Monday, November 02, 2009
Gary and Merri’s hotel in the heart of Cotacachi. Profits are donated to their charitable foundation
Earlier this year, I spent three days in Cotacachi, Ecuador. I stayed with Gary and Merri Scott at their hotel in the heart of the village. I had the pleasure of the company of International Living’s Dan Prescher and Suzan Haskins. We were there to check out our new penthouse suites in this historic village. We weren’t disappointed.
Every morning after breakfast, we took the five-minute stroll through the village to our condo building. Workers were busy putting the finishing touches to our units. Gardeners were creating a botanical masterpiece around the condo building. Surrounded by towering volcanoes, my generous terrace has views to the town square. The build quality is top-notch.
We paid $46,000 for our penthouse suites. The real estate values in Ecuador are that good. The cost of living is the lowest I have seen anywhere. We met expats who lived well there on $600 per month. Plus, we always felt safe.
Gary and Merri have been investing and spending much of their time in Cotacachi for many years. They contribute to the local community through their charitable foundation. In his guest essay (below) Gary shares some of his insights on this part of Ecuador and the demographic drivers that mean that Cotacachi should be on your radar.
Ecuador real estate potential is enhanced by increased inflation and this is why Ecuador real estate investing makes sense now…especially in Cotacachi and areas nearby.
When the US dollar falls, this increases the value of real estate denominated in US dollars. This also forces middle class Americans to move to less expensive areas.
Ecuador real estate benefits in two ways. Real estate there (the US dollar is Ecuador’s currency) becomes less expensive in the short term as the dollar falls. Plus, this becomes a more ideal place for Americans to move.
Sixty million baby boomers will begin to retire in just a few years. Many of their pensions and social security will be severely squeezed by inflation, leaving these people with one of five options:
#1: Keep working?#2: Move to less expensive areas within the US?#3: Export their retirement?#4: Live in near poverty?#5: Die
Imagine this. Sixty million boomers will retire over the next 20 years. We boomers are the most spoiled group of consumers as a demographic class that has ever existed on earth.
We were promised the world.
We were given the world. Now the magic is about to disappear.
Assume that 10% of these will decide to move to less expensive countries. That’s six million people.
Ecuador, three hours and forty-five minutes from the US, will benefit as a nation with a full infrastructure and really low cost of living.
If Ecuador gets just 10% of these six million Americans this is more than a 5% increase in Ecuador’s population of eleven million.
According to the CIA World Fact Book, Ecuador has a Gross Domestic Income of $4,300 per annum per person. That makes a total GDP of $47,300,000,000.
Imagine what happens if the 600,000 gringos have an average income of $18,000 a year per person. That adds up to $10,800,000,000. This is an annual income that almost equals 20% of the entire national GDP!
A recent article in Barron’s magazine suggests that even more than ten percent of Americans may move abroad.
The author of this article conducted a survey with over 115,000 respondents and found that 1.6 million households have already made the decision to relocate. 1.8 million households are seriously considering relocating and 7.7 million households are somewhat seriously considering relocating. That survey suggests that in total, an astounding 10% of American households are considering relocating abroad and another 10% are considering owning a home to either vacation or live part time abroad. More surprisingly, the largest group making these plans were not boomers but are aged 25 to 34.
Merri and I researched and travelled all of Ecuador for seven years before we began to buy…and the majority of our purchases have been in the village of Cotacachi, including a Cotacachi hotel.
There are many reasons why we like this village. One big advantage is the new Quito airport. This new airport creates a special opportunity because it will be forty-five minutes further from Quito—and forty-five minutes closer to Cotacachi.
There is a historical feature that makes Cotacachi special as well. There was a unique confederation of tribes in this northern part of the Andes that were highly independent with a well-developed astronomical knowledge.
They did not take kindly to the “new??? ideas brought by invaders from the south (the Incas) and they seriously resisted assimilation.
They offered the greatest resistance in Incan history, and because of the Spanish conquests, the influence of the Incas is not as strong in Cotacachi. Despite this, the people in this area are known to be different, more energetic, successful on a global scale and friendlier than in southern parts of Ecuador. They drive brand-new cars, and new suburban homes, yet they maintain their local dress, their language and their culture.
The indigenous mayor of Cotacachi, economist Auki Tituana Males, ran the city for a decade with special democratic programs that helped the village evolve into a clean, safe haven.
Cotacachi re-invented itself and became one of the most successful rural metropolitan governments, not just in Ecuador but the entire Andean region.
The area boasts a focus on being multi-ethnic and hosts a population that is 35% mestizo, 5% black, and 60% indigenous. The canton’s motto is that of the indigenous community. For a worthy, productive and solid Cotacachi, the main duty and responsibility is “AMA QUILLA, AMA LLULLA, AMA SHUA” “Don’t be lazy, don’t lie and don’t steal.???
How refreshing! Don’t we wish all nations lived by this code?
In November 2000, the United Nations granted Cotacachi the International Prize for “Best Practices???. In November 2001, the Inter-American Forum for the Rights of Childhood and Youth granted Cotacachi the national Prize “The Dreamer Goblin”, for work with the Cotacachean youth. In March 2002, UNESCO granted Cotacachi the International Prize for “Cities for Peace”, for its democratic work and its intercultural dialogue in search of peace.
Cotacachi is the kind of place where the people are energetic, hard working and sweet!
This is an ideal haven of safety to enjoy while parts of the world fall apart. Children play and hike the streets, laughing without a care. Young girls walk alone on their way to and from school.
Mornings and evenings, Merri and I stroll down cobblestone walks, greeting, smiling and feeling welcomed and at home.
Cotacachi is known as Ecuador’s musical capital and is famous for making high quality, inexpensive leather goods.
Cotacachi is near Otavalo, the largest Native American market in perhaps the world.
The area surrounding Cotacachi has innumerable lakes for fishing and adventure sports. In fact, this area is called the Province of the Lakes. The Lakes of Piñan, at an altitude of 12,000 feet, are ideal for fishing as are the Mojanda Lakes: Caricocha, Huamicocha, and Yanacocha.
For rowing and sailing, there is San Pablo Lake, surrounded by indigenous villages, rushes, green fields, and haciendas, and Lake Yahuarcocha is well-known for the racetrack that surrounds it and the Formula Three races held there each year.
The pleasantly dry climate with an average temperature of 65 degrees Fahrenheit makes outdoor life possible year-round.
The Cotacachi-Cayapas Ecological Reserve is a 750,000 acre protected area with a tremendous range of biological zones. One of the reserve’s main features, about twenty minutes from Cotacachi, is the large crater lake, Cuicocha. Motorboat trips around the two small islands in the middle of this breathtaking lake give the visitor the opportunity to get a glimpse of the local flora and fauna.
Intag Cloud Forest is just down the road…and there is bird watching, hiking, cycling, rafting, horseback riding , nature tours and so much more. This reserve has a rich biodiversity, alive with rushing white-water streams and rivers, and small towns and villages.
All of these features combined with low prices makes the Cotacachi area good for investing.
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