a real asset of real tangible value. Owning agricultural property with the supply and demand influencers noted above make this one of the best and smartest investments you can make. With what’s going on in the world today and the fact that these trends have no end in sight it makes having at least some of your money in agriculture a low risk investment that can and will pay dividends. It’s not paper or numbers on a screen in cyber space but a real asset –
- You can live on it.
- You can grow on it (with plenty of labour willing to work).
- You can raise livestock on it.
- You can do all of the above.
What do think? Please Leave your comments, questions, suggestions below – join the conversation and watch what happens!
The information expressed here is solely the opinion of the author. Nothing on this web site or in subsequent communications is to be considered personalized investment advice. Although we may answer your general questions, we are not licensed under securities laws to address your particular investment situation. No communication by any associate or representative of Learn About Panama is to be deemed as personalized investment advice.