Honduras Real Estate: A Look At The Banana Republic

That Honduras is beautiful is not up for debate. Nature has endowed the country with breathtaking geography. It is not at all surprising that its tourism sector has …

That Honduras is beautiful is not up for debate. Nature has endowed the country with breathtaking geography. It is not at all surprising that its tourism sector has been growing rapidly over the past several years. “The Bay Islands are a diver’s paradise. Tela and La Ceiba have great beaches and are surrounded by national parks such as Pico Bonito and Punta Sal among others,” said Fernando E. Lazarus, a real estate agent from Honduras Shores Plantation. Retirees find several aspects of the country attractive. “The cost of living, including property taxes, is very low while, at the same time, offering great activities,” said Lazarus. “[Visitors and residents] have access to great outdoor activities such as kayaking, white river rafting, canopy zip lines through the rain forest, trekking and cycling.”

That said, currently Honduras is facing political instability that saw the ousting of the democratically elected president, Manuel Zelaya, by a military coup. As uncertainty envelopes the country, onlookers are warning tourists and investors to exercise caution. While the political crisis is a new problem, Honduras has also been battling crime and gang problems in pockets of the country for sometime now. Though, it has to be said that an overwhelming majority of Hondurans are laid back and generous people. The same Nature that has given Honduras so much seems to also every now and then enjoy wreaking havoc on the country by way of hurricanes. Most notable are, Fifi in 1974 and Mitch in 1998, both of which caused widespread damage. But for those who are not deterred by a bit of political strife, crime and occasional natural disasters, Honduras maybe worth a double take.

About Honduras

Long before the silver seeking Spanish came, the western part of Honduras was home to Copán, a major Mayan city close to the present day Guatemalan border. The Mayan civilization had all but disappeared by the thirteenth century and was completely in ruins by the time Christopher Columbus landed at the Bay Islands, paving the way to 300 years of Spanish colonization of the country as part of the Kingdom of Guatemala. After gaining independence from Spain in 1821, Honduras decided to join the Mexican empire of Iturbide. When Iturbide fell in 1823, Honduras and its neighbors formed the Federal Republic of Central America, another union that fell apart a mere 13 years later, giving way to the Central America we now know.

Honduras covers roughly an area of 43,278 square miles and shares borders with Guatemala, El Salvador, and Nicaragua. It also enjoys a Pacific coast in the south at the Gulf of Fonseca and a Caribbean coast in the north at the Gulf of Honduras. The country is home to some 7.5 million people and is divided into 18 departments (similar to states). The capital city Tegucigalpa is located in Francisco Morazán.

Historically, Honduras hasn’t been a picture of political stability. In 1963 a democratically elected government was overthrown by a military coup. Various military governments came and went until 1981, when Suazo Córdova was elected into office, ending decades of military rule. Democracy didn’t necessarily bring the much needed changes. Government institutions remain riddled with corruption and bureaucracy. The recently ousted President, Manuel Zelaya came to power after winning the 2005 presidential election. Mr. Zelaya set off the recent political crisis by attempting to extend presidential terms through a referendum. The referendum was declared illegal by the country’s Supreme Court and he was arrested by the military on June 28, 2009. Roberto Michelletti, a member of Partido Liberal de Hondura (PLH) – to which Mr. Zelaya also belonged, was declared president.

Honduras is one of the poorest countries in the Americas, according to Global Edge, a web portal created by the International Business Center at Michigan State University. The country’s economy is still largely dependent on agriculture but has branched out into processing textiles and other goods for export to the U.S. Remittances make up an astonishing 25 percent of the country’s GDP, amounting to $2.56 billion in 2007. There are over 1 million Honduran immigrants in the U.S. alone.

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With unemployment hovering around 27 percent, some 50 percent of the population falls below the poverty line. In 2005, Honduras made the World Bank and International Monetary Fund’s list of Heavily Indebted Poor Countries making it eligible for debt relief. Since then the country has received some $4 billion in debt relief from its donors. That same year Honduras also signed a free trade agreement with the United States.

Real Estate in Honduras

Attracted by a low cost of living and spectacular natural environment, international buyers, mostly from North America are coming to Honduras to check out what is available in terms of property. “The most popular area is the Caribbean island of Roatan, followed by the islands of Utila and Guanaja,” said Lazarus. However, other areas of interest are cropping up. “Up and coming areas include the Caribbean mainland cities of Tela and La Ceiba. Those craving for more temperate climate might be interested in cities such as Siguatepeque, Valle de Angeles and Santa Lucia in the central mountain areas,” he added.

The most popular area, Roatan used to be known as a sleepy old Caribbean island according to Matt Halliday, owner of roatanrealestate.com. Halliday describes Roatan as “a mountainous island with beautiful beaches with fantastic diving and friendly people.” In addition to the already established direct flights from Atlanta and Huston, there are also seasonal ones from Miami, New York, and Toronto. These direct flights translate to increased tourism and therefore business opportunities for those looking to “fill the need for additional goods and services,” according to Halliday. The island anticipates the opening of its first golf course, designed by Pete Dye, at the end of 2009. Another big investment came from Carnival Cruise Lines in the form of a new dock and port designed to handle larger vessels.

The cost of homes in Roatan of course varies according to size and location. Some examples include a .75 acres of land with 150 feet of beach front for about $250,000, a one bedroom beach front condo in a resort atmosphere for about $219,000, and a luxurious, 4000 square foot, 3 bedroom home with 100 feet of soft white sand beach front, and only 30 minutes from the airport for $775,000. Annual property taxes are considered low on Roatan, running about $500 dollars on a 4000 square foot home. In the mean time, “A 9,540 square feet standard lot with access to a beach club in the Caribbean Coast and Los Micos Lagoon at Honduras Shores Plantation in Tela currently costs US$59,898,” said Lazarus.

Buying Real Estate in Honduras

In the 1990’s the government opened up the property market in coastal areas to international buyers, according to Honduras Shores Plantation. “Up to 3/4 of an acre can be bought [by] a foreign individual. A good lawyer can help anyone who wishes to buy a larger property by forming a local company,” said Lazarus.

Forming a Honduran corporation is a simple process that can be handled by a competent lawyer but it will cost about $2,000. During the purchasing process, it is important to follow all the rules and to ensure a proper understanding of all documents related to the transaction. It is best to seek the help of a well-known real estate agent when buying property in Honduras. “A good lawyer and a thorough ownership history investigation is recommended to avoid bad experiences while buying property,” said Lazarus. Honduran banks don’t finance property purchase for citizens of other countries. Title insurance is available.

Looking Ahead

Roatan Bay Island will most probably continue to be popular with buyers, however, other areas of the country will also pop up to compete for attention. “The mainland Caribbean Coast, all the way from Tela Bay to Trujillo, [will likely] become an increasingly interesting option with plenty of opportunities to seize good deals,” according to Lazarus. The Tela Bay area may be of particular focus as the Honduran government in conjunction with the private sector is heavily investing in developing the area.

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