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Thursday, October 4, 2012

Ecuador Real Estate Report - Salinas/Punta Carnero. October 2012.

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Part one

from Hector G. Quintana
Salinas/Punta Carnero Strong Buy / On Watch
Perennial favorite Salinas has done well for us over the years and continues a “strong buy”, but alas some cracks have begun to show, meriting that it be placed “on watch”, for a possible downgrade in 2013. While the downgrade, if it even occurs, is unlikely to take Salinas below the level of “buy”, it warrants some analysis. Salinas has been the undisputed premiere resort community for the Ecuadorian elite and middle-class for quite some time. Unfortunately, it seems that this positive designation has led to a bit of resting on its laurels, or, at least reputation. This has led to several other alternate beach towns flexing their muscles over the last 5 years and Salinas is not alone anymore, as a vacation hot spot, although it still remains in a class by itself - for now. This trend of relying on its past glory, forsaken much in the way of innovation, coupled with two other developments, leads Salinas to go “on watch” for 2012. The first of the two developments is the continuously stalled finalization of the commercial terminal, to truly brand the Salinas Airport as international worthy. While to some extent this is more a psychological boost, than a major economic catalyst, the continued, now postponed a minimum of 5 times, goes directly to the previous issue of the cities inability to generate meaningful progress and chance. A failure to have a clear time line for the airport’s completion by 2013 will be viewed as a negative indicator for the region. Secondly, since breaking off as its own Province, Santa Elena continues to struggle with unemployment and poverty, to an unfavorable degree compared to the national average. This year, while most Provincial governments were able to point towards an increase in economic activity and a decrease in unemployment, Santa Elena was listed amongst a handful of laggards that did not meet the grade. While Salinas, proper, is largely spared this indignity, well outperforming the Provincial averages, how long before the Provincial problems come to roost at the door of Salinas? Without a more cohesive, cooperative and consistent Province-wide economic plan in place by 2013, the view for Salinas will be negatively impacted. Salinas remains a fantastic investment option for now, but storm clouds are appearing on the horizon. Let us hope the winds of change blow them away.

Item of Note: Many locals might feel slighted at the failure to mention Punta Carnero, which many see as having its own individuality as opposed to Salinas. Still, so long as Punta Carnero falls under the same local municipality control as Salinas, it is hard to separate the two. Punta Carnero remains the quieter, more serene, surfer side of the peninsula, for Salinas proper. However, it would be egregious not to mention the extensive level of renovation taking place Punta Carnero side, including the launching of two newer hostels, the pending arrival of an exciting new condominium tower project, unlike anything seen on the Ecuadorian coast and the possible repositioning of the Hotel Punta Carnero into something different...and better.