Top 10 Second Home Markets
05 Jan 2010
by: By Kevin Brass
Our Compilation of Vacation Home Destinations Offering the Best
Potential for Luxury, Relaxation, Adventure and Rental Income
By Kevin Brass
Editor
To even casual buyers, a second home represents both a major
investment and a fantasy, an escape with the promise of riches and
adventure.
Evaluating a market based purely on rental yield algorithms misses
the swirl of emotions felt by the typical buyer, from retirees to
jet-setting luxury home collectors. Yet sentiment can’t blind the
financial reality of a hard asset worth at least hundreds of thousands
of dollars, a big chunk of any portfolio.
Relevant factors in our assessment included uniqueness,
affordability and the opportunity for capital appreciation. Security
was also a big issue—both physically and financially. Locations with
unproven demand were quickly eliminated, as were isolated locales
catering to survivalists. The goal was to spotlight markets that
combine a variety of factors, not serve niches like the best jungle
locale or the best golf course market.
The list, undoubtedly, tends to be U.S. centric, a nod to our home
base. Destinations like Cape Verde and Seychelles, for example, may be
wonderful spots to buy a vacation home, but they are drawing few U.S.
second home buyers. We also defined “second homes” strictly as vacation
properties, getaway spots, which meant we left off Paris, Barcelona and
other urban centers, where many people own second homes, but may not
use them strictly as vacation getaway properties.
Preference was generally given to destinations off the theme park
routes and away from the strips of hotel towers, tempered by
recognition that it never hurts to have a Four Seasons nearby, in case
of emergency. It’s the mixture of isolation and resources that make an
ideal second home market, the ability to generate rental income and
snorkel in warm waters without fear of getting run over by a cruise
ship.
To calm the quibbling and sniping, the list is presented in no particular order, reflecting our inherent cowardice:
RIVIERA NAYARIT, Mexico
Sure, Mexico is experiencing waves of violence and upheaval. “That’s
the way it always is in Mexico,” shrugs a friend, who writes travel
books on Mexico.
Often overlooked amid Mexico’s array of pre-fabricated
Fonatur-designed tourism Meccas, the area north of Puerto Vallarta has
experienced a mini-explosion of luxury home development in recent
years. The master-planned area on Punta Mita, anchored by a Four
Seasons and a St. Regis, offers the A-list, gated community lifestyle.
Further up the coast a variety of projects are going up along a route
of white-sand beaches, surfer spots and small fishing towns. Best of
all, the starting point is Puerto Vallarta, one of Mexico’s classic,
romantic old cities.
NATAL, Brazil
You just can’t leave Brazil off these lists. The economy is booming,
part of the BRIC resurgence changing the world. There are large
swatches of barely developed, beautiful land. And now Brazil is set to
host both the World Cup and the Olympics in the next six years, which
should prove another jolt of adrenalin to carnaval. Putting Brazil on any list of hot investor spots falls into the “well, duh” school of analysis.
Hot Rental Markets*
*From HomeAway.com
Year to year growth in customer inquiries, 2008-2009
Barcelona – 216%
Amsterdam – 213%
London – 164%
Rio de Janeiro – 134%
Paris – 73%
Year to year growth in properties listed
Panama – 165%
Aguadilla (Puerto Rico) – 136%
Vancouver – 115%
San Juan del Sur (Nicaragua) – 110%
Punta Cana (Dom. Republic) – 91% |
Of Brazil’s many hot spots, Natal stands out as the gateway to the
northeast, Brazil’s top domestic tourist destination. While hardly a
new market--the northeast coast attracts more than 7 million visitors a
year—the stretch of coastline north of Natal “represents the best
potential returns for private investors" in Brazil, Kapital Assets
c.e.o. Keith Punler recently told a reporter. A new airport should also
change the complexion of the area, offering more direct flights from
Europe. As more infrastructure goes in, the spectacular coastline’s
popularity as a second home destination should only increase.
HERMOSA, Costa Rica
Never has an airport changed a location as dramatically as the
Daniel Oduber Quiros International Airport in Liberia transformed
Guanacaste, the stretch of rugged coastline on the northwest coast of
Costa Rica. No more treks through San Jose and puddle jumpers over the
mountains to get to the coast. Instead it’s an easy flight into Liberia
and a pleasant 20-minute drive over a nicely-paved highway to the
Guanacaste coast, which was in the midst of a spurt of luxury
development before the slowdown.
Hermosa is a barely existent small town with few paved roads, a
handful of open air restaurants and sporadic electric and water service
on its own little cove, across Papagayo Bay from the Four Seasons
Papagayo. With a small cluster of condos and luxury homes covering the
hillside, Hermosa and neighboring Coco consistently rank as one of the
most expensive places in Central America to buy an ocean view condo,
according to Reveal Real Estate. Several large-scale luxury projects
have been delayed in the area, including AOL founder Steve Case’s
Cacique, a few miles south of Hermosa. When activity picks up,
Guanacaste is set to develop as the Costa Rica Riviera.
PLACENCIA, Belize
Someday—maybe a long time from now, but some day—Belize will develop
as a spectacular second home market. The trick will be to preserve the
spectacular natural wonders and isolation of the country, while
providing more of the necessary amenities and creature comforts
required by many North Americans.
