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What will happen in Honduras’s real estate market? Will prices go up or down? Is Tegucigalpa still a hotspot for foreign investors? How is Honduras’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with notaries, real estate agents, and clients who buy properties in Honduras, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Honduras’ property prices will rise gradually as infrastructure projects enhance connectivity
Honduras is buzzing with new infrastructure projects that are set to transform the country.
Thanks to a generous $112 million funding package from Japan, projects like the bridge in Danlí and the highway connecting La Ceiba and El Progreso are underway, promising to boost connectivity. This kind of development is a game-changer, making it easier to get around and opening up new areas for investment.
With better infrastructure, foreign investors are taking notice. In 2023, Honduras saw $1.07 billion in foreign direct investment, a sign that confidence is growing. This kind of investment is a big deal because it often leads to economic growth, which can push property prices up.
New roads and highways are not just about getting from A to B; they’re about connecting communities and businesses. A $607 million loan from CABEI is funding a new highway that will make key regions more accessible. When areas become easier to reach, they become more attractive to live and work in, driving up property demand.
Imagine living in a place where getting to major cities is a breeze, thanks to these new developments. Improved accessibility is a magnet for both residents and businesses, which means property values are likely to rise as demand increases.
So, if you’re thinking about buying property in Honduras, now might be the time to act. With all these infrastructure improvements, the potential for property price increases is on the horizon.
Sources: World Highways, Lloyds Bank Trade, Mordor Intelligence
2) Tax incentives will attract foreign investors, boosting the coastal real estate market
Foreign direct investment in Honduras jumped to USD 1.8 billion in 2023, a notable rise from the previous year.
This increase in investment is coming from a variety of regions, including South America, Europe, and Asia, showing a growing global interest in Honduras. The government is actively encouraging this trend by offering attractive tax incentives.
These incentives include tax exemptions on profits from international sales and relief from import taxes, VAT, and income tax for businesses in free-trade zones. Such measures are designed to lure more foreign investors, especially into the coastal real estate market.
Honduras' coastal areas are becoming a hotspot for foreign buyers, thanks to the country's strategic location and stunning natural landscapes. The new tax incentives are making these properties even more appealing.
Real estate agents and developers are noticing a surge in interest from abroad, which they attribute to both the economic growth and the enticing tax benefits now available.
With these incentives in place, the residential real estate market in coastal areas is expected to see a significant boost, drawing in more foreign investors eager to capitalize on the opportunities.
Sources: UK Government, PwC Tax Summaries
We have made this infographic to give you a quick and clear snapshot of the property market in Honduras. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
3) Demand for homes in major cities will rise as urbanization boosts population growth
Urbanization is driving population growth in major Honduran cities, with more people moving to urban areas each year.
Many are leaving rural areas due to gang-related violence, food insecurity, and climate change, seeking better opportunities in cities. This shift naturally boosts the demand for housing in urban areas.
The Honduran government is investing in urban infrastructure, focusing on improving informal settlements and expanding land supply. These efforts make cities more appealing, especially to younger people who are drawn to urban job opportunities and lifestyle perks.
Economic growth is another key factor. In early 2024, the economy grew by 4.7%, largely due to private construction and commerce. This economic boost is pushing property prices up in major cities, signaling a strong demand for homes.
As urban centers offer more jobs and economic opportunities, more people are attracted to these areas, further increasing the need for housing. This trend is reshaping the real estate market, making urban properties a hot commodity.
Sources: Trading Economics, UNHCR, Plataforma Urbana, Latam FDI
4) More North American buyers will seek affordable retirement homes in Honduras
North American retirees are increasingly eyeing Honduras as a top spot for affordable international living.
With the rising cost of living back home, many are drawn to the lower expenses in Honduras. For instance, living costs in Honduras are about 66% less than in the U.S., according to LivingCost.org. This significant difference allows retirees to make their savings last longer.
Honduras offers a straightforward real estate market, making it easy for foreigners to buy property. There's been a noticeable uptick in real estate transactions involving North American buyers, especially in popular areas like Roatan.
Roatan stands out with its growing expat community and simple property purchase process, making it a favorite among retirees. The island's charm and accessibility are big draws for those looking to settle down in a tropical paradise.
