Is it a good idea to buy real estate in Ecuador? Everything you need to know about the real estate
Without a doubt, 2020 was a difficult year for many sectors due to the Covid-19 pandemic, one of the hardest hit being real estate.
The behavior of the real estate market fluctuated enormously, with buyers opting mostly for cheaper places; this caused a lot of vacancies in the high-price market.
According to Henry Ríos, real estate advisor at the multinational Remax, "The trend has caused rental fees to be reduced in areas such as Via la Costa, Los Ceibos, Lomas de Urdesa and Samborondón."
According to Germán Carvajal, Marketwatch's real estate division manager, "The health of the market is measured by the number of new projects that enter into the market each quarter or each year."
While several cities in Ecuador decreased in new real estate projects, the Ecuadorian coast maintained supply and demand and saw an increase in the number of housing projects. A major example of this taking place in the city of Salinas.
According to experts, this is an effect of the pandemic. Many people are looking for a secondary or vacation home and clients are taking advantage of the market which is seeing a drop of up to 20% compared to prices in 2019.
However, looking at the country as a whole, new real estate units decreased in 2020 compared to 2019. According to a report presented by the ‘Association of Real Estate Promoters of Housing in Ecuador’ (APIVE), “The annual variation of the net units reserved in 2020 reflects a decrease of 21.6% with respect to the same period in the year of 2019 ”.
While a study presented by the National Federation of the Chambers of Commerce states, "There has been an estimated $1,659 million loss to the construction sector since March 2020, as a result of the pandemic."
Additionally, Stefano Ferretti, Vice President of Operations for Real Estate Ambiensa, points out that the sector has suffered a 30% drop in the commercialization of homes in 2021 as well. However, the real estate sector is very optimistic due to the recent change of government. Greater commercial openness and better credit lines are expected to be seen under President Lasso.
For Jaime Rumbea, representative of the ‘Association of Real Estate Promoters of Housing in Ecuador’ (APIVE), market recovery this year will depend on the behavior of the public and private financial systems and the arrival of investments that will feed the economy. "If these conditions are met, we can point to a two-digit year-on-year growth, that is, above 10% compared to last year." Additionally, the sector expects there to be greater flexibility in the loan delivery process, as well as in the procedures and permits for construction.
The real estate sector for foreigners
It is important to note that in Ecuador, there are no restrictions for foreigners who wish to invest in real estate. According to Article 9 of the Constitution of the Republic, "Foreigners who are in Ecuadorian territory will have the same rights and duties as all Ecuadorian citizens". Likewise, Article 43 of the Civil Code establishes that, "the law does not know the difference between an Ecuadorian and a foreigner, regarding the acquisition and implementation of the civil rights that this article grants.” Therefore, foreigners, like Ecuadorians, have the right to acquire property in any part of the country.
The right to property is something that is recognized and guaranteed to all people, whether Ecuadorian or foreign (art. 321 of the Constitution of the Republic). Regarding the acquisition of mortgage loans, a foreigner is eligible to request them as long as they have a legal immigration status and proof of at least 1 year of income. Likewise, private banking offers several credit alternatives, such as BIESS.
In this link you can watch a series of videos about the new changes to the immigration law in Ecuador and how they can affect you.
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The EcuaAssist Team