Guayaquil, real estate magnet and commercial engine in Ecuador
This time, we interviewed Jorge Xavier Marquez, real estate Director of the Difare Group, who will talk about the strategic development of real estate in Ecuador.
HalloCasa: “Good afternoon, Mr. Marquez.Thank you very much for your time!”
Jorge Xavier Marquez: “Thank you very much for the invitation.”
HalloCasa: “Could you please introduce yourself to our audience and briefly describe your real estate business in Ecuador?”
Jorge Xavier Marquez: “I did a 30-year career in Advertising & Marketing between 1977 and 2007. I ran advertising agencies and I was in charge in marketing departments with very varied product categories: mass consumption, cars, banking and finance, a long list. In 2007 I had the opportunity to do real estate marketing and to reinvent myself. I benefited a lot from the career in marketing and advertising which I had been active in before being involved in the real estate area. It certainly gives you another point of view. You do not look solely on the consumer to fulfill the dream to own a house. Such a view allows you to create consumers for your real estate brands, which is is much more efficient than creating products for customers.
One part of the Difare Group is Dibiens. Dibiens is the real estate developer of the Difare Group and my role in this company today is to develop strategies for real estate projects and to ensure that the projects are properly marketed and advertised along in the real estate expansion plan.”
HalloCasa: “Mr. Márquez, describe us your city. What are the aspects that attract international investors?”
Jorge Xavier Marquez: “Guayaquil is the commercial engine of Ecuador. It is a port town with strong trade activities. The hotel industry has many international brands in the city and convention centers as well as shopping centers are present. It is an area with high real estate development projects like Samborondon and along the road towards the coast. There are a lot of real estate opportunities.”
The challenge of new real estate companies in Ecuador: demonstrating reliability
HalloCasa: “Please tell our readers about the current situation of the real estate market in Ecuador. How do you perceive real estate investment for this year of 2017?”
Jorge Xavier Marquez: “Many people make an analysis in a general way. At the moment, this should not be done about the Ecuadorian real estate market. The reasons for the property purchase must be analyzed in depth. People are looking for prices first and then for the location in the mid-range level. At the moment, villas are on highest demand. But for almost 2 years there has been an important element which had not been present before: trust.
In this country, more than 10,000 complaints were generated for property fraud in that period. So, you do not only advertise the location, the price, the architecture, you must also communicate that the company is serious and that it will meet its promises. Therefore, for real estate companies consumer trust is the most important element.”
HalloCasa: “How much have all those antecedents affected the real estate investment by foreigners?”
Jorge Xavier Marquez: “I believe that Ecuador, by having a relatively small area of 260,000 km2 but with sierra, coast, jungle and the Galapagos Islands gives an interesting range of variety for real estate investors. Spectacular climate zones such as Cuenca in the highlands and beaches on the coast generate a potential spotlight for retirement investors. Furthermore, along the extensive coast in front of the Pacific exist a lot of hotels. Guayaquil is growing towards commercial investments, such as the convention and the hotel industry. Several brands of international chains have opened their subsidiary in this city. I do not have numbers of foreign real estate investment, but you can observe it easily.”
HalloCasa: “Apart from honesty as a fundamental pillar in any transaction, what other aspects have helped incumbent real estate companies to remain on top of the game today?”
Jorge Xavier Marquez: “Incumbent real estate companies have precisely the advantage of trust. They have a huge list with successful references. They can show thousands of m2 built and properties delivered on time and with satisfaction. The new ones have the challenge to fulfil what they offer and to show that investors do not end up in a rocky adventure. Another challenge is the creation of promising studies and outlooks. Some companies think that if a new project is built, consumers will come. They run the risk that consumers will never arrive. This is not about speed. It is a race in the background. You simply have to do it right.”
Recommendations for foreigners who want to invest in Ecuador
HalloCasa: “What would you recommend to foreigners who want to invest but with an intermediary, that is, without leaving their country of origin?”
Jorge Xavier Marquez: “Today with the social networks and with the amount of information available they have the perfect opportunity to analyze each brokerage very well before making the contact. They can analyze the background, the real estate profile and determine if they feel comfortable making business with this respective company.”
HalloCasa: “Which areas of Ecuador are most desirable when investing in real estate?”
Jorge Xavier Marquez: “It is not the same to build offices on the road to the coast than in Samborondon. The area of Samborondon, depending on the location, is spectacular to commercialize offices. But beware: in that market the price is super volatile. Middle-range houses are the best market opportunities.
The consumer can be tolerant with the location for this type of housing. This year the Ecuadorian Social Security Institute will provide around $800 million US Dollars in mortgage loans, which at an average of $40,000 US Dollars for each loan results in 20,000 homes for that target. The demand is around 40,000 homes a year. So this figure does not cover all the demand in the country. Financial institutions should come in to cover that deficit.
I give you exact numbers: In 2016 the Biess (comment: Biess, a bank of the Ecuadorian Social Security Institute, one of the largest banks in Ecuador) disbursed $1,048 million US Dollars in 22,020 credits averaging $47,593 US Dollars. Private banking disbursed $719 million US Dollars in 12,300 credits averaging $58,455 US Dollars. This means that the potential client can obtain credits between $48 and $58 thousand US Dollars.”
HalloCasa: “Regarding project development in Quito, which has more demand: housing or corporate projects?”
Jorge Xavier Marquez: “We have analyzed a lot to start a residential project in the San Rafael area. We have decidedthat we will not pursue it at the moment. The real estate offer is high and the absorption rate of the project has decreased. We prefer to wait in that case. On the other hand, we see many corporate projects which still have a slow marketing process. In Samborondon we will start a commercial project soon.”
HalloCasa: “Mr. Marquez, now please tell us about the Ecuadorian housing sector in general and especially about the strategic development of real estate projects in Ecuador.”
Jorge Xavier Marquez: “In Guayaquil, there are about 6,000 units on offer. Currently, 73 projects are under development. But the monthly absorption has dropped to 2.13. That means that about 168 units are sold monthly. While in 2014, with fewer projects, we had an absorption of 4.25 out of 94 projects, that is to say, a sale of about 382 units per month. The sale has fallen in 3 years by 56%. It has decreased a little bit and less than before is being sold. Less than before is also being rented and being built. However, something is always being built, rented or sold.
Our company, Dibiens, took the decision to continue with its real estate projects. We have just completed the commercialization of the Plaza Portal al Sol on the road to the coast. We have almost 500 units in the Duran area sold by more than 50% and soon we will start a commercial-corporate development in the best area of Samborondon. That’s enough for this year. Indeed. We do not have to forget that business is behind every project, while the consumer wants that the agreements are being complied to.”
HalloCasa: “Mr. Marquez, we know your time is limited. We would like to thank you for this informative interview. Would it be possible for interested readers to contact you if they have any follow-up questions? Thank you very much for the interview.”
Jorge Xavier Marquez: “Yes of course. Investors can contact me through HalloCasa or contact me directly at email@example.com or through my @xxxmarquez twitter account. Thank you.”
HalloCasa: “Thank you so much for being with us.”
Jorge Xavier Marquez: “Thank you very much.”
HalloCasa, the marketplace for international real estate properties, is being founded by a German in Bogotá. HalloCasa´s mission is to build trust for vendors and investors with respect to cross-border real estate transactions.