Many retirees are also attracted by the quality of life in Honduras, which combines affordability with beautiful landscapes and a relaxed lifestyle. This combination is hard to resist for those seeking a peaceful retirement.
Sources: LivingCost.org, Roatan Sotheby’s International Realty
5) More foreign investors will be interested in San Pedro Sula because of its economic growth potential
Foreign investors are eyeing San Pedro Sula for its promising economic growth.
In recent years, the city has become a magnet for foreign direct investment, with net inflows reaching 3.1527% of GDP in 2023. This shows a growing confidence in the region's economic prospects. The Honduran government is rolling out the red carpet for businesses by offering tax breaks and reduced customs duties, making it easier and cheaper to set up shop here.
San Pedro Sula is not just about numbers; it's about people too. The city boasts a large bilingual population, which is a big draw for companies needing bilingual agents to cater to North American clients. This demographic edge makes it an ideal hub for businesses looking to expand their reach.
Multinational companies are already taking notice. For instance, Concentrix has set up operations in the city, signaling a vote of confidence in its economic potential. The presence of such companies underscores the growing interest in San Pedro Sula as a business destination.
Success stories abound, like the establishment of forty-seven call centers that have created over seventeen thousand jobs. These examples highlight the city's potential as a thriving business hub. The combination of a business-friendly environment and a skilled workforce makes San Pedro Sula a compelling choice for investors.
Sources: World Bank, Trading Economics, LATAM FDI
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6) Rental yields in Tegucigalpa will drop as more properties increase competition among landlords
Tegucigalpa is buzzing with new residential developments, making it an exciting time for potential property buyers.
In just a year, building permits shot up by 34.5%, signaling a boom in new homes and apartments. This surge means more rental options are popping up, which naturally heats up the competition among landlords.
With all these new properties, vacancy rates are likely to climb. While we don't have exact numbers for Tegucigalpa, it's a common pattern in bustling construction zones. More homes than renters often lead landlords to drop prices to fill their spaces, nudging down the city's average rental rates.
To stand out, landlords might start sweetening the deal with perks like discounts or free utilities. It's a classic move in a crowded market. Plus, renters usually lean towards fresh, modern places, which can shift demand to these new builds, cranking up the competition even more.
As the market gets crowded, rental yields in Tegucigalpa are expected to dip. More properties mean landlords have to work harder to attract tenants, often by lowering rents or offering incentives.
For those eyeing a property investment, this could mean snagging a deal, but it also means being ready for a more competitive rental market. Understanding these dynamics is key to making a smart investment choice in Tegucigalpa.
Source: IMF
7) Residential property prices in San Pedro Sula will rise significantly as the industrial sector expands
San Pedro Sula is seeing a significant rise in residential property prices thanks to its thriving industrial sector.
In 2023, the industrial sector, including construction, played a major role in Honduras' economy, making up 26.03% of the GDP. This underscores the sector's importance and highlights the growth in San Pedro Sula. The city is a hub for the Honduras 20/20 Plan, which aims to create 1.26 million jobs by 2025, focusing on manufacturing and agro-industrial sectors. These sectors are particularly strong here, leading to more job opportunities and attracting workers to the city.
This influx of workers naturally increases the demand for housing, pushing property prices up. The government is also investing in infrastructure development, such as roads and public transportation, which enhances property values in connected regions like San Pedro Sula. The expansion of industrial parks and facilities further attracts businesses and workers, boosting the demand for residential properties.
San Pedro Sula's strategic location and industrial growth make it a magnet for businesses and workers alike. The city is becoming a key player in the national economy, with its industrial sector driving much of the growth. This economic activity is not just about numbers; it's about the real impact on the ground, where more jobs and better infrastructure are transforming the city.
For potential property buyers, this means that investing in San Pedro Sula could be a smart move. The city's growth is not just a temporary trend; it's part of a larger economic strategy that is reshaping the region. With more people moving in for work, the demand for housing is only going to increase, making it a promising market for real estate investment.
As the city continues to develop, the quality of life is also improving, with better services and amenities becoming available. This makes San Pedro Sula not just a place to work, but a place to live and thrive. The combination of economic growth and improved living conditions is a powerful draw for both businesses and residents.
