Safe as Houses

WHERE THERE’S INTEREST

Trends for Ecuador’s capital city Quito, and its largest, Guayaquil, differ. While in Quito a project will normally have a maximum of 150 units, in Guayaquil this can rise to 700 as the state incentivizes horizontal construction in the city. According to Quito’s construction chamber, the capital’s real estate sector grew 10% in 2011 on 2010. Demand is higher for finished housing units, be it for houses, apartments, or suites ready to inhabit, although high demand also exists for land, and property under development. Prices in the capital range between $500 and $1,300 per square meter. North central and south Quito are the fastest growing areas. The north central region has the greatest appeal, and hence commands an average cost per square meter built of $1,300. It includes the areas around La Carolina, El Batan, and La Paz. In terms of housing units, Guayaquil represents around 40% of the national total. The price per square meter as of 2011, according to the Guayaquil Chamber of Construction, varied from an average of $552 for high-end ($451 in 2007), to $223 for popular housing, and $28 for the low-end segment.

Meanwhile, cities like Cuenca are increasingly popular for expatriates, whose numbers have almost quadrupled over the past three years. The overall rate of appreciation in Cuenca has held constant for the past five years at 8% to 12% per year, depending on the type of property and location. Cuenca is a city of 330,000 and, like Quito, is a UNESCO world heritage site. International Living has named Ecuador the world’s premier retirement country and Cuenca the number one retirement city. Little wonder that it is home to around 5,000 US citizens. The town is undergoing rapid growth, with more than 30 large condominium projects under construction in early 2013. Costs for new two-bedroom apartments average between $75,000 and $90,000. A well located new three-bedroom, two-bathroom home ranges from $95,000 to $120,000. Purchase prices for new condos, per meter, in early 2013, are running from $975 to $1,250. Construction costs for new houses run from $450 to $575 per square meter. Foreigners and native Ecuadoreans enjoy equal status with regards to real estate purchases. In fact, property ownership can expedite a foreign national’s residency application. As there are no title or escrow companies, buyers and sellers are required to settle their own debts, such as insurance and real estate commissions, outside of the sales process.

CROSSING THE THRESHOLD

President Correa’s determination to expand home ownership has shaped government policy, including real estate incentives, that is conducive to credit growth, breathing life into the property market. The Bank of the Ecuadorean Social Security Institute (BIESS) is key in providing credit lines for home ownership, especially geared at young citizens. It offers mortgages of up to 25 years at interest rates below 9%, whereas private banking offers average mortgages of 15 years at 9.5% interest. Low interest rates, broader deadlines, and easier access underpin BIESS’s command of the market. According to BCE data, as of June 2013, BIESS had registered a participation in the financial system of 63.1% in terms of housing credits, up from 57.5% in 2012 and 52.2% in 2011. Over 65,000 families have benefitted from mortgage credit granted by BIESS in recent years, amounting to an investment of $1.5 billion. According to data from the Private Bank Association, in June 2011, the number of housing credits from the private banking sector was $1.9 billion, and this declined to $656 million in May 2012. “Today, around 80% of our clients’ mortgages are granted by BIESS, and for low income housing, the percentage is even bigger,” César Baquerizo, the President of real estate developer Conbaquerizo, told TBY. In 2012, credit allocation grew more than 25%.

HOUSING THE MASSES

According to The Ministry or Urban and Housing Development (MIDUVI), despite growth, Ecuador still has a deficit of 1.2 million housing units. In terms of social housing, the Ecuadorean Housing Bank (BEV) financed the construction of 129 projects nationally during the 2010-2011 period. Government involvement in the mass housing market —especially that targeting low- and middle-income earners—has accelerated housing construction nationwide. Close to 70% of the population is now urban, sparking a need for large urbanization programs, and the state has housed 30,000 families over the past five years. Since President Correa’s first term in 2007, the leading segment for construction sales growth has been homes priced at less than $35,000. What’s more, around 100,000 middle-class, first-time homebuyers have received a $5,000 one-time housing subsidy grant, enabling them to make a downpayment.

THE MILE-HIGH CLUB

Prestige is a fundamental part of the architectural equation, and Ecuador has no desire to be left out when it comes to talked-about schemes. Ecuador is Spanish for “equator,” and now the country is planning to celebrate its equatorial status in what would be the world’s tallest spire, the Tower of the Sun. This $200 million investment would scale a height of 1.6 kilometers, and be located less than 10 kilometers from Quito as an equatorial signpost. The proposed scheme would have a 300 meter base diameter, four platforms, and a pressurized elevator rising 4,450 meters above sea level. Investors from the US and Qatar, as well as Europe, are currently in discussions over this record-breaker, with construction rumored to commence in 2014 and completion forecast for 2017.