Ex-banana republics can be hot tourist destinations, Honduras, for example.

Honduras (pop. 7 million, GDP/Capita US$1,225) has a bad reputation as one of the least secure countries in Latin America. There’s been a history of military power, corruption, inequality, crime and natural disasters. It is an agricultural country of succulent tropical fruit, sometimes unkindly labeled the “Original Banana Republic.”

Yet now the country seems on the verge of take-off, led by the Bay islands - Roatan, Utila and Guanaja - whose development started in 1991.

Roatan-led boom

“I went to the US, took some real estate courses, and came back - that was the beginning of the 1st realtor in Roatan,” says Maria Monterroso of Island Properties. “One year later our first small investor bought a property.”

The changes in the island of Roatan have been astonishing. In 1995, land on a beach was three thousand dollars per acre. Now it exceeds three hundred thousand dollars per acre. Much of that appreciation has occurred in the last two years, with a million cruise boat passengers per year arriving.

“At first it was all retirees, but now there are many younger buyers and developers,” says Monterroso. Utila and Guanaja islands are less developed and properties are half the cost – but few properties have road access, so almost everything is by boat.

Development on Roatan has become very controversial, as scattered single family houses on beaches and hilltops are rapidly being replaced by high-rise condominiums. “The environment has suffered, there is no getting around it,” says Monterroso.

Examples of condos are the Lawson Beach Club Condo on Roatan on Island Properties’ listing, with two-bedroom units at US$650,000. Another condominium development on Roatan is the Paradise Villas, which re-sells at prices starting at US$179,000, going up to US$249,000 for penthouse units.

The Honduran government is poised to grant the Bay Islands duty free/tax haven status with an offshore banking component patterned on Panama and the Cayman Islands. The islands will levy their own taxes, and have some autonomy. “That is going to create quite a mass of real estate speculation,” says Moneterroso.

The Honduras mainland follows

Tourism on the mainland is just beginning. There are 200 kilometres of beaches on the Honduran mainland, mostly empty.

Coming from Guatemala, Omoa has the first attractive beach, dotted with with houses built by wealthy Hondurans. At the large harbour of Puerto Cortes there are nice beaches, and then, before Tela, government-owned white sand beaches (Los Micos and Miami). Tela has a new airport, and there are plans for a 5-star hotel and a 27-hole golf course.

After the beautiful (but beachless) lagoon, the next good stretch is near La Ceiba, especially to the south where excellent beaches stretch all the way to Trujillo, which is now part of the North Coast sustainable development project being funded by the World Bank. Past Trujillo is the mosquito coast - hot, jungly, and inaccessible.

100 miles of white sand

“We are doing a few projects in la Ceiba such as Mango Tree Villas, where we are conserving a mile of crystal river adjoining a white sand beach. We have hacienda style villas scattered around 53 acres and many parks,” says Kent Ownbey, a property developer who owns Honduras Real Estate.

“La Ceiba offers 100 miles of white sand beach with only scattered fishermen, an international airport, immense cloud forests with waterfalls and kayaking and rafting, clear water rivers, plantations, excellent medical care, a really little great city (with mall and third superb restaurants),” says Ownbey. “Just 15 minutes outside the city you can be in splendid isolation.” He adds that he is developing gated communities not for security reasons, but to ensure proper zoning and proper power and water supplies.

“The picture of Honduras as a violent, underdeveloped country is just not true,” says Ownbey. “People have no idea how safe it is! It is such a sophisticated place. La Ceiba a town with a pop. of 100,0000, there are thousands of 3,000 sq. ft. (279 sq. m.) houses. There are beautiful wide boulevards, on which Lexuses cruise.

“True, some sections are like East Los Angeles,” he admits. “But that is no different from the US.” The buyers are of two main types, he says: People who recognize the close similarities between the Honduran environment and that in Costa Rica, and those who think Roatan prices have peaked, and want to sell and start again.

“In the past two years La Ceiba prices have doubled,” he says. “But you can still get a good beach lot for US$40-50,000, and build a nice house on the beachfront for US$150,000.” There is a new international airport at La Ceiba, but at the moment it only has international flights out of Cayman Islands and Canada. Generally people fly to Roatan airport, and then take the 15 minutes boat trip.

Ownership woes

The Honduran constitution (Article 107) prohibits foreign ownership of property in Honduras that lies within 40 kilometers of the Caribbean Sea, Gulf of Fonseca or the international borders of Nicaragua, El Salvador and Guatemala and on any of the islands belonging to Honduras.

However, the Honduran National Congress passed Decree Law 90/90 in 1990, which permits foreign ownership of coastal areas under two different parameters. Firstly, foreigners can acquire a single property not in excess of 3,000 sq. m. in size to build a private residence. Secondly, foreigners may purchase as much land as they want for approved tourism projects. All purchases must be approved by the Ministry of Tourism.

Although the Supreme Court has upheld the constitutionality of Decree Law 90/90, caution must be made before making any purchase. The US Embassy warns buyers of the risks inherent in purchasing real estate in Honduras, citing the problems of fraudulent and lack of titles, weak and inefficient judicial system, squatting, and other property disputes.

Title problems are overblown, argues Ownbey, though he says that large lots should be bought through a company structure, which can be 100% foreign-owned.

“Honduras has a registry system like the US. It gives you a certificate, and you get a certificate from the Municipal Office that no taxes are unpaid. You can get title insurance. The attorneys have been educated in the US (mine went to Harvard!).

“With a little bit of common sense and ordinary prudence you will be OK. Only a crazy person who comes in and buys property from a bartender is going to have difficulties.”