Sources: Trading Economics, IFC, Macrotrends
8) Property prices in the Bay Islands will surge as retirees seek a tropical lifestyle
The Bay Islands are becoming a hotspot for retirees seeking a tropical lifestyle, and property prices are expected to rise as a result.
With a growing retiree population of about 80,000, including a lively expat community, the Bay Islands are attracting more attention. This surge is partly due to the pensionado residence visa, which requires just $1,500 in income from Social Security or a similar source, making relocation easier for retirees.
Property sales and inquiries are climbing, with Realtor.com showcasing a variety of listings. Prices range from $59,000 for land in Utila to $4,950,000 for a house in Politilly Bight, indicating strong demand. In Roatan, property prices are expected to rise by 3% to 7% in 2025, fueled by increasing tourism and limited land availability.
The Bay Islands are gaining recognition as a retirement haven, thanks to their warm climate, stunning landscapes, and affordable living costs. Improved infrastructure, like better roads and utilities, is boosting property values and living conditions, making the islands even more appealing to retirees.
Honduras offers favorable tax policies for foreign property owners, such as a flat 25% tax rate on rental income and a 10% capital gains tax rate, which enhances the investment appeal of Bay Islands properties.
As more retirees discover the Bay Islands, the combination of natural beauty, affordability, and improved amenities is making them an increasingly attractive option for those seeking a tropical retirement.
Sources: Realtor.com, About Roatan Real Estate, International Living
We made this infographic to show you how property prices in Honduras compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
9) Interest in colonial-style homes will grow as cultural heritage becomes a key selling point
Honduras is becoming a hotspot for tourists who are drawn to its rich history and culture.
Thanks to media buzz about preserving cultural heritage, colonial-style homes are gaining popularity among tourists and potential buyers. The charm of these homes is undeniable, and they offer a unique glimpse into the past.
The Honduran government, along with NGOs, is putting in a lot of effort to restore historical sites, especially those with colonial architecture. This not only beautifies the area but also boosts the value of colonial-style properties. Real estate listings are now proudly showcasing these architectural gems.
People are increasingly looking for homes with a story, a trend that's reflected in consumer surveys. There's a growing desire for homes with historical significance, as they offer a unique and culturally rich living experience.
Social media is playing a big role in this trend. Platforms like Instagram and Pinterest are filled with vintage aesthetics and retro designs, which are making colonial-style homes even more appealing. These homes are becoming the stars of social media, capturing the imagination of many.
With all this interest, it's no wonder that colonial-style homes are seeing a resurgence. They are not just homes; they are pieces of history that people want to be a part of.
Sources: Frommers, Honduras Real Estate, Square Holes
10) Rental yields in the Bay Islands will drop as property prices rise faster than rents
The Bay Islands, especially Roatán, are experiencing a significant rise in property prices.
In Roatán, you can find homes starting at around $250,000, while beachfront condos are available for under $200,000. This shows a growing interest in owning property in this beautiful area.
Historically, property prices in Honduras have been climbing faster than rental rates. Even though rental properties offer gross rental yields between 7.7% and 10.4%, these yields haven't increased as quickly as property prices.
This means that rental yields are lagging behind the rising property values. The gap between what you pay for a property and what you can earn from renting it out is getting wider.
Real estate agencies have noticed a surge in demand, fueled by foreign investment and an influx of expatriates and retirees. This demand is pushing property prices even higher.
Economic indicators point to more foreign investment, which is likely to drive property prices up further, making it harder for rental yields to catch up.
Source: International Living
11) Demand for affordable housing in Honduras will grow as the middle class expands
Honduras is seeing a steady rise in its economy, thanks to thriving sectors like agriculture, manufacturing, and services.
This economic boost is putting more money in people's pockets, leading to a noticeable expansion of the middle class. As more folks find financial stability, they're eyeing cities like Tegucigalpa and San Pedro Sula for better job prospects. This urban shift is creating a buzz in the housing market, with a particular focus on affordable options.
People aren't just looking for any home; they want modern amenities and comfort. This desire is pushing the demand for housing even higher. The government and international organizations are stepping in, working on policies to make housing more accessible. They're improving infrastructure to support this growing need.
Foreign investors are also catching on, pouring money into the real estate market. This influx is expected to drive up property values, making affordable housing a hot topic. For those looking to buy, it's becoming increasingly important to find options that won't break the bank.
