By Liam Higgins
If you’re looking for buildable commercial property on Av. Odoñez Lasso, expect to pay as much as $1,100 a square meter. Three or four blocks off of Lasso, on residential streets, land prices average $400 to $550 a meter. Even if you head several miles out of town, to San Joaquin, Challuabamba or Ricaurte, you will pay $250 to $350 per meter.
According to Alex Morales, vice president of the Cuenca Chamber of Construction, land prices in Cuenca are the highest in the country and show few signs of coming down. “Now that there is talk that the economy will begin to recover, it is even less likely that they will decline,” he says. “The number of land sales are down but owners believe this will change soon.”
He adds that despites slow real estate sales, construction is beginning to pick up. “There has been a drought in the sector but we saw more activity in late 2019 and expect that to continue in 2020.”
Land prices close to Cuenca have, on average, tripled over the 15 years, according to builders and real estate agents. “It has become a major problem for Cuencano families who want to build a home close to the city,” says architect Carlos Rosa. “Even if they want to buy an apartment, prices have risen beyond their reach in many cases. We thought the recession would bring costs down but it has had minimal effect so far.”
One effect high prices have on the real estate market is that more people are renting than ever before. “Rental rates have remained steady but this will change as the economy improves,” he says. “You will see rents increase.”
Rosa and Morales say that per meter land costs are often double the assessed municipal value. “There has been an effort to bring municipal assessments into line with sales prices, but there is still a large difference,” Rosa says.
Despite higher prices, Morales says that there has been a recent increase in the number of building permits issued for new projects. “There is still a demand for condominiums and several new projects will begin construction within the next few months,” he says. “It is a good sign for the building trade which has been very hard hit by the bad economy. I don’t see a return to construction levels of six or seven years ago, but that is possible if the economy rebounds.”
What explains the high prices?
“Cuenca is a city that Ecuadorians want to live in and that element of desirability is a big factor keeping prices high,” Morales says. “The city continues to attract new residents, including foreigners, and many see a bright future because of such projects as the tram and changes to El Centro. The census office projects that the metropolitan area will have a population of more than a million within 10 to 15 years.”
Geography also plays a role in the stubbornly high land prices. “We are surrounded on all sides by mountains, that’s why we are called Cuenca, which means bowl or basin,” says Rosa. “We are seeing more construction on mountain sides around the city but this is expensive and presents engineering and utility problems.”
Morales worries that high prices are keeping too many home buyers and small businesses out of the market. “If you look at Machala, Riobamba, and Ambato, land prices are less than half what they are in Cuenca, and those cities are growing too although not at Cuenca’s rate. You look at the situation and think something has to change.”