Tropical investing with a twist

Flickr image courtesy Feastguru.com.

This past autumn when I arrived on the island of Guam in the far Pacific, I was greeted by a tropical depression. After that storm system passed, a typhoon warning was issued. Fortunately for me, the typhoon drifted north where it struck the island of Saipan.

During my time in Guam, but thousands of miles to the southeast, the island of American Samoa was struck by a tsunami. There was a lot of nature roaring about the Pacific while I was out there.

This was my third visit to America's Pacific Island territories since early in 2007. It wasn't just for fun. Every two years, Nick Captain of Guam's Captain Real Estate Group of Cos. hosts the Micronesia Real Estate Investment Conference, and for the second time I was asked to be one of the main speakers.

When I tell people I'm heading to Guam for a real estate conference, they tend to scratch their head in wonderment. "People invest in real estate out there?" they ask. And the answer is always, "Yes, they do -- and in a major way."

The conference generally attracts anywhere from 200 to 300 people from Hawaii, the mainland U.S., Korea, the Philippines, Taiwan, Japan and some of the other Pacific island nations closely tied to the United States, such as the Marshall Islands and Palau.

What's the attraction?

Although most Americans don't realize it, our country consists of five territories and commonwealths beyond the 50 states. They include the Virgin Islands and Puerto Rico in the Caribbean, and Guam, the Commonwealth of Northern Mariana Islands and American Samoa in the Pacific. That's a lot of sandy shores, and Hawaiian and U.S. investors come to the Guam conference because they are of a select group that has taken the time to understand there's still cheap beachfront under the Stars and Stripes to be had.

Foreign investors know the islands, particularly Guam and the Northern Mariana island of Saipan, as resort playgrounds for Asians who want to buy and develop because they know these investments are protected by the full weight of American rules and regulations.

However, one also has to know the local rules and regulations, and that makes real estate investing tricky on American Samoa and Saipan. The Guam real estate market, which for all practical purposes is the largest in the northern Pacific, is as open and as speculative as anywhere else in the United States, whether it be Honolulu, Chicago or Charlotte, N.C.

American Samoa and Saipan are different beasts because when these island states created constitutions to guide governance, they kept real estate within traditional ownership patterns. Much of it was communal and, except in a minority of locations, none of it could be sold to non-native peoples, much the same way Native American reservation land cannot be sold. ...CONTINUED

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