Ecuador
Real Estate Archive
Ecuador Real Estate Opportunity written April
2000
Updated July, 23 2005
By
Gary Scott
Ecuador real estate offers vast
opportunity, but how can you know? New places are hard to imagine and often it
is hard to get started when you do not have a feel of the past and present.
To help you overcome this fact
and get a feel of Ecuador we have posted this special archive that lists many
of the hundreds of messages we have shared with our readers about Ecuador real
estate in the past years. We begin in 2000, a significant year because the country
dollarized and began using the US dollar as its currency.
The message below was one of
the first written in 2000.
Why will Ecuador always be a
great place to be and why is Ecuador real estate good to own? There are at least
two reasons Ecuador real estate is good, the first being that the country sits
on the equator which contains a special energy. Learn the second reason below.
The second main reason is because
Ecuador real estate receives direct sunlight 365 days a year and the topography
that ranges from sea level to over 22,000 feet. Going from the coastal plain into
the mountains of Ecuador the bio diversity is the same as going from the equator
to the Arctic Circle. Ecuador has it all and has many things that no other place
has.
For example did you know that
trees in Ecuador do not have seasonal rings?
There are other unduplicated
benefits in Ecuador, but before sharing them, may I digress.
"Ecuador to Merri and me
has it all. Beauty, convenience, low cost and opportunity." I wrote these
words over ten years ago when Merri and I first visited this unique equatorial
country to look at Ecuador real estate as an investment.
Ecuador Real Estate Pays Off
The country really paid off financially
for us over the last decade, but as is so often the case what we thought we were
looking for was only a smidgen of what we received. Ecuador has brought our lifestyles
ever so much more than just extra cash. We have gained much more than just Ecuador
real estate. We have gained incredible luxury, heart warming sweetness, breath
taking beauty, much better health and pleasant surprises at every turn. Yet having
lived, worked and played there now for over ten years we are just beginning to
realize how really special and what enormous joys and pleasures this tiny country
has. Ecuador real estate opportunity is just one small part.
Ecuador Real Estate is Diverse
Slightly smaller than the state
of Nevada, Ecuador has four highly distinct zones, the Amazon jungle basin, the
Andean central highlands, the Coastal Plain and the Galapagos. Not only do these
four regions offer highly different lifestyles and opportunities distinct from
each other, each also offers unique sights, sounds and thrills that you cannot
obtain anywhere else in the world. Yet it is all so compact!
Ecuador Real Estate is Easy to Reach
Nothing is much more than an
hour or two away from any other place. In Ecuador you encounter cultures, knowledge,
birds, plants, sights, scenes and sounds you will not find anywhere else in the
world.
Ecuador Real Estate is Sweet
Yet there is even more that is
hard to explain. A sweetness that lies just below the surface permeates all things
and makes them somehow enjoyable in ways that are difficult to describe. Merri
and I have taken over 1,000 investors to this country since we first began.
Again and again they say the
same. "I don't know what it is that I feel so good here, but I love it. I
have to come back again."
Perhaps it's the random, jumbled,
apparent lack of order in a society where things do work. The airport is organized
and gets better every time we arrive. The political system does move forward (Ecuador
is South America's oldest democracy), the legal system does work. Perhaps it is
the way things work differently there. Perhaps it is the incredibly low cost of
fresh fruit, clean air and pure water. Whatever it is, many of those who have
accompanied me have (like Merri and me), bought homes, moved there and bettered
their lives in a multitude of ways.
Ecuador Real Estate Nuances
Perhaps it is the slight differences
because like good ice cream, the nuances often say more than the obvious. Cracks
in a wall, its patina and peeling paint speak more loudly than color, architecture
and design. So I'll describe the current circumstances of the country below, but
written words are never enough. I'm writing the logical reasons why you might
love Ecuador here, but you need to visit. Ecuador is a place for the heart and
it will be your heart that rules in Ecuador, never your mind.
Ecuador Real Estate Crossroads
Ecuador is at a crossroads. It
stands in a position where it can really rise from its third world state or sink
into an even deeper time of turmoil. There are three driving forces at work, the
first being economics. The country has a batch of new projects going on that will
bring an infusion of cash. The biggest deal is the new oil pipeline now about
80% complete. This will increase the government's revenue by about 30%.
A new airport is being built
in Quito which creates an Ecuador real estate boom in several areas.
Ecuador Real Estate and the US Military
Plus there is increased US military
spending in Manta and construction as this coastal town is being turned into an
important port. These projects give the country hope. On the downside the country
is in an economic mess and has about $2.2 billion of debt, a huge amount for the
nation's small economy. How can they back all these dollars?
Ecuador Real Estate and Dollars
Dollars leads us to the second
driving force, which is the nation's dollarization. The idea of abandoning the
sucre and using the U.S. dollar as the nation's currency was that this will stop
inflation because it limits the politicians' ability to spend. This is a good
idea and the long-term stability will be good. The IMF loves this as do many of
the other bright boys in top western economic posts… all who have never
tried to run a country surrounded by other nations that do devalue their currencies.
