Expat Community > Ecuador

HGQ2112
Joined 2009
Posts: 1640

Real Estate Report - Manta

12 years ago

I generally release extremely condensed excerpts from real estate country analysis reports on July 1, 2012, for public consumption. This year, business matters and various personal matters have kept me from being punctual. Utilizing the better late than never theory, I offer them as segmented summaries, with each city having its own thread. I wanted to present them in one Ecuador thread, but it would be huge. Frankly, many people won’t even read them and those that do will likely want to focus on one or two cities. I would say that this format will cause folks to have to “hunt and peck” for data, but I still deemed it the lesser of two evils.

This data is presented only for those who have an interest in their real estate purchase, also being an investment asset. For those just looking to buy a pretty house, no point in reading further. The perspectives shared are not for every buyer. Some have different motivations for their purchase, besides sound investing, and those perspectives should be equally respected.

We have a simple system for rating a locale:

Sell - We recommend selling your asset or portfolio as quickly as possible.
Hold - If you have bought already, hang onto the asset and wait for further market developments. If you have not bought already, then do not buy now, but perhaps begin to look around for future opportunities.
Buy - Means that it is a good time to acquire an initial or additional real estate asset in that sub-market, due to favorable long-term market trends.
Strong Buy - Means that an exceptional market opportunity exists and that the time is right for the immediate consideration of an initial or additional real estate asset acquisition in this sub-market. For those looking at portfolio diversity, spreading assets across “strong buy” markets is advised, prior to focusing on “buy” markets, if investment opportunities is your sole or primary reason for purchasing real estate.

We also employ two trending systems. The first is an upward mobility and downward mobility system intended to dictate if this property market is in an upswing or downswing from the last time we reported on it. Upswing markets will be denoted by an ? and downswing markets by a ?.

Also, we place certain markets “on watch”. This is neither a necessarily good or bad thing, but a caution that a pending review to upgrade or downgrade the market is imminent. We try our best to project whether that review is likely to be positive or negative, but some market dynamics are so complex that this projection is not always 100% accurate. it should be used for guidance and not as statements of certainty.

Without further delay...here is data for the market you selected to view:

Manta Hold ?/ On Watch
No region of Ecuador intrigues me more than Manta. Perhaps that is why I am allotting more space to this location than any other. Its complexity, its contradictions and the convergence of competing dynamics make the market fascinating. That is for everyone else to enjoy. For me, having to rate this locale is the most difficult challenge in this report. Alas, the conflictive forces, as a collective whole, win out over any one sub-section of market dynamics. The city remains rated a hold and remains “on watch” for a future rating change. The challenge is projecting whether that change is likely to be an upward or downward revision.

First, lets get this on the table immediately - Manta is tuna. Period. I do not care how some slice it, dice it and romanticize it. This industry sector put Manta on the map, remains its core industry and impacts the dynamics of future economic and real estate development for the region. Lets also be clear...it smells like tuna in Manta. Some places more than others...but we are talking a matter of degree regarding the pungency and a matter of differentiating the number of days during which your specific area is impacted, depending on which way the wind blows + proximity to the tuna plants. Frankly, in the areas I frequent, away from the “tuna zone”, I can barely detect the scent and it is of no bother to me. However, I do get tired of folks pretending like this reality does not exist. It does. It may bother some.

Much of the angst which surrounds the Manta market is precisely the desire to move away from being not only the “Tuna Capitol of Ecuador”, but amongst the “Tuna Capitols of the World”, quite literally. Manta has had to do this strange dance, sort of a limbo, with a slice of the twist, as it on the one hand tries to diverse away from just the tuna industry, while on the other hand not completely alienating this lifeblood source of revenue. At one point, Manta wanted to become the next Salinas...resort community to the world. But, like all too many things Manta...the idea started...stopped...and may be starting again...sort of. I will explain.

Manta seemed headed down the path of “resort community”, but then stopped half-way, seemingly happy to serve as a regional resort community, while “entertaining” USA base military personnel. Hence how you ended up with the “Bar Harbor” strip. A once bright future of tourism development seemed to ease away, into the lazy comfort of just servicing what was convenient. Then...in the quiet of the night...bam! In a flash, the military base was gone. Oddly, the USA did not seem to think it “fair” to have Ecuador establish an Ecuadorian military base in Miami, in exchange for the USA base in Manta. Said reference, attributable to a quip made by then, and now, President Correa.