With the middle class on the rise, the demand for affordable housing is set to grow. This trend is not just about numbers; it's about meeting the needs of a changing population. As more people move to urban areas, the pressure to provide suitable housing options will only increase.
In the coming years, the focus will likely remain on creating affordable housing solutions that cater to the evolving needs of the middle class. This shift is crucial for maintaining the momentum of economic growth and ensuring that everyone can find a place to call home.
Sources: World Bank, ALAP, ReliefWeb
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12) Short-term rental growth will affect long-term rental markets in tourist areas
In 2023 and 2024, Honduras saw a big jump in short-term rental listings, especially in tourist spots like Roatán, Tegucigalpa, and Copán Ruinas.
Platforms like Airbnb and Booking.com are buzzing with options, from beachfront villas to mountain retreats, making them a hit with travelers. This boom has been a goldmine for local economies and property owners, who are cashing in on the trend.
The Honduran government has noticed, reporting significant income from these rentals, highlighting their growing role in tourism. Many property owners are now eyeing short-term rentals for their higher earnings and flexibility.
But there's a flip side. As more homes turn into short-term rentals, long-term rental options in tourist areas are shrinking. This is a trend seen across Central America, where non-hotel tourist accommodations jumped by 30% from September 2020 to August 2022.
With fewer long-term rentals available, prices for long-term tenants are climbing. This shift is reshaping the rental landscape, especially in places that draw lots of tourists.
So, if you're thinking of buying property in these areas, keep in mind how the rise of short-term rentals might affect long-term rental markets. It's a dynamic scene with both opportunities and challenges.
Sources: Lodge Compliance, Key Data Dashboard, Bloomberg Linea
13) Interest in luxury beachfront properties will grow among local and foreign buyers
Honduras is becoming a hotspot for luxury beachfront properties.
With its stunning coastal areas like Roatán and Tela, the country is seeing a surge in tourism, which naturally boosts the demand for these properties. More visitors are drawn to the beautiful landscapes and vibrant culture, making the idea of owning a piece of paradise increasingly appealing.
Foreign investors are also eyeing Honduran real estate, thanks to government policies like the Investment Promotion Law. These policies offer attractive incentives such as tax breaks, making it easier for international buyers to dive into the market. This influx of foreign capital is expected to drive up property values, especially in tourist hotspots.
Infrastructure improvements are another key factor. The government is enhancing roads and public transportation, making coastal areas more accessible. This development is evident in places like West Bay in Roatán, where luxury properties are sprouting up, reflecting these advancements.
Honduras is being marketed as a luxury destination, with media coverage showcasing its natural beauty and affordability. This positive attention is drawing more international buyers, who are intrigued by the unique blend of luxury and affordability that Honduran beachfront properties offer.
As more people discover the allure of Honduras, the interest in luxury beachfront properties is expected to grow, attracting both local and foreign buyers eager to invest in this emerging market.
Source: LATAM FDI
14) Blockchain will make property transactions faster and safer by increasing transparency
Blockchain is revolutionizing the real estate world by making property transactions more secure and transparent.
In Honduras, they've started using a blockchain-based land registry, which is a game-changer for securing property titles. This system is designed to prevent unauthorized changes, tackling the long-standing issue of bureaucratic corruption. It's a big step forward in protecting landowners from fraudulent claims.
Smart contracts are another exciting aspect of blockchain in real estate. These digital agreements automatically execute when conditions are met, cutting out the middlemen and reducing costs. This means transactions are faster, more efficient, and less prone to human error.
Countries like Brazil and India are also jumping on the blockchain bandwagon, exploring its use in financial transactions. This shows a global shift towards adopting blockchain in real estate, as more nations see its potential to simplify and secure property deals.
As technology advances, blockchain is becoming more accessible and user-friendly, paving the way for its widespread use in the real estate market. This growing trust in blockchain is transforming how property transactions are conducted, making them more reliable and efficient.
With blockchain, the future of real estate looks promising, as it continues to streamline processes and enhance security. The technology is set to become a staple in property transactions worldwide.
Sources: Honduras begins CBDC consultation for cross-border payments and financial inclusion, Honduras to use Bitcoin Blockchain tech to run its land registry, The Future of Blockchain Technology in 2024: 5 Predictions
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.