Dollarization will be good if it can survive, but here is the problem.When the
sucre existed it created two economies, the local and the global economy. As inflation
rose in Ecuador the sucre devalued. Wages in sucre rose to match the devaluation
and the real cost of basics that were created in the local economy such as food,
clothing and shelter remained about the same. One year it cost a sucre for a loaf
of bread and a person earned a sucre an hour. So an hour's work bought a loaf
of bread. Then when the sucre dropped by 100%, wages rose to two dollars an hour
and so did the price of bread.This is a nasty little system that pushes most of
the poor in Ecuador further and further from the global economy. The poor became
less and less capable of buying TVs, cars, or anything imported from the U.S.
and abroad. But the system works in so far as people have enough for food clothing
and shelter.
With dollarization, inflation
becomes real. The cost of food rose.
The farmers loved this. They
got more and more for their bananas, corn, potatoes and such. But the poor worker
who lives in the city gets caught in the crunch. His wages don't rise and his
costs do!
Ecuador has one of the largest
disparities between rich and poor and a failed land reform in the 70s (I won't
go into details here) has swollen the number of city poor. So now the bulk of
the population face great economic difficulty due to dollarization.
Plus there is one more rub. Neighboring
Peru, Bolivia, Colombia, Venezuela and Argentina do not use the U.S. dollar and
their currencies have fallen. Thus Ecuador is becoming increasingly uncompetitive.
Huge debt and a currency pegged to the U.S. dollar are what pushed Argentina into
its current muddle. In other words, the cure may be so painful that the patient
cannot survive the treatment.
Enter the third driving force,
a new President backed for the first time by the huge indigenous population. President
Lucio Gutierrez, an army colonel, who was a key figure in the bloodless coup of
the last corrupt President. His role in this coup brought him great popularity
and his indigenous connections were enough to put him into office on a reform
campaign.
The man is probably sincere,
but like Jimmy Carter may be overwhelmed by events. He has no political experience
at all. He is inheriting an economic mess and in his first week managed to get
everyone mad at him by adding a luxury tax (which made the wealthy mad), raising
gas prices (which made the poor mad) and loping 20% off of all government salaries
over $1,000 monthly including his own (which made all the top civil servants mad).
Gary & Merri Scott at Haceinda
La Cieniga in Ecuador
My opinion is that the country
is at a crossroads. Prices are not as low as they were for sure, but the place
is still inexpensive. The streets are not as safe as they were, but especially
out of the city and away from the Colombian border, Ecuador is not a dangerous
place.
Ecuador Real Estate Forces
There are enormous historic,
economic, cultural obstacles to overcome. Three forces are about to clash.
The first are the few very rich
families, who have always been in economic and political control. Since there
is no middle class, these business families have never used capital markets and
have kept business ownership to themselves. Without capital markets they have
depended on low cost labor rather than capital equipment. If they stick to this
old paradigm, as real wages rise (especially in relation to the neighboring countries)
they will become increasingly uncompetitive.
The second force is the huge
number of very poor. They want change, better lives, etc., but do not understand
global economics. They want change without changing and/ or evolving to fit into
today's modern industrial world. They want the goodies of the west but do not
know what to do or how to integrate successfully into the global economy.
The third force is the new President.
He has promised to attack graft. But can he do this with success? He has 17 seats
out of the congressional 100. Unless he can form a consensus of change, he will
likely be caught between a very large rock and a very hard spot.
My humble opinion is that education
is the only real way to make the shifts required. The country must focus its newly
found incoming cash flow on education. The poor must be helped to become more
productive so they can rise. My guess is the funds will go instead to handouts
to quell uprisings and to more graft.
This is hardly an optimistic
opinion but regardless, there will be opportunity. If the country moves the right
way, they will enjoy increased stability, productivity and we can participate
in helping this wonderful nation join its place in the global economy.
Should the old system continue
there will be more crises. Dollarization will collapse and a new devalued currency
introduced. If this happens we'll have some more real estate tours where land
will become available at rock bottom prices (just as we are doing in Argentina
right now (see details of Argentina course).
The zero on the roulette wheel
will be law and order. If the majority who is poor make enough fuss, law and order
may decline. This is always the businessman's risk.
My feeling is that the unchangeable
good parts will remain. Sweet people, more sight and sounds than you can find
anywhere else, exquisite biodiversity of flora and fauna. There will be a rich,
ancient culture full of wisdom to mystify you and bring you back again and again.
The people have an inherent sweetness that has been ingrained for thousands of
years. I do not believe that this will suddenly go away. A portion of the indigenous
population (the Otavalans) are perhaps the most successful indigenous community
in the world. Their influence is a stabilizing factor.
Plus there is more flora, fauna,
some really great Indian markets, jungle lodges, incredible fishing, hiking, sightseeing
and such. The many readers who have moved to Ecuador tell me they still love living
in this place, as do Merri and I. Ecuador is a great place to visit, live in or
do business. Ecuador real estate is inexpensive and represents great value! There
are some real estate deals but one has to search and work at this (which is true
anywhere). I hope to see you sometime there!
You can continue with an archive
of messages about Ecuador sent to my readers from 2000 to 2005 in the next message.
We have continual Ecuador
real estate tours.
I hope to see you in Ecuador. Until then, good
investing!
Gary
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