This month we look south to Honduras where Canadians are having a marked effect on that country's development. This entry has been kindly brought to us by Kimberley Player, an economic and real estate consultant currently calling Seattle home. Kimberley's website is:
http://kimberleyplayer.com
http://kimberleyplayer.com
Canadians faced with mixed
signals and varied investment prospects within domestic real estate markets
have increasingly been looking outside their borders for international
opportunities. In some cases, this demand is having a significant impact on
landscapes in other countries. It might be surprising to some that a nation
known as one of the world’s most peaceful has had considerable influence on the
development of a country notorious for its drug trade and homicide rate,
Honduras.
Background
Canadian interest in Honduras
predates recent headlines around corruption, enforcement issues and violence,
which often belie the beautiful places and people found outside of a few big
city hot spots. Roatan, one of the Islas de la Bahia off of Honduras’ north
coast, was the initial draw. This idyllic island, best known for its
world-class scuba diving, offered something that many more-established
Caribbean destinations could not –inexpensive real estate and a lack of foreign
ownership and development restrictions. It’s true that being somewhat off the
beaten track came with its challenges, such as a less-than-optimal
infrastructure and a bit of a “wild west” mentality, but in some ways, these
quirks also served as attractions for more adventurous investors seeking authenticity
and a unique environment, not to mention substantial appreciation prospects.
Over the last decade, Canadian
tourism and real estate investment on Roatan has skyrocketed, driven in part by
growth in cruise ship visits and flights. Sunwing, CanJet, and Air Transat all
offer direct flights from Toronto and Montreal (in some cases, seasonally).
Developers and vacation home buyers have jumped at the opportunity to invest in
what has been advertised as an “undiscovered, relaxed, and inexpensive
alternative to other Caribbean islands”. Canadian-operated resorts,
restaurants, bars, and dive shops have also proliferated. This growth has
spread to the Honduran mainland, most notably the north coast cities of La
Ceiba, Trujillo and Tela along the “Emerald Coastline”. Additional flights to
La Ceiba are fueling occupancy at Canadian-owned resorts and delivering a
prospective buyer pool to the doors of real estate developers.
Looking forward,
one of the most controversial examples of the potential for Canada to shape
development in Honduras is its prospective role in the proposed Honduran
“Charter City”.[1]
In theory, Canada would provide a governance model and expertise in a variety
of sectors within a specially designated zone – essentially a newly-created
city – in Honduras. Whether this improbable experiment will materialize has yet
to be determined; however, the fact that Canada has been held up as an ideal
partner for the venture speaks to an already strong connection and degree of
influence.
Why Honduras?
Why is it that
Canadians are driving a large proportion of Honduras’ tourism and development?
The country is certainly not devoid of Australians, Americans, Europeans and
visitors from other countries. However, one doesn’t often see American flags
flying off a floating bar or dive boat, or rousing games of cricket being
played on the beach. Instead, “Hockey Night in Canada” is on TV in bars like
Sundowners (Roatan) and Expatriates (La Ceiba). West End, Roatan has even
hosted several road (or rather sand) hockey tournaments.
·
Perhaps most importantly, the Canadian economy
and housing markets have remained relatively robust during the recent US
recession. While the pool of potential US homeowners has dwindled in the face
of the financial pain associated with overleveraged, speculative second (and
third and fourth) home investments, a larger percentage of Canadians remain in
the vacation home market.
·
Although it’s true that a relatively low price
point has driven interest from all nationalities, marketing of Honduran
property in Canada has been particularly aggressive. RE/MAX Bay Islands claims
that 50 additional RE/MAX agents are promoting Roatan’s Canadian-funded Oceano
project across the Great White North. Canadian company Life Vision Properties
holds events across the country (often during the cold winter months) and lures
prospects with dreams of sun, sand and sea, as well as dramatic forecasted price
gains for their Trujillo developments. Incredibly, over two-thirds of Life Vision’s
buyers reportedly invest sight unseen, without ever setting foot in Honduras.
·
The seemingly contradictory draws of familiarity
and adventure also play roles in drawing Canadians. On one hand, there’s a
level of comfort associated with having Canadian company in a foreign land; on
the other, Canadians seem more willing to travel to places that have an element
of risk, perhaps because they are subject to fewer over-hyped State
Department-type warnings than their American neighbours.
For Better or Worse?
As a Canadian who has spent a
fair amount of time in Honduras, I’ve developed my own strong connection with
this wonderful but often misunderstood nation. I also have mixed feelings about
the larger influence of my home country in a foreign land. On one hand, the
economic benefits of tourism and development are clear. Expanded employment
opportunities for Hondurans have translated into improved education and
healthcare, as well as other positive community impacts. There’s also no
question that the provision of Canadian aid in the form of regulatory,
infrastructure and public service expertise could help Honduras deal with their
very real issues of weak governance, corruption, and poverty.
The caveat is that we need to
make sure to export the best of Canada and not treat Honduras as an inexpensive
vacation playground. Cultures, communities, landscapes, shorelines and reefs
must be respected. The downside to limited ownership and development
restrictions can be land rights conflicts, poor planning, and environmental
damage. Life Vision Properties’ Trujillo projects are the subject of indigenous
Garifuna land claims; land title issues and questionable environmental
practices are also too-prevalent in projects where Canadians have been prime
demand drivers. Construction and
expansion of cruise ship terminals in Roatan have not only damaged a reef that
is the island’s main attraction, but violated the environmental provisions of
international free trade agreements. Perhaps even more concerning are the
effects of a growing social inequity problem – in the form of crime - which
tourism can exacerbate.
A sound economic business case
can be made for planning that facilitates smart, sustainable land use and
development, something Canadians do relatively well at home. This expertise is
sorely needed in developing countries like Honduras. Tourists and second home
owners don’t have to be real estate experts; however, awareness and support of
projects that encourage community cohesion; environmental standards and green
building; local business retention and jobs; and equitable rights and services
can ensure that their favourite vacation spots continue to be vibrant, healthy,
beautiful places to visit and live.
Kimberley is an economic and real estate consultant with experience in
strategic planning for developers, landowners, investors, public sector
agencies, NGOs and corporations. She has an extensive market research
background and expertise in development and feasibility analysis; demand
forecasting; and market assessments. Her previous work experience includes
assignments ranging from the benchmarking and optimization of real estate
portfolios, to community and resort planning, and public-private strategies for
economic growth. A member of various professional organizations including the
Urban Land Institute, Kimberley has a Finance degree from the University of
British Columbia and a Certificate in Sustainable Tourism Destination
Management from The George Washington University.
Kimberley’s passion for travel has led to a strong interest in
tourism and related development. Her goal is to ensure sustainable growth that
celebrates local character while promoting holistic community planning.
[1]
Fuller and Romer, Success and the City,
How charter cities could transform the developing world (Macdonald-Laurier
Institute, April 2012)
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