photo courtesy of ECI Development, Gran Pacifica in Nicaragua
The recovering U.S. real estate market, strengthening dollar, and continued baby boomer retirement has brought an old niche international market segment back into focus: international developments.
Back in the late 1990s up until 2008, the U.S. second home market enjoyed a spectacular boom, making beachfront and second home destinations in places such as Arizona, Florida, and California unaffordable for many American buyers seeking a second home in prime resort destinations; so buyers began to look further afield to places overseas that offered lower prices, quality product, accessibility to the United States, and warm weather in attractive locations. Countries such as Panama, Costa Rica, Mexico and numerous Caribbean islands began to market projects in the United States and these countries enjoyed a boom in U.S. buyers. After 2008, this international market segment evaporated as prices dropped to new lows in U.S. resort destinations, erasing the “value proposition” of similar product overseas.
Now, with the U.S. market enjoying an uptick, signs are that international developers are poised to build again, and overseas developers understand that to successfully market overseas developments in the United States, it makes sense to partner with qualified REALTORS® in the United States, who have the marketing expertise and client base, and can offer more results than marketing directly to the public. International developments are where the action is at in this market segment, because when U.S. buyers purchase property overseas, they tend to prefer new, master planned communities; and the lack of MLS systems in Latin American countries make resales more difficult for U.S. consumers to shop for.
What is the opportunity in this market? According to Mike Cobb, a developer of Nicaragua-based Gran Pacifica, a recent survey revealed that 11% of U.S. citizens are seriously considering relocating or owning property outside of the United States, 5 million already live outside of the USA, and over 600,000 Americans currently receive social security checks overseas.
What do REALTORS® need to know about this market segment? While marketing international developments may conjure up images of jet-setting off to exotic locations and enjoying high commissions, Mike Cobb urges REALTORS® to not leave their brains at the border. ”You need to get to know the developer and see the project firsthand,” says Cobb, adding that developers typically offer deeply discounted stays to REALTORS® who come and see the project. “Make sure it is up to U.S. building standards and your client’s standards, and that there is construction progress as promised, and that the developer is financially sound.” REALTORS® should also understand license laws in their states, to ensure that they are complying with rules and regulations regarding accepting commissions. Your state license commission is a good place to start.
What tools does NAR offer for REALTORS® looking to grow this segment?
1) Earn your CIPS: If you are selling property overseas, you need to understand the nuances of these countries, as your clients will look to you as the expert. Additionally, CIPS designees can network with other trusted designees around the globe. If you are already a designee, use the network and search the developments that make sense for you to market.
2) Hop on a plane. Check out NAR’s Global Meetings & Events calendar for international events. One of the best opportunities to view developments firsthand is the AMPI Summit in Puerto Vallarta this June. You will tour developments firsthand, and the conference theme will cover this market segment in thorough detail in a prime market. Last year’s event in the Riviera Maya drew more than 100 U.S. REALTORS®.
3) Spend time in the Global Pavilion at the REALTORS® Conference & Expo in November. The event, to be held this November in San Diego, has a pavilion dedicated to international developments around the globe. The developers will exhibit specifically to do business with you. During the busy conference, make sure and spend some time to meet these folks firsthand, and you may be on our way to tackling this interesting and potentially profitable market segment!
If you are currently a CIPS designee, look for the June issue of Global Perspectives to cover more on this topic, including co-marketing strategies for international developments.
by Jeff Hornberger, CIPS, RCE
Director, Global Alliances
National Association of REALTORS®