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.

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

To spur development, long-term leases, which can be bought and sold, have been created on both American Samoa and Saipan — but a long-term lease, even at 99 years, is not full ownership, and this has hampered development on these islands. American Samoa, even before the devastating tsunami that killed hundreds of people, had trouble attracting development.

Things aren’t much different in Saipan. When Japan’s economy was flush, Saipan became, after Guam, the next hotspot for pleasure-seeking, sun-worshiping Japanese tourists, in a manner similar to U.S. citizens heading to the Caribbean. New high-rise hotels were built and the island boomed. Then the Japanese economy tanked, and with it went Saipan’s economy.

Other troubles arose and the island hasn’t yet recovered. When I first visited there in 2007, I wrote that Saipan was "the last real estate bargain under the Stars and Stripes." In 2009, Saipan’s economy was even in worse shape than two years before, and the real estate bargains (acquiring long-term leases) were now at substrata prices.

Meanwhile, over in Guam, investors were chomping at the bit to invest based on an expected infusion of federal dollars.

The tourist area of the island sits on a perfectly formed bay. It’s here where the high-rise hotels are clustered and mostly filled with Japanese tourists. The Tumon Bay area looks like a mini-Waikiki.

Traditionally, the Guam real estate investment market has followed tourism. When the Japanese tourists come, many also buy real estate. When they don’t come, real estate prices deflate. As a result, Guam property markets run through very fast cycles with dramatic climbs and scary declines.

There is one other major facet of the local economy and that’s the U.S. military, which has bases on Guam. At the 2007 Micronesia Real Estate Conference as well as the 2009 gathering, the main topic of discussion has been an expected $15 billion commitment by the federal government to build up infrastructure, as an estimated 8,000 Marines will eventually be based on the island. Indeed, the keynote speaker at the 2009 conference was retired Vice Admiral Douglas Katz of the U.S. Navy.

The last real estate bust in Guam was early in this decade, which was followed by a Marines-to-the-rescue mini-boom. That heat has simmered down a bit recently, because, as Katz reiterated, the build-up on Guam will come, but slowly and over an extended period of time.

In 2007, real estate deals on Guam (residential and commercial) hit the $700 million mark; in 2009, it is expected to be just $240 million, said Nick Captain. He predicts investment activity would come back quick when federal dollars start washing ashore. In short, he adds, the time to invest is now — when the market is quiet. When the next investment typhoon hits, it will be too late.

Steve Bergsman is a freelance writer in Arizona and author of several books, including "After the Fall: Opportunities and Strategies for Real Estate Investing in the Coming Decade."

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