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How to Market to the Post-Crisis Buyer

By Claudia Gonella
Co-Founder, Reveal Real Estate

As we enter 2010, a sense of stability and predictability--a new normal--is returning to the Central America real estate sector.

One of the most telling aspects of this new normal is the retreat of the speculator buying for quick re-sale profit. The quick flip speculator has been replaced by a new type of international real estate investor--a “post crisis” investor--with a different mindset and goals.

Here are 14 characteristics of this post crisis international investor:

• They are more informed and will demand better service from the industry
• They will not make decisions based on thin slices of information, but will demand openness and transparency
• As a general rule, they are skeptical of promises made by developers on their websites and brochures.
• They are wary of pre-construction properties, preferring to purchase completed real estate with amenities they can enjoy right now.
• They want to understand the financial health of the community before they invest
• They expect substantial discounts on the market highs of 2007.
• They will haggle, even when it comes to high-end properties.
• They will be drawn to real estate that is a bit low key
• They are interested in properties that generate revenue in the short term.
• In addition, they are motivated by lifestyle factors, not just financial gain.
• They are focused on regions with a low cost of living, good health care and safe streets.
• They will avoid areas with over-supply risk and copy-cat developments.
• They will seek safe haven investments and tax friendly environments.
• They are interested in contributions to larger concerns such as environmental preservation, the local community and sustainable approaches to building, water and energy

These buyers are very different than their predecessors, but the change offers opportunity.
In order to succeed in 2010, developers need to innovate--both their products and their marketing--to embrace the mindset of the post crisis real estate investor. Those that do will earn their way out of trouble. Those that don’t will suffer.

Already examples abound of developers in Central America taking different approaches to cater to this post crisis consumer. In Nicaragua, the Montecristo Golf and Beach resort recently launched a collection of “casitas,” small family homes with simple floor plans, recognizing the new cost-conscious buyers. To address the wariness toward pre-construction projects, Coldwell Banker in Belize is marketing projects “you can see and touch.”  

Tourism and retirement as a business model for international real estate in Central America is not broken, it has just shifted.  Yes, the over-leveraging of the North American and European consumer has come to a halt and the amount of debt will have lingering consequences. But as retirees and investors take stock of their situations and consider their options, many will still be looking for a more affordable life overseas and safe, tax-friendly places to plant their money.

Instead of decrying the downturn, the developer of the Grand Baymen resort project on Ambergris Caye is marketing to Belize’s strengths, emphasizing the country’s tax breaks and expat-friendly retirement plan. In Panama, the Valle Escondido project is marketed as a safe haven for investors looking to diversify their portfolios and move money away from the U.S. financial system.

As the industry embraces this new post crisis world, we’re looking forward to a healthier, more sustainable market for international real estate in Central America, one that is more open and transparent and less reliant on the rampant speculation of the past…but it may take all of 2010 to get there.

Claudia Gonella is co-founder of Reveal Real Estate, a site dedicated to improving the transparency of real estate in Central America by putting data in the hands of consumers. Prior to moving to Central America full time in 2003 she consulted, wrote and spoke about corporate social responsibility and sustainable development. She now regularly writes on the state of the real estate markets in Nicaragua, Belize, Costa Rica and Panama.

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