Real estate prices will shoot up with the relocation of thousands of military personnel to the island by 2012.

What’s more that happy expectation is driving investors to purchase land and causing a shortage of properties in the market.

With Guam’s economy and the real estate market seemingly on the rise construction has begun on new housing developments some as large as 300 lots.

W. Nicholas Captain president of The Captain Co. and Captain Realty; told the Journal “We have seen roughly a doubling in the total amount of sales activity islandwide. From 2000 through 2003 the market was reflecting about $10 million in sales a month and in 2004 through 2005 we saw sales increase to about $20 million a month. The overall real estate market is quite healthy.”

While the market may be on an upswing he said the island does not have enough rentals and houses on the market to meet the current demand and that the addition of incoming military personnel will cause real estate prices to increase.

Captain said that in his opinion the real estate market cannot accommodate the current demand.

He said “Many people are grabbing up land in anticipation of the incoming military. There is almost a feeding frenzy among perspective investors. We have seen a sharp increase among the number of foreign investors that are looking at our market a sharp increase in the number of local investors that are looking to acquire property and a sharp increase in pricing in some sectors which includes certain components of the land market and investment condominium projects. The current demand is exceeding the supply.”

While the market cannot meet present demands Captain said eventually there will be adequate housing for the incoming military personnel from both the military and private sector. Within the next few years he expects to see significant growth a new supply of projects coming online and a stabilization — at least in the near term — on pricing. It is actually the psychological effect of the incoming military personnel that Captain is concerned about. “People are making decisions now about something that won’t be happening for five years. If people are expecting an economic boom because the military is coming I think that that is an overly optimistic scenario. There has already been a run up in pricing because of these great expectations but you are going to need economic growth to support the price increase or else we are going to see some downward moving on pricing.”

Christopher M. Felix principal broker for Century 21 Realty Management Co. Inc. told the Journal “There does not appear to be enough [property] on the market to accommodate the demand.” He said when the military personnel does start coming the rental market will tighten and rent will be raised. “Prices will go way up. It is the law of supply and demand.”

Trying to meet that demand is the Estates at Sasajyan near the Marbo Caves in Mangilao one of the largest subdivisions being developed.

Sasajyan will have an area of more than one million square acres. Duenas Bordallo & Associates were hired to come up with the designs for the estates. Currently the project is still in the preliminary design phase. Jay Lather vice president and general manager of EC Development; said “We will be going before the [Department of] Land Management review process within the next month and if all goes well we should be in a position to begin selling (lots) by February.”

The project consists of six phases. Phases 1 through 4 are soon going before the review process. Those phases consist of 150 lots. Phases 5 and 6 will be held back and go before the review process at a later date. All six phases are scheduled for completion by 2008. When the property is ready to start selling lots will be sold and buyers will be able to draw up the plans for and construct their own house.

The entire development consists of:

• More than 300 ocean-view home sites;

• Fully improved 1/2-acre lots ranging from $60 000 to $300 000;

• Underground utilities and paved road;.

Common area recreational facilities consisting of an ocean-side jogging/walking path along the coastline ocean access a two-acre children’s area with a baseball field and park area and at least 100 acres of open space on the northern side of the estates which is not earmarked for any development.

Lather also sees Guam’s economy and real estate market on an upswing. He told the Journal “I think we have begun the economic ascent on Guam. Prices are edging up on the market. Guam will be revving up substantially in a year from now and we want to get started now so that we can be ahead of the curve.”

Lather said that the incoming military personnel would not pose a problem. “I don’t see that as an issue at all certainly from the land stand point that is not an issue. We’ve got information that there is going to be development for the Navy communications and Andersen South that will be housing Marines. We also know that a large portion will be sent up to the CNMI. There is going to be development in Rota and Saipan and as far as the actual Marines that is not a problem ” he said. Lather said “From the real estate side which is my level of expertise we’re set to go and it’s not going to be a problem. It’s a huge opportunity. We are very excited about it.”

Lather is correct that in addition to the new subdivisions that are being built the military is also planning on constructing housing facilities of their own in order to accommodate the incoming military personnel. The exact number of incoming military personnel is not known. The number however will be in the thousands and the relocation should be complete by 2012.

Tech. Sgt. Jeffrey Capenos of the U.S. Air Force’s 36th Air Expeditionary Wing Public Affairs office told the Journal that the Air Force is drawing up plans for more housing as well as maintenance facilities hangars medical facilities etc. at Andersen Air Force Base. “We are currently drawing up blueprints for a one-year plan a five-year plan and 10-year plan but nothing has been decided. We are looking at every possible aspect so we can do everything as smart as possible ” he said.

