Guatemala Real Estate: Is Anybody There?

Every year tourists come to Guatemala to visit the country’s famed Mayan ruins. Many also seek out further adventures in Guatemala’s natural wonders. The country is trying and to a certain extent is succeeding at billing itself as an eco-tourism destination. The low impact travel segment of the tourism industry is rising. “In Guatemala you can find everything you wish – Caribbean and Pacific coasts, rivers, lakes, volcanoes, and forests,” said Maria Isabel Garcia from Inversiones de Guatemala, a real estate company located in the country’s capital, Guatemala City.

Still, Guatemala faces strong competition from other Latin American countries some of which – like Costa Rica – have already made a name for themselves. It lacks the fabled beaches of Mexico, the sophistication of Argentina, and the wealth of Uruguay or Chile. The hope is it will one day get there. After all, just a mere decade and half ago, it was mired in an ugly guerrilla war that killed over a 100,000 people and displaced over a million citizens. By some measures, the country has already come a long way.

About Guatemala

Guatemala was once the bedrock of Mayan activities in Central America. This is evidenced by the many ancient ruins that have been discovered throughout the country. Speculation as to why the Mayan civilization collapsed rages. Historians, archaeologists, and lay enthusiasts alike come to Guatemala – “the heart of the Maya”, as it refers to itself – to coax answers from the ruins left behind.

Present day Guatemala is bordered by Belize, the Caribbean, El Salvador, Honduras, Mexico, and the Pacific Ocean. Slightly smaller than Tennessee, the country is home to some 14 million people, an estimated half of which live in Guatemala City.

Guatemala was a Spanish colony, albeit not as important as silver and gold rich places like Mexico. The Spanish left their marks in quaint colonial towns such as Antigua, a UNESCO World Heritage Site. Although many Guatemalans speak at least one Amerindian language, Spanish is the country’s most widely spoken language and its lingua franca.

Guatemala’s GDP per capita is half of that of Argentina, Brazil or Chile, according to the CIA’s World Factbook. Some 50 percent of the population is employed in the agriculture sector which also accounts for two-fifths of the country’s exports. Foreign investment has increased over the last decade and half after the end of the 36 year guerrilla war. However, the country’s underdeveloped infrastructure and high crime rate are major handicaps.

Guatemala’s economic growth has been stable, expanding at the rate of about 4 percent over the last five years, according to the 2009 Index of Economic Freedom published by the Heritage Foundation and the Wall Street Journal. Despite widespread corruption problems, the government has succeeded in avoiding high public debts and practices solid fiscal and public finance management.

That Guatemala has a crime problem isn’t up for a debate. “Guatemala has one of the highest violent crime rates in Latin America,” according to the State Department website that issues country specific travel information. Figures from 2008 show that some 40 people a week were killed in the country’s capital city alone. That said, the state department is quick to point out that “a vast majority of murders” are committed against Guatemalans themselves.

Just how bad the crime rate is and whether or not it should deter travelers from visiting this otherwise interesting country is in question. Some disregard the issue as a problem limited to particular areas of the country. “It’s like many countries, there are red areas, dangerous places, but most [places] are very calm,” said Garcia. The underlying message seems to be, avoid those “red” areas, take sensible precautions, and you will be fine.

The Guatemalan tourist sector is rapidly expanding. Opportunities abound for those who are willing to take a chance, according to Invest in Guatemala, a governmental organization tasked to promote investment in the country. It has identified the colonial town of Antigua, Mundo Maya in Peten, Izabal’s Caribbean coast, Atitlan in Solola, the Pacific Coast, and Guatemala City to be areas with potentially good investment returns.

Real Estate in Guatemala

As seems to be the story the world over, the real estate sector has suffered due to the financial crisis. “It is slow,” said Garcia. “The banks don’t take risks anymore and clients who don’t need bank credit are too few.” The most popular places for foreign buyers are Atitlán Lake, Tikal – the biggest of the Mayan ruins, and the colonial city of Antigua. Buyers should expect to pay USD 1,000 to 1,500 per square meter in new developments but prices vary greatly depending on the location of interest.

Foreigners can pretty much buy and sell property at will in Guatemala but they cannot purchase land at international borders, rivers, or oceans, according to Global Property Guide. “The only requirement is they pay taxes and observe the laws of the country,” said Garcia. International buyers are advised to check property titles closely. “It’s recommended that [buyers] verify if the person selling the property is the real owner.” Using a licensed and reputable estate agent should eliminate many problems that can arise during international property transactions.

Looking Ahead

Garcia and others in the real estate sector hope buyers with resources will still consider investing in property. “Leaving money in the bank isn’t the safest option. Interest rates are really low. It is a hundred times better [to buy] and rent out property,” she said. This maybe true but nervous investors who have seen their savings vanish are probably not likely to pour whatever is left into Guatemala’s property sector. Not just yet.