Welcome to America in Asia
Situated in the Western Pacific, within close proximity to the Asia Pacific Rim including Japan, South Korea, China, Taiwan, Hong Kong, Singapore and the Philippines, Guam U.S.A. truly is America in Asia.
Guam is an unincorporated territory of the United States and closest U.S. soil to the Asia Pacific region. The biggest island in Micronesia with an area about the same size as Singapore, roughly 210 square miles, Guam is the southernmost island of the Marianas Island Chain, located east of Manila, Philippines and south of Tokyo, Japan, both a short 3.5-hour flight away. Its average year round temperature ranges in the mid to high 80’s most days and mid to high 70’s during the evenings. Its population is currently estimated to be around 171,000.
While its stable U.S. political status, government, economy, and currency in U.S. Dollars certainly make the island a distinct attraction in the Asia Pacific region, it’s the lush tropical landscapes, warm breezes, powdery white sand beaches, clear blue waters and sunny skies that eventually lure people and companies from all over the region and U.S. Mainland to invest in Guam real estate and make Guam home.
When you purchase property on Guam, you take and hold title in the same manner, with the same guarantees and constitutional protections as you would have anywhere in the United States mainland. Real estate holdings allow for both fee simple and leasehold ownership and the deed or lease would be recorded and filed at the Office of the Registrar, Department of Land Management, Government of Guam. Guam laws certainly welcome foreign investment.
Japan has been the predominant visitor market and source of foreign investment in the hotel, tourism and visitor transportation industries the last four decades, however tourists and foreign investment from South Korea, Hong Kong and Taiwan have been factors from time to time as well, even more so recently from South Korea, Australia, Hawaii and the U.S. mainland.
While tourism is Guam’s number one industry with well over one million visitors every year; due to its geographic location, Guam also plays a major role in U.S. military support. The island is home to a large Navy Base and port harbor, a Naval Computer & Telecommunications Base, an Air Force Base and numerous other U.S. military support units, reserves and national guard units. In our Guam links section, you will see useful links to the local military community and you can find information on tourism at the Guam Visitors Bureau link under Government of Guam.
Of major significance, it was announced in 2006 that Guam’s role in U.S. military defense strategy for the Asia Pacific region would change dramatically. This impending military buildup will undoubtedly be an excellent compliment to the growing tourism industry. The new military strategy entails the relocation of the 3rd Marine Expeditionary Force from Okinawa, Japan to Guam. This includes 8,000 Marines, around 9,000 to 10,000 family members and dependents, and private contractors, support personnel and families estimated at up to 25,000. According to the U.S. Navy Pacific Fleet Commander in a local newspaper article in mid 2007, this military buildup involves the construction of a new base for the Marines and their families; construction of waterfront facilities with a nuclear carrier capable berth at the Navy base and a U.S. Army Ballistic Missile Defense Task Force, consisting of about 630 service members and an additional 950 family members. Both Navy and Air Force bases are reportedly earmarked for major expansion as well, possibly doubling in size. The U.S. military is committed to almost $15 billion in construction and related infrastructure investment and this almost ensures Guam will experience major economic and population growth over the next few years.
This military expansion together with our staple tourist industry and continued influx of foreign investment has Guam real estate on the rise again and poised for sustained long-term growth. The confidence and optimism of the residential real estate market these days has many new projects either proposed, approved or currently under construction, with some already successfully completed and sold. According to local industry analysts, through the first half of 2008, the median price paid for a single-family dwelling on Guam was around $203,000, a condominium unit, in the same time period, was about $138,000. In comparison, according to the Honolulu Board of Realtors®, through the first seven months of 2008, the median price paid for Oahu, Hawaii single-family homes was $627,000 and condominiums was $330,000. Guam and Hawaii are the closest U.S. soil tropical island resort destinations to the Asia Pacific region, with Guam’s advantage being located much closer.
Government and private industry analysts predict a need of possibly up to 10,000 or more new or refurbished housing units over the next few years and as new higher priced better quality housing units are built and sold, median prices will continue to increase. Along with the residential sector, it is anticipated that the commercial, industrial, apartment and hotel sectors should benefit from this major economic and population growth as well.
Due to the rapid accelerated growth suddenly thrust upon the island, the wastewater infrastructure system in central Guam is nearing capacity. So unfortunately, in July 2008, in order to address this, the Guam Waterworks Authority, or GWA, placed a temporary moratorium on new development projects in the central area. This will allow GWA to engage the system upgrade, repair and improvement projects required to ensure sufficient wastewater capacity is available to accommodate this rapid accelerated growth. The government took this approach in order to implement more long-term, responsible planning, thus maintaining investor confidence in the future of Guam. It was later announced in September 2008, by both GWA and the Consolidated Commission on Utilities (CCU) that the moratorium is expected to be lifted by April 2009 or sooner.
Guam did experience a huge spike in real estate investments in 2007; resulting in approximately $687 million in transactions closed, but the market has since slowed down. It is predicted to slow down the next couple of years and then gradually grow as the buildup approaches. Industry experts believe both the actual time frame for the Marine relocation planned for 2014, still several years away and the temporary moratorium on new developments in central Guam are direct contributing factors, however; world events such as the fuel crisis and the financial crisis on Wall Street in the U.S. mainland are contributing to the slow down as well. Higher fuel prices, fuel surcharges and more expensive flights have affected our tourism visitor and spending numbers. Both tourism and the military are major components driving Guam’s economy.
Despite the temporary setbacks, these are still very promising times for Guam. On tourism, Guam continues to hold its market share even though numbers are slightly down this year. On Guam’s banking industry, banks continue to provide capital for real estate transactions. Industry leaders have said the mortgage meltdown problems affecting mainland banks do not apply to local and U.S.-based banks here. Bankers say Guam is traditionally very conservative, and by law, banks here cannot receive money or make loans without FDIC insurance. Guam banks came out of the Asian economic crisis of the late 1990’s with stricter standards and are better prepared to face potential problems in the future. On the military, in an October 2008 article from the Pacific Daily News, according to a Department of Defense official whom overseas buildup readiness, despite the Wall Street turmoil and its potential strain on the federal budget, from a national defense perspective, the planned military buildup on Guam will move forward and the marine relocation will occur. Thus Guam, in the next few years, is almost assured to experience major economic and population growth, which is a real opportunity for real estate investors.
All in all, we are very excited about the future of Guam real estate. We are anticipating yet another major influx of foreign investment as the major construction projects and related activity associated with the military build up begin. Future long-term growth and stability are in the forecast, so savvy real estate investors large and small, both companies and individuals alike should give Guam some serious consideration and we at Pacific Rim Realty, will be here to assist you every step of the way with your Guam real estate investment goals.
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