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Guam's Real Estate Market Watch, Part 2
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by Jean Hudson, KUAM News
Sunday, January 22, 2006
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For the first time in a decade Guam saw a total in real estate sales within the single-family sector exceeding of $100,000,000. The Captain Company president Nick Captain says this is a very strong indicator that the residential market is doing very well, as that excess of $100,000,000 reflects a 25% increase from last year.
The total sales volume in the condominium sector during 2005 also went up. It increased by 67% from 2004, which is double the activity that the market experienced between 2000-2003. Captain said, "So very, very strong growth not just from the local side but also the foreign investment side. Obviously more so on the foreign side on the condominium sector than in the single-family dwelling sector, but again overall residential market is very, very strong and we're looking at an increase in inventory over the next couple of years."
As far as Guam's commercial real estate market, Captain says there's a strong demand from owner occupants and to some extent, from investors. In 2005, commercial property purchases came in at $40,000,000 in total sales volume, which is more than the prior five years combined. Despite the dramatic increase in sales, Captain admits the commercial markets is giving mixed signals.
"However, we're still seeing rents and occupancy levels remain relatively soft," Captain added, 'so there's really mixed signals. I think you have a number of owner occupants that can fill space for themselves for their business(es) on a long-term basis, so we're seeing a lot of activity from owner occupants in the commercial sector."
Also giving off mixed signals are land sales. On one side we're seeing incredible price increases for lands that have development potential. Properties like these have increased in sales over the last six to eighteen months, mostly of it is from foreign investors while some of it is locally drive. Captain says there is still a run-up in prices, but at the same time we're seeing this increase in supply as a result of the Ancestral Lands Commission and the return of federal excess lands to original landowners - that haven't really hit the market yet - as a result of problems like title issues.
These internal issues have kept the vast majority of land on Guam off the market, but Captain adds that some of that is starting to come through and is available, though it's unclear as to what extent the impact of those ancestral land returns will be.
"Just for example," cited Captain, "if you look across the street from the Micronesia Mall you have about 2,500 acres of former Federal excess lands that have been returned to the original land owners and if that product is all put into the supply inventory at the same you could see a dramatic impact on pricing as a result. But if the internal problems keep the majority of that land out of the inventory you may see prices continue to rise in the near term."
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