Guatemala City The new Real Estate El Dorado for Investors? part 1

 In this first part I want to share this article recently published in Guatemala, national news paper El Periodico. It is an analyse of the market condition in Guatemala City, Central America. In a second part I will comment on these changes.

From El Periodico News Paper writter  Manuel Silva

The supply of vertical housing has increased in recent years due to vehicular traffic problems. People prefer to live close to the capital and have moved to small apartments that measure between 30 and 85 square meters at lower cost. "People have changed garden homes for better locations," the developers say.In the central parts of the city the square meter is not less than Q10,000 (1,370 $ / m2). However in more remote projects, for example, located in zone 18 the cost may be approximately Q4,000 ($ 548.00 /m2). The most expensive in the city, according to a recent study, is located in zones 14 and 15, explains Juan Pablo Estrada, president of the National Association of Home Builders (Anacovi).The cost ranges from US $ 1,700 to US $ 2,340/m2. But those prices can also be found in areas such as  Zona 4, since the phenomenon that is occurring is that the smaller the space, the higher the price per square meter of the apartment.Estrada believes that the price of the apartments has gone up aggressively. And he acknowledges that there was some speculation in some areas because of the difficulty in obtaining land and permits to build
But beyond the cost of building, which is the same everywhere, the main factor that has cost the projects is the price of the land, which according to Javier Ruiz, from Aicsa, is very expensive."About six years ago it was estimated that the value of the land was about 15 percent of the total investment, and now it is almost 25 percent. In the end, that cost is passed on to the consumer. In addition, now the apartments are the norm and there is increasing demand, when before was the exception, "explains Ruiz.

Estrada adds that on the central axis, except for some land in zones 1 and 2, it is almost impossible to get land below US $ 400 /m2 and paid up to US $ 1,000 /m2 in the most exclusive zones of zone 14. And with land so expensive only two options remain, or densify more or sell much more expensive. As an example says that two years ago they asked for US $ 175/m2  in zone 11 and now they want around US $ 400/m2 .

According to the map of land values ​​in the capital city, published by the Municipality of Guatemala in March 2009, in the "main axis of the city defined by the Sixth and Seventh avenue and the Reforma Avenue, is where the average value of the Plots ranges from US $ 401 to US $ 500 per square meter. " By that time, the most expensive area of ​​the capital was 10 and 14 with averages between US $ 300 and US $ 400. In addition to the zona 4, the 9, the 10 and the 13. And the cheapest zona 5.Is there gentrification? 

There are areas that were degraded a few years ago and are having a period of splendor such as the Historic Center and the zone 4. Francisco Sabatini, associate professor of the Latin American Program of the Lincoln Institute of Soil Policies, notes that many see the development of housing from a unique perspective of economic benefit. And this can lead to a process of gentrification, where people of higher income come to a place of lower income people. What can have as effect a social conflict or simply an increase of the prices."There is a process of gentrification in some areas, but it is a greater supply as people are returning to the city."Enrique Godoy, Presidential Commissioner.

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