The Property Time Machine

“I wish I had a time machine”. Those were almost the first words out of Mary’s mouth when I met her. Her husband nodded in agreement. I did too. Who wouldn’t want a time machine?

I could picture myself going back in time and snapping up Microsoft shares before they became a household name…or priceless Van Goghs, back when the painter, himself, couldn’t even sell one of them…or choice properties in prime locations before they boomed.

And Mary’s mind was on property too. She wanted to buy a beach house where she could retire. She considered Panama and Costa Rica 10 years ago, checking out listings and even traveling through both countries to get a feel for them.

But she decided that her retirement was too far in the future. She left her savings in the bank. Ten years back, her savings would have bought her a beach house in Panama or Costa Rica. But her savings haven’t grown very much, while the cost of beach property in Costa Rica and Panama had soared. Today, she’s priced out of both markets.

But she hasn’t given up her dream of a beach home. She doesn’t want to compromise by buying a home a short drive from the beach. She doesn’t want a tiny studio. She wants a spacious house with ocean views in a beachfront community. She’s worried that she won’t find it anywhere on her current budget.

But she can — and she won’t need a time machine. She simply needs to look to Ecuador…

You see, while coastal property prices in both Costa Rica and Panama rose sharply in the last ten years, Ecuador’s coast was a sleeping giant.

A surge of foreign investors triggered the real estate booms in Costa Rica and Panama. Those foreign investors didn’t make it to Ecuador. So property prices on Ecuador’s coast are pegged to the price that local buyers can afford to pay for a home.

So what we’ve seen on Ecuador’s coast is a slow but steady appreciation in prices rather than a rapid spike upwards. Most local buyers pay cash for a second home, too, so the market isn’t frothy and filled with speculators. Ecuadoreans buy beach homes for personal use. Most don’t buy property to flip or as a buy-to-let investment.

And that means you can still buy a home on Ecuador’s coast for less than half of what you’d pay for a similar property in Costa Rica or Panama. And one location offers the most bang for your buck — in terms of value and appreciation potential.

Ecuador boasts hundreds of miles of Pacific coastline. But we’ve found the sweet spot…a section of coast that we think holds the most promise.

Coast of Ecuador

I first scouted Ecuador’s coast back in 2008. And when I say scouted…I spent a month on the ground. I explored in off-road vehicles and tiny fishing boats. I burned up boot leather to get the real skinny on off-the-beaten-track locations. I spent time in towns where a foreigner was a novelty. I ate in roadside stops filled with local truckers. I poked around every beach, cove and bay I came across.

And at the end of that month I knew I’d found the sweet spot. (You can see it on this map here; it’s between Canoa and Pedernales.) The problem was; it was really tough to get to.

Since that first trip, I’ve lost track of the number of scouting trips I’ve done on Ecuador’s coast. And each time I’ve gone back, it’s been easier to get to the sweet spot.

Finally, in 2011, this piece of coast opened up. It hit a milestone. And it’s now poised for major growth. Already, we’re seeing more local tourists and buyers, mainly from Quito…and growing interest from foreign buyers looking for a second or retirement home.

In January 2011, a new coastal highway opened. It winds its way from Quito, Ecuador’s capital city, through the mighty Andes Mountains. Driving this route, you can’t help but appreciate the mammoth engineering task involved in carving this road through the mountains.

The new road is smooth and easy to drive. It’s much quicker too, cutting the journey time in half. It now takes 3.5 hours to drive from Quito to this section of coast. That makes this piece of coast the closest beach area to Quito.

That’s an important point. Previously, the closest beach area was a town called Atacames. But Atacames is a 6-7 hour drive from Quito…compared to 3.5 hours to get to Pedernales.

I love this piece of coast. It’s got so much to offer. Travel further south on Ecuador’s coast, and the climate gets very dry, with scrubby vegetation. Travel further north, and it becomes sticky and humid. This place is somewhere in between. It’s not bone-dry or shirt-soaking damp. There’s enough rain to keep the hills and forests green and fresh for most of the year.

It’s unspoiled here too: No high rises, no mega-malls, no sprawl of subdivisions. Lack of access has preserved the natural beauty of this coast. Empty beaches run for miles. Howler monkeys call to each other in the forests covering the hills behind the coast. In the bright blue Pacific, giant whales breed and play with their young. Bright butterflies dance in the ocean breeze. Fishermen land their day’s catch and sell it fresh from the boat for $1 a pound.

This coast has everything that Mary wants. She wants natural beaches, forests and lots of wildlife. She wants year-round warm weather. She’d like a low cost of living and lots of locally-grown produce and fresh seafood. She’s not looking for brand-name coffee houses, fast food chains, or fashion malls. You won’t find any of those on this coast. What you will find are raw beauty and low property prices.

One of the nicest residential communities on this section of coast is Jama Campay.

Jama Campay is a small beachfront community of lots, houses and condos. The development sits on low cliffs overlooking the ocean, with forest-covered hills providing a lush backdrop.

Jama Campay on Ecuador's Coast

A 20-minute ride from Jama Campay takes you to a town where you can buy groceries and gas, go to the bank, or dine in one of the local restaurants. The restaurants aren’t fancy, but neither are their prices. You can get lunch for as little as $2.

Just south of Jama Campay, there’s a fun town called Canoa. It’s a little Margaritaville with lots of rustic bars, cafes, restaurants and clubs. Its wide beach and good waves attract a young international set of surfers and backpackers.

But Jama Campay contrasts with the party atmosphere in Canoa. It’s tranquil. Most of the buyers are well-heeled locals from Quito. They come here to relax with family and friends. Few rent their homes when they’re not here. They prefer to keep their homes for private use. One owner who is renting is earning $250-$300 a night for their house. There’s a shortage of accommodation on this coast, and that shortage is growing as more tourists visit.

The homes in Jama Campay tick all the right boxes for Mary. They’re a spacious 1800 square feet with an open-plan layout…they offer wide ocean views…and they’re priced at $134,600. You’ll enjoy the wide outside terraces, where you can dine to the sound of the waves…

Living Room in Jama Campay

And (to tick another box on Mary’s wish list) it’s only a few minutes’ walk from your home to the beach…

I’m going to tell you what I told Mary. Go and take a look at this coast.

Margaret Summerfield
for The Daily Reckoning