Friday, October 15, 2010
Roatan is a picture perfect Caribbean island
Dear Reader,
Roatan is the largest of Honduras' Bay Islands. The island is 37 miles long and 5 miles wide at its widest point. This is a picture perfect Caribbean island. White-sand beaches, turquoise water...with waves breaking off shore as surf meets reef.
Proximity to the world's second-largest reef means Roatan is a popular spot with divers. Unlike many Caribbean islands that are flat, Roatan's spine rises steeply to give ocean views and fresh breezes from much of the interior. The (good) main road from east to west gives a scenic drive of green sloping hills and breathtaking color contrasts as you look to the offshore reef.
Roatan experienced major real estate and tourism development in the 1990s and first half of the last decade. Cruise ships, resort developers, direct flights from the U.S., and retirees started to come in droves.
With good reason. I can hardly imagine a nicer place to be.
This was my first trip to Roatan in four years. This is the first time you have heard about Roatan in these dispatches. On my last trip, I found an island with a real estate market screaming "BUBBLE!". New projects were poorly thought out, overpriced and underfinanced. Developers and real estate agents arrogantly professed that they could sell whatever they put out on the market. Everyone thought they could make a buck developing or selling real estate.
No one could tell me where all the end users would come from. Who would spend time in, or rent these new homes? No one seemed to care. As the breeze rustled the trees, it whispered of a real estate market that was a one-way bet. Folks were told not to worry about buying near a garbage dump. It would be moved...some day...and time was running out to get in on the party.
Back then, there were more than 30 real estate projects at varying stages of planning and early development. Most of these were being attempted by folks with no development experience. They didn't have development experience in their home country...let alone an island in the Caribbean...governed by a Central American country.
As much as I always welcome an excuse to visit Roatan, it was clearly time for me to take a breather from this market. Time to watch from the sidelines and see how it played out. Time to wait for the next cycle of opportunity here. Whenever or whatever that would be.
While Europeans own little hotels, dive schools and restaurants here, most of the real estate buyers were from the U.S. and, to a lesser extent, Canada. Sales began drying up in 2007 as the U.S. real estate market unraveled.
Potential buyers felt poorer and could no longer rely on a line of credit from home. Every market with the level of exposure to U.S. buyers that Roatan had, suffered similar problems. At a development level, Roatan was particularly exposed as there were so many projects in early stages of development.
Since my last trip, we've seen the U.S. property market collapse, the global financial crisis, and political uncertainties in Honduras and negative international press reports.
Real estate buyers disappeared.
This is just the type of situation I look for. A stunning, accessible, English-speaking, Caribbean island with good infrastructure...and, most important of all, the presence of distressed sellers.
My approach by air to the island reminded me of what I have been missing.
Up and down the coastline, the contrasts are breathtaking. In parts, symmetrical rings of sea look so dark it's almost black. In other parts, turquoise water hugs white-sand beaches. The hilly spine that runs along the island is a rich green of mature trees. They sway in the breeze, sometimes giving a glance of luxury homes with killer views. As we land, the tiny airport terminal is dwarfed by a massive gleaming cruise ship.
My base for the first portion of my trip is the dive resort of Barefoot Cay. It was renamed from Burial Cay. Seems like a sensible thing to do if you want to attract paying guests.
In island terms, it's not close to the airport. Still, the drive took less than 15 minutes. I'm in time to enjoy the sunset as the clear waters of the Caribbean lap gently against the wooden dock.
Before my head hits the pillow on my first night, I have already come to a conclusion.
Once the right deals can be done, Roatan will be on my radar. Wherever in the world you look, distressed sellers and limited buyers equals deals. There are deals to be found here.
And I found deals in the following days. Stay tuned to find out more about those deals in the coming weeks.
Ronan McMahon
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