Ambergris Caye Real Estate Investment
Ambergris Caye Real Estate is a hot commodity for both personal use and investment. The investment potential and upside look even more attractive when you look at the year-over-year tourism data and how it correlates to the rental/lodging inventory on the island. Ambergris Caye is the top destination in Belize. Even though tourism has grown, rental inventory has not. This creates a unique investment opportunity. Learn more with the data points and market analysis below;
Ambergris Caye Tourism & Rental Inventory Data Points
Even though tourism is growing and we have seen Belize tourism rebound in 2022 to pre-COVID numbers, the total rooms for rentals have stayed stagnant with almost no new inventory and often even a decline in inventory. Tourism pre-COVID grew by over 60% in 5 years (over double-digit annual growth of 14.6%) but lodging and inventory stayed the same. Even now, rental inventory saw a -5% decrease in Q4 2022.
Rental Inventory: A decrease of -5% in Q4 2022
Below you can see the lodging and rental inventory on Ambergris Caye over the last 3 years;
Ambergris Caye Lodging Inventory
Ambergris Caye saw -2% in Q2 2022, -1% in Q3 2022, and -5% in Q4 2022. With a -20% decrease over 3 years.
For lodging, as a point of reference, Ambergris Caye saw -2% in Q3 2022, -1% in Q4 2022, and -5% in Q1 2023. So compounded tourism growth over 12 years at an average of 14.6%.
As you can see, the 3-year trend has been consistent with many quarters seeing a dip in rental inventory (even with an increase in demand). Over the last 3-years, lodging/rental inventory on Ambergris Caye decreased by 20%. This creates a unique opportunity for investors. With the shortage in supply and increase in demand, there is a need for more lodging and rentals.
The reason you see a lodging or rental inventory decline is due to the fact people are moving to Belize and we are seeing an exodus of people (especially Baby Boomers retiring abroad).
Market Comparison
What is interesting is comparing it to other markets. Tulum for example;
Tulum in comparison saw a +6% increase in Q4 2022 and +8% in Q1 2023. With a 47% increase over a full year. And an 88% increase over the last 3 years.
You can see other comparable off-shore markets and their lodging inventory below;
Tamarindo Costa Rica for example saw a +6% increase in Q4 2022 With a +23% increase over 3 years.
Turks & Caicos is a Caribbean island like Ambergris Caye. Turks & Caicos saw a +11% increase in Q4 2022 with a +76% increase over 3 years.
Panama City as another example and comparison saw a +4% increase in Q4 2022 with a +26% increase over 3 years.
All of the above locations are popular tourist destinations (Ambergris Caye, Tulum, Tamarindo, Panama, and Turks & Caicos) and have all seen substantial growth in tourism numbers. That said, very few places have seen a tourism boom without an increase in inventory. Because of this, Ambergris Caye has an A+ Rating based on AirBNB criteria of Rental Demand, Rental Growth, Seasonality & Regulations.
Ambergris Caye Real Estate Investment
Prior to 2020, Ambergris Caye lodging remained stagnant over the years even with tourism growing. Even though Tourism is increasing, rental inventory
The number of hotel rooms and lodging inventory for rentals has not seen the same growth and is not meeting the tourism demand.
Therefore, many industry experts predict Ambergris Caye real estate prices and nightly rental rates will continue to increase. This will lead to greater equity appreciation and a higher cash-flow yield.
Even though demand is on the rise, the supply has remained stagnant. With increased awareness comes increased demand but the lodging and vacation rental inventory supply do not meet the demand growth.
Ambergris Caye Investment Opportunity
To give you an idea of the growth and opportunity with Ambergris Caye Real Estate you have to look at the population and tourism growth statistics. Ambergris Caye (as of 2015) had an estimated population of approximately 16,444 people. Since then the population has grown with an even higher volume of foreigners moving to Ambergris Caye. Over the last 5 years, Ambergris Caye has seen a population growth rate of around 8% per year, and in the previous 10 years, prior Ambergris Caye experienced an annual population growth rate of roughly 17%.
It is also estimated that up to 25% more people reside on Ambergris Caye on a part-time basis (vacation or winter homes). Ambergris Caye as a destination for tourism has experienced incredible growth over the last 5 to 15 years. From 2017 to 2022 (the same 5 years) Ambergris Caye has seen tourism grow at a rate of 14.6% per year (over double-digit annual growth).
When you factor in the population growth and the influx of new residents with the growth in tourism, you really start to see the opportunity. As it stands right now, there is not enough vacation or long-term rental inventory to support the growth in tourism and the growing population.
The reason you see a lodging or rental inventory decline is due to the fact people are moving to Belize and we are seeing an exodus of people (especially Baby Boomers retiring abroad).
Ambergris Caye is an island with limited supply. Even though the supply is limited, the demand has skyrocketed over recent years with more-and-more tourists visiting Belie. In 2019, Belize saw over 500,000 overnight tourists, most of which visited Ambergris Caye. These overnight tourism arrivals grew by 60% from 2015 to 2020. With 70-75% of overnight tourists who visit Belize heading straight to San Pedro and Ambergris Caye.
Since 2010 has had an average tourism growth rate of 14.6% annually. That 14.6% growth each year. So compounded tourism growth over 12 years at an average of 14.6%.
The number of hotel rooms and lodging inventory for rentals has not seen the same growth and is not meeting the tourism demand. What is being developed on Ambergris Caye in the next five years will not be able to sustain the increasing tourism demand. Therefore, many industry experts predict Ambergris Caye real estate prices and nightly rental rates will continue to increase. This will lead to greater equity appreciation and a higher cash-flow yield.
Even though demand is on the rise, the supply has remained stagnant. With increased awareness comes increased demand but the lodging and vacation rental inventory supply do not meet the demand growth.
Ambergris Caye luckily has something we like to call “Island Economics”. When investing in an island there is only so much land available. The limitations on available land create scarcity, not only scarcity of property but also a scarcity of land and completed resale homes. There is only so much land on an island. Island economics means that you see greater property appreciation on an island due to scarcity of property and limitations on how much can be built.
Areas and destinations along the Yucatan Peninsula or other areas with nearly endless developable land eventually have an over-supply that is caused by the fact there is nearly unlimited room for development. Investors rarely see the same equity appreciation they see when they invest on an island. One of the difficulties of investing in a property that has nearly endless room for growth is the fact that developers continue to build, so real estate investors don’t see the same level of appreciation that they see on an island, where the availability of land is limited.
This is basic economics, Ambergris Caye has higher demand and less supply. Mainland destinations in Central America have less demand and nearly unlimited supply. On Ambergris Caye, you have far more amenities (with the reef 400 yards off the coast), with beaches on the East & West Coast.
The reason so many investors choose Ambergris Caye over mainland Belize destinations is largely due to the growth and investment potential. Ambergris Caye is the #1 tourist destination in Belize by a large margin. It also delivers the highest Average Daily Room Rate for an income property. It is also important to note that as an investor, you will have much higher margins, as resale properties on the island sell have more demand and higher returns on investment.
Belize’s tourism has over tripled since 2010, as it has grown by 208%. In 2022, over 11 months (January to November) Belize had a total of 362,628 overnight tourists. That is 81% of the pre-COVID inbound tourism numbers. This shows strong tourism recovery for Belize and Ambergris Caye.
Belize 2022 Tourism
When you factor in the population growth and the influx of new residents with the growth in tourism, you really start to see the opportunity. As it stands right now, there is not enough vacation or long-term rental inventory on Ambergris Caye to support the growth in tourism and the growing population.
For more information on Belize Real Estate & Investing in Belize contact Remax Belize!
