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HGQ2112
Joined 2009
Posts: 1640

Real Estate Report - Atacames / Tonsupa

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:

Atacames/Tonsupa Buy ?
This year has led to several rare exceptions in our market reports. Chalk it up to global real estate market instabilities and extremely complex macro and micro economic dynamics throughout the globe. Even then, Atacames/Tonsupa holds the special distinction of being notable for two, not one, rare exceptions. First, I seldom, link two markets together, even when there is a strong symbiotic relationship, such as Salinas/Punta Blanca, Montañita/Olon, or Vilcabamba/Loja. I also very seldom upgrade or downgrade a region by more than one category from one year to the next. Atacames/Tonsupa is definitely a rare exception and I will explain why.

First, the issue of linkage. I tried to justify considering these markets on a separate level, but it was near impossible. To the point that listing them together actually gave a representative analysis that was more accurate, than looking at them separately. I simply cannot see a circumstance where the market impact in one of these cities will not greatly impact the other, almost to an exact same degree. I will explain. Atacames has become a vacation/ commercial destination. I have already referred to it as “Montañita for adults” and that is not too inaccurate a broad description. People go to Atacames to have fun...escape...relax. They come mostly from Quito. They go to Atacames for little else, unless you want to be a business owner, who purchases one of the establishments where people go to have fun...escape...relax. However, unlike in Montañita, where despite a hospitality industry pushed to its limits, there is sufficient room availability for the masses, Atacames does not have the hospitality capacity to accommodate. They also offer only a handful of high-rise residential buildings along the beach strip, where additional rentals can be found. So, where are the rentals? Yep...Tonsupa. Tonsupa has almost no commercial establishments to speak of...but it is high-rise row along the coast. In fact, only Salinas has more coastal high-rises. Yes...I realize Manta exists. I will say it again, I am talking smack dab beachfront...only Salinas has more coastal high-rises. For the Atacames commercial strip to survive, it must rely on its nearby neighbor to the north to help house the tourists and I doubt that as many buyers/renters would be arriving in Tonsupa, if not for the festivities offered in Atacames. The linkage is virtually unbreakable.

The Atacames/Tonsupa area also holds the distinction of moving up from a “sell” to a “buy” in only one short year. This truly hinges on one major comparative variable, but is worth analyzing in some detail. Atacames/Tonsupa are located in Esmeraldas Province. Esmeraldas Province has amongst the highest per capita crime rates in Ecuador. Unfortunately, this transcends even to violent crime categories. This sole variable has impeded us from moving the area up from a “sell” to even a “hold” in recent years. Two variables have changed that. One, Ecuador as a whole, with the Esmeraldas region being a beneficiary, has been improving its law-enforcement operations both quantitatively and qualitatively. It was visible on recent trips to the Esmeraldas area, where I saw a greater police presence, serving as a more visible deterrent than at any point in the past. While this may take a few years to penetrate crime statistics, I believe it is a defined trend, in the right direction. Second, it has become impossible to ignore the increased tourism in that area and the increased funding coming largely from Quito to expand the area further. The incoming rush of cash is no longer knocking on the proverbial Atacames/Tonsupa door, it is kicking it in with force.
Impossible at this point to ignore that while trailing statistics are going to show a high per capita crime rate, the rend for additional law enforcement is a positive one and that the native Ecuadorian population seems to enjoy the region, be unconcerned with the “possible dangers” and are more than willing to commit investment capital to its future growth. Combine that with some fantastic beaches, solid residential development projects in Tonsupa, and some very entertaining commercial establishments in Atacames...well...it is a recipe for success. I am afraid that the Atacames/Tonsupa region has already become what Bahia de Caraquez still continues to dream it wants to be - the vacation resort for the Quito set. It is impossible to ignore this locale as an investment market for our clientele. However, caveat emptor. If you know you have a low tolerance for ugly looking crime stats, avoid this place like the plague (You know who your are). For the rest of you, the Atacames/Tonsupa stretch is one of the most exciting growth opportunity stories in Ecuador and if you shop right, there are plenty of value opportunities also available.

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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Real Estate Report - Atacames / Tonsupa

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