There appears to be no slow-down in local construction, particularly of condominiums, according to Cuenca developers. At the same time, they say, prices continue to rise.
The Cuenca Chamber of Construction reports that there are more than 40 condominium projects either under construciton or in the permitting process in the city. As evidence, Chamber president Diego Monsalve points to the 10 complexes either recently completed or in construction on Av. Primero de Mayo, between Tres Puentes and Av. Las Americas. “The demand continues to be strong and that is why there is a record amount of construction,” he says.
Both builders and real estate agents report that Ecuadorians returning from overseas, particulalry from the U.S. and Spain, continue to be the driving force behind real estate sales. “They may amount to as much as 35% of all sales in the canton,” says real estate agent Juan Rodriguez. “It is difficult to tell for certain because in many cases the local families of people living overseas are the ones involved in the sales.”
In contrast, a recent survey by four real estate companies shows that the number of native English-speaking buyers, mostly North Americans, has declined dramatically in the last 18 despite the fact that record numbers of new expatriates continue to relocate in the area.
Monsalve says that the continuing rise in prices, which he estimates to be between 8% and 12% depending on the type and location of the property, is due not only to demand but to rising costs for raw land and building materials. “Materials keep going up and these are included in the prices,” he says. He also reports that many buyers, particularly returning Ecuadorians and foreigenrs, are willing to pay more to be close to the historic district, where prices are the highest.
Prices for new condos, according to Monsalve and others, were averaging $1,100 per meter through the first half of 2012, up from $885 two years ago.
The consortium of real estate companies reporting the decline in sales to foreigners, says the drop is between 20% and 30%. “It is impossible to get exact numbers since there is no distinction made between local and foreign buyers at the land registry, but the drop has been surprising,” says Carlos Espinoza whose company participated in the survey of attorneys, notaries and land registry officials.
“Sales to foreigners have always been a very small part of the local market, between 1% and 2% of all sales, but we have trouble understanding why there are fewer buyers now with this group,” says Espinoza.
According to Cuenca’s new immigration office, there are more than 4,000 English-speaking foreigners in town and, they say, the pace of arriving newcomers is not slowing down.
Carlos Alvarez, a Cuenca developer who worked for 15 years in Miami, says one of the reasons for the falling sales to gringos is that more of them are renting. “This makes sense, of course, to get to know the community before you buy. Another reason, however, is that many of the newer gringos cannot afford to buy even if they want to. Many of them, unfortunately, are part of the group referred to as economic refugees.”
Elizabeth Cowans, a British demographer who has been a visiting profesor at two of Cuenca’s universities, agrees with Alvarez. “As a sideline to my teaching, I have been following the expat community here for seven years and I can safely report that it has changed remarkably in the past two or three years,” she says. “To be blunt, as a group, the more recent exapts are older and poorer, and this obviously affects real sales.”
Cowans says that some of the change can be attributed to publications and websites such as International Living, which have promoted Cuenca for its low cost of living. "It's fair to say that they grossly misrepresent the facts," she says. "On the other hand, the bad economy has created some desperate people who are willing to do anything –and go anywhere– to survive."
According to Alvarez, there has been a boom in traditional rental demands among the expat community. “Until recently, almost all the gringos were renting turn-key units that were furnished and included the utilities in the rent. Now, my friends in the real estate business tell me that many of them are looking for traditional, unfurnished units with a one or two year lease.”
Is the Cuenca real estate market heading for a bubble? “I don’t see it happening over the next two or three years,” says Alvarez. “Demand will remain strong and price appreciation will continue.” Beyond that, it’s anyone’s call, he says. "At some point there will be a moderation of prices and maybe a reduction in new construction. This is inevitable. But it is important to keep in mind that we don’t have the 20% to 25% increases that I saw in Miami, or in Panama or Costa Rica, 10 years ago. Those were situations where a bubble was created.”
Alvarez adds: “Cuenca is a beautiful city and great place to live. In my opinion, this will keep the market strong even if prices moderate.”
Photo captions: New condos continue to rise around Cuenca as others are on the drawing board.