Latin America: A land of opportunity

Our publisher Bill Bonner just got back from Argentina with a spring in his step and the southern stars in his eyes. A trip like that, it seems, and you've got to get a souvenir. Prices in that part of the world are just too good. Not one to do things by halves, of course, the memento he bought was a 100,000 acre cattle and llama ranch with 20 houses on it. He couldn't help himself, he tells us. And how much does something like that cost, we wondered. "Less than a large apartment in central London," was the reply. What we initially saw as an impulse purchase looks more and more like a wise investment.

Despite the tortured optimism of UK estate agents - most of whom are expecting prices to pick up again in the next three months - our domestic property market has, by and large, peaked. And if the same is true of most of the rest of the English-speaking world, then perhaps we should brush up on our foreign languages. Just below the US, there's a whole continent waiting to be snapped up, with everything from white beaches to rainforest glades. And so far, its property market hasn't bubbled out of control. Be warned, though: buying a house overseas is not always plain sailing. Take Venezuela. It may boast a long Caribbean coastline and the stunning 1,000 metre drop of Angel Falls, but aside from the huge problems of currency exchange - and the fact that you will find it hard, if not impossible, to get your money out again should you decide to sell - you might find that, thanks to new laws introduced by President Chavez, your property is confiscated under his vision of "21st-century socialism".

Things change, though. One country that used to be out of bounds is Nicaragua, but in recent years, hardier investors have seen some extraordinary returns. The country is "still fighting its violent stigma", says Karyn Strauss in Hotels, but tourism is up 31% in Nicaragua this year and increasing numbers of people are settling there. As the infrastructure improves, so do the prices. A plot with 270-degree views could set you back £57,000, but if you remember that "the cost of living is low" and the quality of life high - with arguably the best beaches in the region - visitors "suffer few disappointments", says the Daily Reckoning's Rude Awakening.

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Panama, 150 miles south east, has the same impressive coast line, but few of the problems Nicaragua is overcoming and Venezuala still suffers from. For starters, currency is not a problem (it uses the US dollar) and foreigners have the same property rights as Panamanians. For less than £141,000 you can get a sea-front property next to Panama's largest coral reefs. That might not sound cheap, and these properties are already up from £51,000 12 months ago, but you are paying for the fact that Panama is one of the region's safest, most business-friendly and accessible markets.

Brazil starts further round the coast. Its stock market has risen by about 37% this year and the country is benefiting from renewed strength in domestic demand. This has been fuelling house prices, as seaside holiday homes are back in vogue for Brazilians. There are still lots of great properties. An ocean-front lot can be had for just £14,000 and with construction costs so low (from around £11 per sq ft), you could find yourself listening to the surf from the veranda of a four-bedroom house for a total of about £37,000. (See www.beachfrontbrazil.net) Better still, Brazil is becoming increasingly easy to get to. TAP, the Portuguese national carrier, now flies 40 times a week from Portugal to five different destinations in Brazil and you can get flights for under £400.

While it is highly cyclical, Latin America tends to peak at different times from over here. We may be at the end of our upswing, but they're moving up now. According to the IMF, the Latin American and Caribbean region should see overall output GDP growth of 4.1% this year and 3.8% in 2006 - compared to its forecast for the UK of 1.9% and 2.2%. And Argentina is roaring ahead, with a predicted GDP growth of 7.5% this year and 4.2% next year. No wonder many investors reckon it's the best place to head to right now. Indeed, it is a "screaming buy", says Erin Beale in the Daily Reckoning - and that goes for shares as well as houses.

Although property prices have recovered somewhat since the currency crisis three years ago, Argentina is still cheap by our standards. A flat in downtown Buenos Aires costs around a tenth of the same property in London - and comes with all the luxuries one might expect, including a swimming pool and secure parking. As soon as you get to the countryside, prices start to look unbelievable. For £16,000 you can buy 12.5 acres, with two houses, although one of them needs "renovation". At the other end of the scale, you could buy two properties with a swimming pool, tennis court, gym, secure garaging for six cars and - as if that's not enough, a Jacuzzi in the master-bedroom suite - for £284,000. That's not peanuts, but compared to the UK or Europe, it's eye-poppingly cheap (see www.mendozaproperty.com for details.)

Argentina, Brazil and Panama should all have further upside to their property prices, but as buying a house abroad is always fraught with problems, and Latin America is long way away, you might only want to consider it if you intend to move there. In a recent survey by International Living, Panama topped the list for countries to retire to for the fifth year in a row. Its incredible benefits include being able to retire from the age of 18, as long as you can prove a monthly pension' of £284, in return for which you get perks ranging from 50% off entertainment through to 20% of medical consultations. Chile and Argentina both ranked in the top 15, just ahead of Ecuador, which scored 100% for climate - it ranges from tropical on the coast to cooler in the mountains. All three were well ahead of the UK and US, which both scored 10% for property, compared to 75% for Argentina and 87% for Ecuador.

In the end, it comes down to where you think we all are in our property cycles. There's no doubt British property is expensive, and it may be getting cheaper, but Latin American property, following a long period of revolutions, bad government, inflation and bankruptcy is already cheap, and may be on the up for a while yet. Plus there are a host of little things': nice weather, good quality of life, beautiful dancers. So for an investor with a sense of adventure, a sense of humour, and perhaps a little samba in his soul, Latin American property is well worth a serious look.