Oxford Insight December 2, 2005 (Broadcast #523)

In This Insight

** Cactus Juice, Monkey Lalas and One of the Last Undiscovered Gems of the Caribbean

By Alexander Green, Oxford Club Investment Director

The Oxford Club's motto is "great profits in the company of good friends."

We've made plenty of great profits this year. This week, we've made a few new friends, as well.

Right now, I'm with a small group of Oxfordians on the beautiful, unspoiled island of Roatan, the largest of three Bay Islands 30 miles off the coast of Honduras. For pictures of our trip, click here.

If you're not a diver, you may be unfamiliar with Roatan. (And that's a good thing for those who prefer quiet, secluded getaways.) If you're a serious diver, however, you're probably as unfamiliar with Roatan as the average Sox fan is with Fenway Park.

That's because the waters here are home to the world's second-largest barrier reef - smaller only than Australia's Great Barrier. And there is an astonishing variety of marine life here - including whale sharks, the world's largest fish.

The day after we arrived, my wife, Karen, and I strapped on our masks and fins and paddled out to the reef, just a stone's throw off the shoreline of West Bay, where we're staying. Two hundred yards out we ran into "the wall," where the ocean floor suddenly drops from about 12 feet to nearly 6,000 feet. (Not six hundred, six thousand.) Talk about peering into the abyss. It's an awe-inspiring sight.

Our group is spending the week at the Mayan Princess, a recently completed seaside resort consisting of one- and two-bedroom villas. Staying here, we've had daily sightings of emerald-green hummingbirds, an iguana who suns himself poolside, and the occasional monkey la-la.

What's a monkey la-la? It's not a monkey. It's a… well… it's one of these (click here). These prehistoric-looking things rear up on their hind legs and dart around like something out of Jurassic Park. It can be pretty startling when one bolts past you at 7 o'clock in the morning, before you've had your first cup of coffee.

Of course, we're not here just to admire the local fauna. Our group is investigating some of the last bargains in Caribbean real estate. So far, we've looked at raw land, residential lots, pre- development condos, oceanfront villas and bayfront efficiency units.

Our experienced guides are Barb Perriello of Agora Travel and Mike Shepard with Century 21 Real Estate. (Both are property owners here.) And they've made sure we've had plenty of time to meet and break bread with the island's leading developers, transplanted ex-pats, and good-natured locals, who all seem to have fallen in love with the island and kissed The Rat Race goodbye.

Some investors here are looking for an inexpensive place to retire. Others are looking for a vacation home that can provide rental income. Still, others are simply looking for an above-average investment return.

So what are some of the pros and cons of owning property here? First the pros:

1. This is some of the last reasonably priced property left in the Caribbean. Of course, real estate has gone through a global boom, so they're not giving it away down here. But the prices are a half to a third of what they are in other Caribbean destinations, so there's a reasonable expectation of further price appreciation.

2. Honduras is a stable, democratic country. The locals are very friendly and the vast majority speak English.

3. It costs only about $80 a square foot to build here. Why so cheap? Labor, mainly. A master carpenter or stone mason earns about $120 a week. For $100 a square foot, you can build a first-class home with plenty of upgrades.

4. Roatan is on the verge of getting "discovered." Three years ago, the island was visited by approximately one cruise ship a week. Today, it's five to seven a week. Next year, thousands more tourists will discover this island. And daily flight service from the U.S. - through Miami, Houston and Atlanta - will begin in March.

The cons:

1. Foreigners can own land, but are restricted to up to 3,000 square meters, approximately 0.7 of an acre. Larger parcels can only be purchased by forming a Honduran corporation. (This costs less than $650 and is becoming a common practice.)

2. The island has a fairly primitive infrastructure. The mountain roads are small, winding and strewn with potholes. Visitors are advised to drink bottled water, not tap water. And there are no shopping malls, golf courses or casinos… yet. All are expected in the next couple years.

3. There are currently no zoning laws in the Bay Island, although a task force is developing them. And while building permits are required, there are no government building inspections. So it's imperative that you deal with a proven, experienced and reputable builder.

4. It can be pretty buggy. Fortunately, this problem is easily solved with a bottle of cactus juice. That's not a nickname for the local rum (which is quite good, by the way). Cactus juice is a combination of sunscreen and insect repellent that is made of all-natural ingredients and works quite well, as long as you apply it every couple of hours.

In sum, Roatan is a lovely, laid-back island paradise. Many investors here believe Honduras is on the verge of becoming the next Costa Rica. And Roatan, of course, is the crown jewel.

I don't claim to be a real estate expert. But if you're interested in learning more, come down and take a look. Another group of Oxford Club members is planning a visit after the new year. For more information, contact Barb Perriello at 800.926.6575, 561.243.6276 or info@agoratravel.com.

Alexander Green