Guam Real Estate, Guam Property, Real Estate in Guam, Guam Economy and Guam Business Climate
Welcome to America in Asia
The following is a brief description of Guam U.S.A., its location, economy and business climate as it affects the local real estate market.
Please be sure to click on any one of the links below that further describe our people, history, culture and paradise, along with the local Realtor® association, online property search tools, our homes, condominiums and townhomes, plus real estate and community information specific to popular villages and areas of interest and expertise.
Situated in the Western Pacific, within close proximity to the Asia Pacific Rim countries including Japan, South Korea, China, Taiwan, Hong Kong, Singapore and the Philippines, Guam truly is America in Asia.
Guam is an unincorporated territory of the United States and closest U.S. soil to the Asia Pacific region. It is the southernmost island of the Marianas Island Chain and largest island in Micronesia, with an area about 210 square miles in size. Guam is 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 in 2010 was projected to be around 180,692.
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 lush tropical landscapes, warm breezes, powdery white sand beaches, clear waters and sunny blue skies 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 real estate 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 is recorded and filed at the Office of the Registrar, Department of Land Management, Government of Guam. In addition, real property taxes are relatively low when compared to the U.S. mainland. According to the Department of Revenue & Taxation, Guam real property taxes are computed using 70% of the property’s appraised value. The amount due is one-half (1/2%) percent of that for buildings, or one-eighth (1/8%) percent of that for land.
Japan is the predominant visitor market and source of foreign investment in the hotel, tourism and visitor transportation industries over the last four decades; however tourists and foreign investment from Hong Kong and Australia have been factors from time to time. South Korean investments were key in the recent past. Even more recently investors from Taiwan, the Philippines, the U.S. mainland and Hawaii are playing increasingly larger roles.
With well over one million visitors every year from Japan alone, tourism has been Guam’s staple industry, contributing about 60% of Guam’s total revenues and generating about $1.2 billion annually. Relying almost exclusively on visitors from Japan, local tourism officials continue to explore ways to expand arrivals and diversify markets. One such effort comes through the development of the cruise ship market. The cruise ship industry certainly has great potential for Guam with several notable ships making dock visits recently, including Japanese cruise ships the Nippon Maru and MS Asuka II, and most notably, the Queen Mary 2, the largest luxury cruise line to enter Apra Harbor. Another effort is through continued pursuit of a permanent visa-waiver program for the island to be extended to China and Russia, similar to that already in place in Saipan, CNMI. Local government officials continue to lobby Congress for the tools Guam needs to move towards self sufficiency and a permanent visa-waiver program will definitely provide Guam more tourism opportunities. China could be a major source of tourism; however pursuing smaller markets such as Russia, Taiwan and the Philippines, among others, will help to grow and diversify the tourism industry over time.
Guam also plays a key role for the U.S. military due to its geographic location. Military spending contributes about 30% of Guam’s total revenues. The island is home to a large Navy Base and port harbor in Sumay, Agat, a Naval Computer & Telecommunications Base in Dededo, a large Air Force Base in Yigo and numerous other U.S. military support units, Army, Air Force and Navy Reserves, Army and Air National Guard and a Coast Guard detachment.
Both tourism and the military are the two major components driving Guam’s economy, contributing a combined 90% of Guam’s total revenues. 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.
In 2006, it was announced that Guam’s role in U.S. military defense strategy for the Asia Pacific region would increase dramatically. Military spending could surpass the growing tourism industry and their respective contribution percentage to the island’s total revenues could be reversed in the coming years.
This new military realignment strategy entails the relocation of the 3rd Marine Expeditionary Force from Okinawa, Japan to Guam. This includes 8,000 Marines and around 9,000 to 10,000 family members and dependents; private contractors, support personnel and families estimated at up to 25,000, all at a price tag of about $10 billion alone. According to the U.S. Navy Pacific Fleet Commander, the military buildup involves the construction of a new base for the Marines and their families; construction of waterfront facilities with a nuclear aircraft 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. The U.S. military is committed to almost $15 billion in total construction and related infrastructure investment and this ensures Guam will experience major economic and population growth over the next few years.
Excitement and optimism followed the 2006 announcement of the military buildup. The buildup combined with our tourist industry and strong economies in parts of the Asia Pacific Rim lead to a wave of foreign investment that stimulated the housing market, and saw several new residential single-family home and condominium projects either proposed, approved or under construction, with some already successfully completed and sold.
In 2007, real estate sales totaled approximately $687 million, which reflected the enthusiasm in the market. South Korea was the major player and foreign investor. For 2007, the U.S. Commerce Department reported that Guam’s economy was worth almost $4 billion, growing at a yearly rate of 1.8 percent since 2002, according to the gross domestic product for the island.
In 2008 and 2009, the market slowed in part due to the reality of the actual time frame for the Marine relocation being several years away, and also in part due to world events such as the fuel crisis, the financial crisis, the mortgage meltdown on Wall Street, and global economic recession. Total real estate sales for 2008 were reported at $368 million.
