Before a piece of land can thrive as a premier vacation destination and tourist hot spot, it needs a ‘plan for progress’. This plan involves creating a vision for new infrastructure and amenities that can transform any ordinary land space into a hub for economic activity. Peninsula Papagayo and Cancun are two examples of destinations that have benefitted from a successful plan for progress. See the following article from International Living for more on this.
Green tropical forest sweeps down to golden-sand beaches washed by the rich blue Pacific. It’s some of the most outstanding coast I’ve ever seen. This stretch of northwest Costa Rica—Peninsula Papagayo—is a chic, up-market destination where the jet-set goes to stay in world-famous resorts and multi-million-dollar houses.
It wasn’t always so. Forty years ago, this was a hard-to-reach farming region. But Peninsula Papagayo was in the path of progress. Costa Rica’s government had a vision: To make this little country a major force in resort and residential tourism. It planned a new international airport in Liberia and road infrastructure to make the coast accessible.
Further road improvements and more local flights saw tourist numbers rise steadily. Then something big happened…
The developers of Peninsula Papagayo clubbed together with two other residential developers in the area and put up a $3 million fund to persuade Delta to start a regular service from the U.S. to Liberia Airport in 2002. They figured that without direct flights, they wouldn’t get the number and caliber of guests to justify luxury resort hotels, luxury residences and luxury price tags.
Direct flights came. The rest is history. Today, it’s more Four Seasons than backpacker and with a price tag to match. A one-twelfth share of a three-bed villa in Peninsula Papagayo will set you back $225,000. Half-acre ocean-view lots can fetch $600,000.
The lesson is clear. Anything that improves the accessibility of a piece of real estate increases its value. Infrastructure like roads, bridges, airports, air and rail routes. And anything that improves amenities in an area will have the same affect, too.
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This is the path of progress. Get ahead of it and you stand to make a lot of money.
To profit from the path of progress you need:
Vision: You need to be able to detach yourself from what the area currently looks like and visualize what it could be with the delivery of new infrastructure and amenities. Picture what a swampy spit of land could look like if the plan to improve it comes off.
Credible research: To profit from the path of progress, you need to make sure the funds are in place to pay for the new infrastructure and that the country or region has the capacity to deliver it.
And you need to be able to stay the trade. By that I mean you need to be willing to sit on your investment for the medium term.
Infrastructure projects take time…particularly if you are looking at a less-developed country. Take a conservative time line for exit…double it…and if you’re not happy, walk away.
You’ve heard of Cancún, Mexico? Once it was a small, swampy piece of land in an isolated part of the Mexican Caribbean. Folks thought it was good for nothing. But that was before the path of progress turned Cancún into one of the world’s largest resorts.
Today Cancún Airport welcomes hundreds of international flights each week. Visitors and workers need somewhere to stay and eat. That demand has sent real estate values soaring.
Cancún became maxed out. But the development plan extended down the coast to Playa del Carmen. The government built new roads in that direction. Developers planned major projects. Today a modern highway brings you right to Playa. Back before the road was in, $10,000 bought you a building plot in the unpaved village center. Today, a 1,000-square-foot oceanfront condo in Playa del Carmen can set you back $600,000.
Mexico’s Caribbean coast had the basics going for it, including the intrinsic value of being a Caribbean coastline with a huge potential market on its doorstep in the U.S.—only two hours away.
The government’s tourism-development agency, FONATUR, had the capacity to make good on its promises to deliver infrastructure and accessibility. And it offered effective tax incentives to attract major international hotel groups. Bottom line: These guys had not just vision, but also the ability to actually make that vision a reality. In other words, their promises were credible for investors.
Today, I see three areas in particular around the world where the Path of Progress is marching in a clear direction. I detail them in the current issue of International Living magazine.
This article was republished with permission from International Living.