“Is Ecuador recession-proof?”

It is a question that Quito attorney and business advisor Rick VandDercreek hears frequently these days and he notices that most of those asking are North American and European investors.

“I’m not sure where people are getting the idea that we live in some sort of bubble down here and the answer, of course, is a resounding ‘no.’ On the other hand, there are some positive signs and some areas of the economy, including real estate, seem to be holding up much better than in other Latin American countries.”

VanDercreek, a former Price Waterhouse executive who has lived in Ecuador for almost 30 years, says that the jury will probably be out well into 2009 on the full effect of the economic downturn. “In my opinion, only a fool would make a hard prediction at this point. Things are going from bad to worse in the U.S. and Canada and, depending on what happens in Eastern Europe, the EU could become a disaster.”

David Morrill, correspondent for newspapers in the U.S. and U.K. and author of two books for foreigners thinking of relocating to Ecuador, agrees with VanDercreek. “It’s too early to know where we will land.We’re feeling the impact of the recession and it will get worse.”

Like VanDercreek, Morrill sees a silver lining in the recession. “My focus is on real estate and on foreigners moving to Ecuador to live full- or part-time and, I have to say, that in this area, things are looking pretty good.” Morrill, who writes for International Living, a service for North Americans considering moving abroad, says that real estate prices are relatively stable in Ecuador. “Friends who live in resort areas of Mexico and Panama tell me that prices have fallen in porportion to drops in the U.S. This isn’t really surprising since so much of the real estate is those areas is owned by foreigners. They’ve created a speculative bubble.”

For the record, Morrill says real estate prices have leveled off in Ecuador and have actually shown some single digit declines in Quito, Guayaquil and some coastal areas. “There will probably be some bargains in coming months but I don’t think we’ll see a collapse.”

VanDercreek and Morrill say that there are two factors that keep the Ecuadorian real estate market relatively strong. “The first is the large number of Ecuadorians living abroad,” says VanDercreek. “It’s a little-known fact that on a per capita basis there are more Ecuadorian citizens living in the U.S. than citizens from any other country. It’s something like 2.5 million, and these folks mostly live in New York and New Jersey, where service work, which most of them are involved in, pays pretty well.” According to VanDercreek, Ecuadorians living abroad are a major factor in the local housing market and, he adds: they are buying.

The second factor is that foreigners have minimal effect on prices. “There are 6% or 7% as many foreign residents in Ecuador, per capita, as there are in Panama, says VanDercreeek. “We’re a blip on the radar down here whereas, because of the numbers, foreigners have a strong effect on the market in places like Panama and Costa Rica.”

VanDercreek says another reason for stability in Ecuadorian prices is that there was no the "boom" like there was in Central America.

Morrill, who is a partner in a real estate business in Cuenca, says he has been surprised by the increasing numbers of North Americans considering moving to and buying in Ecuador. “Last fall, when the economy started to tank I thought we would see fewer folks coming down. I expected a hunkering down effect.” In fact, he says, the opposite has happened and more North Americans are traveling to Ecuador. “Apparently, lots of people are feeling an urgency to make a move sooner than later.”

“It’s a plain fact,” says VanDercreek, “that Ecuador is a comfortable place to live for foreigners. We’ll never have the boom here that you saw in Panama –or at least I hope we won’t-- but people who come for a visit find a lot of things to like.”

For those thinking of buying residential real estate in Ecuador, Morrill has some advice. “Don’t let anyone tell you that if you don’t buy now you’ll never see these opportunities again. Recessions tend to have a freeze-frame affect on opportunity and this is the case now in Ecuador. The good deals aren’t going away anytime soon.”

Credit: by Marshall Ellis, EuroNex business news services

Photo caption: Ecuadorian real estate prices are holding steady despite the recession