Placencia, one of the few spots on the mainland coast with white
sandy beaches, is something of a test case. Several mid-size
developments are going up along the coast. The only road on the
peninsula is finally getting paved. And Francis Ford Coppola’s Turtle
Inn provides a level of upscale trendiness.
Yet Placencia remain remote, isolated, a quick hop away from the
jungle or the underwater splendors of the world’s second largest
barrier reef. Development continues to inch forward, with few signs of
life from Ara Macao, the big project planned for the north end of the
peninsula. While investment money and direct flights continue to flow,
it will be years, probably decades, before Placencia gets that
overwhelmed, too-crowded feel creeping into Ambergris Caye, Belize’s
primary destination.
MALLORCA, Spain
Spain may be struggling, but Mallorca still holds a special allure.
The island provides a compact mixture of the Mediterranean yacht scene,
old world expats and picturesque Spanish countryside, with only a dash
of the throbbing disco scene found on other islands.
Sales on Mallorca are down by more than 60 percent from 2007 levels,
but demand remains high for top-level property, according to recent
reports. But valuations have fallen far less than other areas; even in
tough times Mallorca holds its own. Offering both seaside retreats and
quaint hillside villages, it is still seen as the perfect Mediterranean
escape, an old school destination attracting a new generation of buyers.
JOLLY HARBOUR, Antigua
In the array of Caribbean islands, Antigua stands out as a
throw-back to old England. Richard Burton owned a house here and Eric
Clapton built his high-end rehab clinic on the island (although he’s
reportedly selling his estate). Antigua has a firmly entrenched status
as a hideout for celebrity royalty, which rivals its reputation as a
home for shady banking operations (Google: “Sanford Ponzi Scheme”.)
Antigua is high-end, yacht-friendly Caribbean, without the
millionaire tourist clubs of St. Barts or the Cayman Islands. There is
still relatively little development, which is mostly clustered around
Jolly Harbour on the west coast. In 2007, even as other markets began
to falter, Antigua prices zoomed 40 percent, one of the largest jumps
in the world according to Knight Frank research. Nobody expects those
types of leaps in the future, but it’s fair to say Antigua will remain
beloved by the yacht and cricket set.
VANCOUVER, Canada
Geography has blessed Vancouver. It sits amidst a spectacular
landscape of islands and mountains, a land where you can whale watch in
the morning and ski in the afternoon. Situated a stone’s throw from the
U.S. border, it is also the first stop and destination of choice for
many Asian investors, assuring it will be one of the first to benefit
from the growing number of Chinese and Korean buyers.
Home base of the upcoming Winter Olympics, Vancouver itself offers
an array of towers and trendy apartment units, one of the best urban
centers in North America. But move beyond the city and there is a wide
array of markets, from the ski resort of Whistler, to the fishing
rivers of Squamish, to the isolation of the gulf islands.
HVAR, Croatia
OK, it’s a wild card. The splintered countries of post-war
Yugoslavia still have unresolved issues. But the Adriatic Coastline is
spectacular and remarkably free of the clutter of most European
coastlines. Most of amenities are still dreary throwbacks to the Tito
regime.
But there is also an entrenched market in Croatia, long a favorite
of German and Italian tourists. (German is the most common second
language.) As it further integrates into the EU, property rules will
align with the rest of Europe and traffic from the second home-mad U.K.
will undoubtedly increase. There will be more cheap flights, more
development and more access to property.
Hvar is a spectacular island off the Dalmation Coast, an easy ferry
ride from Split. Steeped in the turbulent history of the Adriatic, Hvar
is a rapidly growing tourist destination, with spectacular coves and
secluded beaches. While hardly undiscovered, it is still new ground for
the international industry, and its never-ending search for new islands.
SAN DIEGO, United States
The numbers don’t lie. Always one of California priciest markets,
prices plummeted 25 to 35 percent in many neighborhoods. And those
neighborhoods are spectacular, perched on a sun-splashed stretch of
coastline with the best weather in the United States (marred only
occasionally by brush fires of Biblical proportions.)
San Diego doesn’t have the vast over-supply of units found in, say,
Florida, which means it will likely stabilize and bounce back quicker.
Nevertheless, more than 7,600 condos units went up from 2001 to 2007 in
San Diego’s downtown, which sits on the pristine bay. Many of those
units are for sale, with prices that would have seemed ridiculous two
years ago.
RODNEY BAY, St. Lucia
Of the emerging islands in the Caribbean, St. Lucia has all the
elements in place for steady growth. Its array of spectacular coves and
beaches is augmented by its unique Creole culture, pristine twin Piton
peaks and swatches of rainforest, a rarity in the Caribbean.
More importantly, investment money is flowing to the island, which
is still in a relatively early development stage. Many of the second
home projects are clustered on the north end of the island around
Rodney Bay, where there are clusters of luxury homes. A fairly easy
drive from the international airport as Castries, the area offers
classic Caribbean style at prices below the sky-high offerings in
Barbados
Honorable mention: Inland Panama; Provence, France; Punta Cana, Dominican Republic; Riviera Maya, Mexico; Umbria, Italy
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