Cuenca rental market
While the number of traditional, long-term, unfurnished rentals units in Cuenca has shown steady growth in recent years, the number of furnished, short-term rental units available to foreign visitors has grown rapidly since the city was named the world´s top retirement city in 2009 by International Living magazine. In 2009, the total of short-term rentals could be counted in the dozens. As of early 2012, there are between 125 and 150 good quality units in the market, about 90% of them apartments. Despite the increase, demand often exceeds supply as Cuenca attracts growing numbers of students, teachers, volunteers and those here to check out the city as place to live.
It is important to understand the difference between unfurnished long-term rentals and furnished, short-term rentals. Glowing reports of bargain-basement Cuenca rental rates in websites and magazines have blurred the distinction and caused confusion among potential renters. Long-term rentals in Cuenca are similar to long-term rentals in North America and Europe. They come unfurnished, without utilities and usually with a one-year lease.
Cuenca real estate market
Magazine and website articles touting Cuenca as the world's top retirement destination are attracting record numbers of North Americans and Europeans to the city. They have also, however, fostered a misconception that foreign real estate buyers are dramatically affecting the availability and prices of housing. The number of foreign residents in Cuenca --about 1,400-- is still a small proportion of the city´s overall population of about 520,000. The market continues to be driven by Ecuadorians, both local and those returning from overseas. In 2010, returning Ecuadorians accounted for an estimated 32% of local sales. North Americans and Europeans, on the other hand, accounted for less than one-half of one percent.
The most popular properties for foreign buyers continue to be condominiums close to the center of town, just outside of the historic district. Local real estate agents estimate that 65% to 70% of sales to foreigners are condos.
In 2010 and early 2011, property values continued to rise steadily despite the recession in much of the world. The general rate of appreciation in Cuenca has held constant for the past five years at 7% to 12%. Annual appreciation for newer condos is running 7% to 10%. Cost of raw land in areas such as San Joaquin and Yunguilla has shown recent increases of as much as 15% per year.
Cuenca is undergoing rapid growth, with more than 30 condominium projects under construction, with more on the drawing board. Despite the high level of sales, condo prices are still very reasonable due to the fact that the market is driven almost entirely by Ecuadorian demand. Costs for new two-bedroom apartments with very nice tile and wood finishings average between $55,000 and $70,000. A new 3-bedroom, 2-bath unit, with spectacular views of the city and mountains, ranges from $85,000 to $100,000. Older apartments, of course, are less expensive. Construction costs for new condos per meter, as of July 2011, were running from $775 to $1,000. By contrast, per meter costs were running between $1,500 and $2,200 in Panama, Costa Rica and Mexico.
The major advantage of condos for foreign buyers is that they are easy to resell and rent. Many condo buyers express an interest in purchasing homes in the city or property outside of town but decide that an in-town "foothold" will allow them more time to make a decision on a larger purchase.
Investors are taking note of Cuenca's tourism boom (officals estimate that numbers are growing 10% a year, the highest growth rate in Ecuador) and the increased demand for furnished apartments for foreigners who want to stay in the city for an extended period. Demand exceeds capacity during the busy times of year.
Probably the best bargains in Cuenca today are larger homes. Beautifully landscaped, finely detailed 3,000 to 5,000 square-foot houses, in Cuenca´s most desirable neighborhoods, can be had for less than $250,000. Many of the homes have guest houses and other out buildings. Similar properties in the U.S. would cost two to three times more. There are also a number of larger homes with acreage available outside of Cuenca. Although the market for larger properties has been sluggish in recent years, the large-house sector seems poised for a rebound. The downside of larger homes is mainentance and upkeep and expenses for caretakers.
For those who want to live in the country but be within a short driving distance of Cuenca, Yunguilla valley, southwest of the city, deserves a close look. Yunguilla is often compared to Vilcabamba, the popular expat destination near the Peruvian border, because of similarity of weather and terrain. The major difference is that land prices are running about 70% of those in Vilcabamba. Construction prices are also a bargain, with cost per foot averaging $35 to $50.
A down-side to the on-going "good news" about Cuenca is that costs reported in some publications and websites pushing the low cost of living are often inaccurate. Tales of luxury penthouse condos for $50,000 and high-end rentals with all utilities included for $300 reflect the market five to eight years ago, not the current one. We believe that when the facts are reported accurately, however, the news is still good.
Please keep in mind that prices are averages and the cost of particular properties will vary.