Ecuador Forum

JayRock
Joined 2009
Posts: 73

14 years ago

What are the investment risks?

14 years ago

The backdrop of many of the recent threads about the changing political climate in Ecuador is the question of the advisability or not of investing in real estate in Ecuador. I would like to bring this topic to the forefront and ask what others see as the specific risks involved. To take a non-arbitrary example, let's say that someone was thinking of buying an apartment in Quito. (For me this is beyond hypothetical, as the escrituras are in process, although the final payment has not been made yet. I do not plan to back out at this point in the process, but it is still up in the air whether I will rent, trade or live in the apartment, and I imagine that I could flip it in the next couple months and get my money back out, probably with a small profit to boot.)

In thinking about the major investment risks I come up with three scenarios: 1. The political situation takes an ultra extreme turn and private property is outlawed for all or some with the government taking title to either all property or just property owned by non-citizens. 2. The Ecuadorean economy collapses, perhaps due to getting rid of the $US as the currency, and property values plummet. 3. Severe political instability ensues, increasing economic problems, further discouraging foreign investment, and causing property resell values to fall dramatically due to the real or perceived danger of living in Ecuador.

Imo, in the first scenario an investor would simply be sol (pardon my abbreviation). In scenarios 2 and 3 a long-term investor could likely wait out the situation. The new currency would eventually stabilize and the property values, especially in a capital city such as Quito would eventually rise again, as they are partly globally influenced, I would imagine.

I would be very interested to learn if others foresee additional risky investment scenarios and what their take is on the ones that I have listed above. Thanks!

William Russell

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William Russell

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