As reported in the Journal (See “Navy begins upgrades to housing” in the Nov. 28 2005 edition of the Journal.) the Navy plans on investing millions of dollars on upgrading its current housing facilities. Petty Officer Ben Keller assistant public affairs officer for the Navy told the Journal “We don’t know specifically how many marines and Navy personnel are actually coming to Guam. The Navy is doing studies to determine that number.” Keller said that the Navy won’t be doing any planning or construction until it knows the number of personnel coming in.

However Rear Adm. Charles J. Leidig commander of U.S. Naval Forces Marianas told the Saipan Chamber of Commerce on ????????? that the Navy already has identified where it will place accommodation for its personnel and specifically referred to Andersen South.

“Andy South — which used to belong to Andersen Air Force Base and still does and is really not occupied; Barrigada — a communications facility with a lot of open area; NCS — Naval communications and telecommunications station — another large area with a lot of land — we’ll probably be looking to those areas and some of that real estate to locate those forces.”

Quoting a Navy source the Journal reported as early as May that Marines would be relocated to Guam and Andersen South.

Frank R. San Agustin Jr. president and principal broker for Titan Realty represents the owners of 12 Marbo lots around the Estates at Sasajyan. He told the Journal “The Estates at Sasajyan is the force driving the development of the Marbo Cave area.” Some of his customers who own land in that area have decided to take their property off the market to see what effect the development has on the property. “The Marbo Cave area has the potential to become the next Pago Bay ” San Agustin said.

Construction on the Palo Verde Estates along Ypao Road is scheduled to start in March. Felix represents the owner/developer of the property — Landmark Development LLC — whose president is Bryan Y. Suhr president of South Pacific Petroleum Corp. and whose vice president is Michael Hahm vice president of South Pacific Petroleum Corp. Felix said the estates would be a 35-acre gated community. The development includes:

Eleven 1/2 acre cliff-line lots and eight 1/2 acre lots across the cliff-line lots. The lots will be sold bare so buyers will be able to design their own home. The cliff-line lots will sell for $500 000 and the eight lots across from that will be sold for $250 000.

Landmark will build 65 single-family dwellings. The dwellings will range in area from 1 800 square feet to 2 700 square feet. Buyers will be given several different floor plans for the dwellings along with prices and they will be able to choose which one they want and Landmark will build it.

Near the entrance 33 townhouses will be built. The sizes of the townhouses range from 1 800 square feet to 2 000 square feet. The price of the townhouses will start at $350 000 to $425 000.

At the center of the estates will be a three-acre park. There will also be a swimming pool tennis court and clubhouse.

Utilities will all be underground. The developers are also thinking about putting in an underground LP gas line for generators.

The gate will have a guard service 24 hours a day.

Construction of the development’s infrastructure is scheduled to begin in March and construction of the houses in June. Felix said hopes he to have the houses ready for delivery by Christmas through June 2007.

He said the real estate market is doing well and hopes that it is an upward trend. “We have seen a rise in residential real estate values of 20% to 40% ” he said.

Charles Leng president of Pacific Concorde Development Inc. has decided to take his new development in another direction. Leng said that instead of a huge development with over 100 units for sale he is working on one small development with only six houses. Construction on the houses began March 2005. Two of the houses have been completed. The remaining houses are scheduled for completion around December through January 2007. The development is located in Mangilao and can be accessed through Mamis Street.

All the houses will be located on 800 square meter lots and include three bedrooms two bathrooms a living room area kitchen area with a breakfast nook laundry room that connects to the garage and a 443 square-foot two car indoor garage. The houses will be roughly 2 000 square feet. Leng told the Journal that the quality of the houses was very important to him. The completed houses have a front door and electric garage door that can withstand winds of up to 170 miles an hour and the inside doors counters and cupboards are all hardwood that has been waterproofed. The French windows are made of tempered glass and are tinted to give the homeowners some privacy. Buyers also have the option of requesting typhoon shutters and Pacific Concorde will install them. The asking price for the houses is $295 000.

Anthony Godwin principal broker for Today’s Realty which is handling the sale of the houses said “Smaller developments allow for more style and better utilization of the area.” Leng is currently looking for more sites to build more developments of this type. MBJ