Ex-banana republics can be hot tourist destinations, Honduras, for example.

Honduras (pop. 7 million, GDP/Capita US$1,225) has a bad reputation as one of the least secure countries in Latin America. There’s been a history of military power, corruption, inequality, crime and natural disasters. It is an agricultural country of succulent tropical fruit, sometimes unkindly labeled the “Original Banana Republic.”

Yet now the country seems on the verge of take-off, led by the Bay islands - Roatan, Utila and Guanaja - whose development started in 1991.

Roatan-led boom

“I went to the US, took some real estate courses, and came back - that was the beginning of the 1st realtor in Roatan,” says Maria Monterroso of Island Properties. “One year later our first small investor bought a property.”

The changes in the island of Roatan have been astonishing. In 1995, land on a beach was three thousand dollars per acre. Now it exceeds three hundred thousand dollars per acre. Much of that appreciation has occurred in the last two years, with a million cruise boat passengers per year arriving.

“At first it was all retirees, but now there are many younger buyers and developers,” says Monterroso. Utila and Guanaja islands are less developed and properties are half the cost – but
few properties have road access, so almost everything is by boat.

Development on Roatan has become very controversial, as scattered single family houses on beaches and hilltops are rapidly being replaced by high-rise condominiums. “The environment has suffered, there is no getting around it,” says Monterroso.

Examples of condos are the Lawson Beach Club Condo on Roatan on Island Properties’ listing, with two-bedroom units at US$650,000. Another condominium development on Roatan is the Paradise Villas, which re-sells at prices starting at US$179,000, going up to US$249,000 for penthouse units.

The Honduran government is poised to grant the Bay Islands duty free/tax haven status with an offshore banking component patterned on Panama and the Cayman Islands. The islands will levy their own taxes, and have some autonomy. “That is going to create quite a mass of real estate speculation,” says Moneterroso.

The Honduras mainland follows

Tourism on the mainland is just beginning. There are 200 kilometres of beaches on the Honduran mainland, mostly empty.

Coming from Guatemala, Omoa has the first attractive beach, dotted with with houses built by wealthy Hondurans. At the large harbour of Puerto Cortes there are nice beaches, and then, before Tela, government-owned white sand beaches (Los Micos and Miami). Tela has a new airport, and there are plans for a 5-star hotel and a 27-hole golf course.

After the beautiful (but beachless) lagoon, the next good stretch is near La Ceiba, especially to the south where excellent beaches stretch all the way to Trujillo, which is now part of the North Coast sustainable development project being funded by the World Bank. Past Trujillo is the mosquito coast - hot, jungly, and inaccessible.

100 miles of white sand

“We are doing a few projects in la Ceiba such as Mango Tree Villas, where we are conserving a mile of crystal river adjoining a white sand beach. We have hacienda style villas scattered around 53 acres and many parks,” says Kent Ownbey, a property developer who owns Honduras Real Estate.

“La Ceiba offers 100 miles of white sand beach with only scattered fishermen, an international airport, immense cloud forests with waterfalls and kayaking and rafting, clear water rivers, plantations, excellent medical care, a really little great city (with mall and third superb restaurants),” says Ownbey. “Just 15 minutes outside the city you can be in splendid isolation.” He adds that he is developing gated communities not for security reasons, but to ensure proper zoning and proper power and water supplies.

“The picture of Honduras as a violent, underdeveloped country is just not true,” says Ownbey. “People have no idea how safe it is! It is such a sophisticated place. La Ceiba a town with a pop. of 100,0000, there are thousands of 3,000 sq. ft. (279 sq. m.) houses. There are beautiful wide boulevards, on which Lexuses cruise.

“True, some sections are like East Los Angeles,” he admits. “But that is no different from the US.” The buyers are of two main types, he says: People who recognize the close similarities between the Honduran environment and that in Costa Rica, and those who think Roatan prices have peaked, and want to sell and start again.

“In the past two years La Ceiba prices have doubled,” he says. “But you can still get a good beach lot for US$40-50,000, and build a nice house on the beachfront for US$150,000.” There is a new international airport at La Ceiba, but at the moment it only has international flights out of Cayman Islands and Canada. Generally people fly to Roatan airport, and then take the 15 minutes boat trip.

Ownership woes

The Honduran constitution (Article 107) prohibits foreign ownership of property in Honduras that lies within 40 kilometers of the Caribbean Sea, Gulf of Fonseca or the international borders of Nicaragua, El Salvador and Guatemala and on any of the islands belonging to Honduras.

However, the Honduran National Congress passed Decree Law 90/90 in 1990, which permits foreign ownership of coastal areas under two different parameters. Firstly, foreigners can acquire a single property not in excess of 3,000 sq. m. in size to build a private residence. Secondly, foreigners may purchase as much land as they want for approved tourism projects. All purchases must be approved by the Ministry of Tourism.

Although the Supreme Court has upheld the constitutionality of Decree Law 90/90, caution must be made before making any purchase. The US Embassy warns buyers of the risks inherent in purchasing real estate in Honduras, citing the problems of fraudulent and lack of titles, weak and inefficient judicial system, squatting, and other property disputes.

Title problems are overblown, argues Ownbey, though he says that large lots should be bought through a company structure, which can be 100% foreign-owned.

“Honduras has a registry system like the US. It gives you a certificate, and you get a certificate from the Municipal Office that no taxes are unpaid. You can get title insurance. The attorneys have been educated in the US (mine went to Harvard!).

“With a little bit of common sense and ordinary prudence you will be OK. Only a crazy person who comes in and buys property from a bartender is going to have difficulties.”