Manta, again, went off in search of its identity, to complement, while not alienating the tuna industry. It seemed that the romance with “tourism and resortville” was only put on hold, but not ended, as Manta again began to explore the possibility of becoming a national/international resort community. However, precious time and momentum had been lost. Some establishments, which thrived while the base was present, quickly set like the fading Ecuadorian sun. The task at hand - compete with Salinas and now about another 6 upstart areas that all wanted to be the “next tourism hot spot” became more challenging. The dream of romance still wafts through the Manta air, along with the tuna, as the pro-tourism crowd persists.

However, in the midst of this development angst arose a new voice. That voice said, “Tourism is for sissies and places that can’t be anything else. Why not turn Manta into Ecuador’s premier coastal commercial center?” Why not indeed? Manta is blessed with, arguably, one of the most business-friendly municipal administrations in all of Ecuador. While in most municipalities, the emergence of a new business entity is met with the sounding of alarms and a scattered, mad dash search for road blocks, Manta seems to greet new business with, aghast, a welcoming spirit and sense of cooperation. As such, Manta is routinely voted as one of the most business friendly cities in all of Ecuador. Manta also enjoys a port city location, although its size and activity is oft exaggerated by the local Manta interests. It has a somewhat central location, making it neither particularly easy or excruciatingly difficult, to reach from either Quito or Guayaquil. It has an airport which, while lacking in “International Airport” status, is reasonably active by Ecuadorian standards, when it comes to national flights. Salinas, long ago seems to have squandered its opportunity to lead coastal development down a commercial path, comfortable in resting on its reputation for tourism. So, why not have Manta rise to take the mantle of Ecuador’s commercial coastal capitol? It certainly there for the taking. There is certainly global precedent. Many successful commercial cities have emerged from, or being situated in, resort locales. Miami, anyone?

However, blessed with options, does not make one rich in results. Manta’s tendency to meander across ideas for “future potential”, without first creating a truly unified voice of community consensus, commitment and cooperation, I am afraid may be hindering efforts again. It is not that Manta does not make progress, it is more that it does so in an uneven, haphazard fashion that fails to excite and sustain interest. So, for example, Manta has promised to build the “mother of all commercial high rises” right smack dab on the ocean. Cool. Exciting. Just that when you look at the total amount of commercial space to be offered, just in this one behemoth alone, you just can’t help but ask, “Where is the business interest coming from to absorb all this space?” I know one thing, it is not there now. This is just one commercial project of many, either now proposed or already being built. They have built (or proposed) the product, before coming together and determining from where the tenant base will come. Typical Manta.

Meanwhile, the residential real estate market is equally skewed. Manta is a city that dwarfs, for example, Salinas (proper) in population, yet for years the residential inventory volume in Manta has been significantly less than Salinas. In fact, it is what led to us having Manta as a “sell” market for 2010 and 2011. Inventories were so thin that buying anything made no sense and if you were holding, it was a great time to sell. The upgrade is less a reflection of current market dynamics, than a hedge against the incredibly number of new residential projects projected to be built and hit the markets. If even a fraction of them get built, it will likely lead to enough inventory that competitive price reductions will lead to select buying opportunities, either in resales, forced to slash prices to compete with the new inventory, or in purchasing off-plan new inventory and hanging on for the medium to long-term. To the contrary, if most, let alone all, these projects get built, we may need to once again downgrade Manta to a sell, because we could be looking at the kind of oversupply market dynamics that cursed Panama City by 2007 and came home to roost in the 2008 Panama real estate debacle. Hard to be sure, how much of this inventory will go from dream to real, but the Manta market bears close watching, for a likely revision - whether upward or downward we hesitate to guess, until more numbers are reviewed, end of year.

In closing, it is no secret that I believe the best future for Manta, much to the embarrassment, of Salinas, is for Manta to establish itself as the premier commercial coastal city in Ecuador. It has the perfect basis, with its large population, central location, port facilities, airport and the historical success of industry, at least of the tuna variety. Frankly, Manta simply cannot compete with Salinas, Montañita/Olon or, for that matter, even the Tonsupa/Atacames strip, as a resort locale. The beaches are not as nice, the city is too “industrial feeling” and while Salinas and Montañita readily fill up with the Guayaquil set, and Atacames/Tonsupa readily fills up with the Quito set, there is no natural “resort community clientele” for Manta to draw upon. I do, however, believe that Manta would make an ideal commercial enclave on the Ecuadorian coast, while utilizing a more modest tourism impetus as a secondary growth factor. Well, I should have said tertiary growth factor, because when all is said and done...one thing...and maybe only one thing, in Manta is certain...tuna is king.

Hector G. Quintana
[email protected]
"In a time of universal deceit, telling the truth is a revolutionary act." -- George Orwell, “1984”

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