In 2010, as U.S. and global economic conditions improved and real estate markets showed signs of recovery, Guam was in an enviable position as it is not only benefitted from U.S. government stimulus money, it was also experiencing the excitement of a forthcoming military buildup which coincided with global and U.S. economic recovery. Total real estate sales for 2010 were reported at $306 million, back up from a low of $250 million in 2009.
In regards to the military buildup, the final Environmental Impact Statement identified a measure of mitigation it called adaptive program management, in which the pace and sequencing of construction would be adjusted to stay within the limitations of the island’s infrastructure, port, roads, utilities, as opposed to the original targeted completion date of 2014. The Record of Decision, which was signed in September of 2010, all but solidified the buildup and basically adopted most of the estimates in the final EIS, which meant a longer period or pace of economic activity and a more manageable buildup construction timeline, which will better serve the island overall.
Guam’s population is projected to increase by almost 41,000 people during the peak of construction, which should level off to approximately 34,000, based on implementation of this adaptive program management. However, the ultimate number, previously estimated at around 80,000 people in the draft EIS, will be based on the island’s ability to handle the construction work force, the arrival of Marines, among other factors. The military buildup is also expected to create up to 33,000 new jobs and the local government is forecasting about a 60% increase in its annual budget during the peak.
Guam’s housing inventory was recently estimated to be around 27,500 units. Government and private industry analysts predict a need of possibly up to 10,000 or more new housing units over the next few years and as new higher priced better quality housing units are built and sold, median prices may increase. While a great climate and booming economy usually push prices up, if the housing supply expands along with demand, this should keep prices stable or moderate. However, if housing supply greatly exceeds demand, prices can actually decrease. As demand for more central village locations increases, prices may go up in these areas. One way to offset higher prices and attain affordability would be to develop outer villages. If accomplished responsibly, it represents opportunities for investors and developers, and even homebuyers to discover some of the island’s best kept secrets and showcase lush scenery few have ever seen or lived in. We feel it helps homebuyers to be aware of the dynamics of a rapidly growing housing market and the factors that could affect prices. Investors and developers should place emphasis in serving the market segments lacking supply. This is where we can help. We know where the niches are in the market, in price, income levels and location. Along with the residential sector, there is much anticipation that the office, retail, commercial, industrial and hotel & leisure sectors of the market will benefit from the economic and population growth as well. Opportunities for investors and developers abound and based on our experience, we understand the types of developments, features and amenities that can provide a project the most potential for sustainability, long after the buildup is completed.
This is an unprecedented period of time in the history of Guam, which over the next few years, is almost assured to experience a rate of economic and population growth never before seen. Real estate prices are expected to rise in these coming years.
The writing is on the wall. Shovels continue to break ground. Major construction activity has begun. Signs of the economic activity to come are everywhere. The Port Authority of Guam embarked on a modernization project amounting to over $200 million last year, of which 75% is buildup related. DOD and USDA will fund $100 million. This would increase the port’s capacity to support both the buildup and the island’s long term needs. The Department of Public Works also started about $158 million in pre-buildup construction on Guam’s highways last year, all funded by the Federal Highway Safety Administration. DOD approved over $115 million in road project funding as well. The Guam Land Use Commission approved several temporary work force housing projects accommodating almost 20,000 workers, with more under review, which could potentially bring the total accommodations to over 23,000 workers. In 2009, the U.S. Congress appropriated $738 million and the Japanese government gave its initial share of funding amounting to $330 million, for a total of over $1 billion in military spending at Andersen Air Force Base, Guam Army National Guard and Naval Base Guam, among others, all commenced in 2010. Japan has also agreed to finance up to $740 million into the island’s power, water and wastewater utilities and systems upgrades, expansion and development related to the Marine relocation. In the first quarter of 2010, the Navy awarded a $500 million small business multiple award construction contract to six different firms of which several projects are underway. Halfway through 2010, the Navy awarded a $4 billion design-build multiple award contract to seven different contractor partnerships, allowing them to commence some seed projects first and eventually the projects related to the Marine Corps Base relocation.
In 2011, Japan committed to an additional $3 billion of military buildup funding through its Mamizu Multiple Award Construction Contract or Mamizu MACC, also one of the largest military contracts in Guam’s history. As in the federally funded $4 billion MACC awarded last year, the Navy will select three to seven companies for the Mamizu MACC. These companies will have the right to bid on a range of buildup projects from $15 million to $300 million.
Pacific Rim Realty thus far has helped several contractors and partnerships with their facilities, housing and/or land investment requirements and we are ready to help more.
All things considered, real estate is still a local business driven by local conditions and we believe there is arguably no other real estate market in the world at this time that will experience the growth and economic opportunities associated with such a major buildup. The future of Guam real estate is very exciting. Guam is truly a unique island by itself both physically and economically. New waves of foreign investment are expected as major design and construction projects and related activity associated with the buildup have begun. Unprecedented economic and population growth is in the forecast, so savvy real estate investors large and small, both companies and individuals alike should give Guam serious consideration and we at Pacific Rim Realty, stand ready to assist you every step of the way.
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