Top 11 Overseas Retirement Havens

"'Part of that will be equity in my home,' my friend explained. 'But I'd like to have US$4 million invested. With today's low interest rates, even with US$4 million I'll barely have enough to live.'

"Bill figures that, even if he can earn 5% on his US$4 million stash--tough to do these days--that's still only US$200,000 a year. If he pays half that in taxes, he'll have to live on US$100,000 a year, in an expensive house, in the fast lane he's used to. Also tough to do.

"Bill ran some more numbers by me and asked me how soon I thought he'd be able to retire.

"'That's easy,' I said. 'Never...'"

• How much will it cost you to live in the overseas Shangri-la that's calling your name? Here's how to figure an answer to that question...

• Panama is much discussed on the international stage these days, but, for a change, the news right now is not all good.

First, on Nov. 30 last year, Panama signed a tax information exchange agreement (TIEA) with the United States, ending, for all intents and purposes, this country's tradition of bank secrecy. Even today, more than a month later, bankers and others in Panama are not certain how the terms of the treaty will be interpreted or applied, but, bottom line, an American should take for granted now that, if he has a bank account in Panama, the U.S. government will know about it.

Does this mean that Panama is no longer the appealing offshore haven we've been reporting it to be for years?...

• Sometimes first impressions can be deceiving. So I'd worked hard to keep my expectations in check leading up to this return trip to Medellin. Surely, this city, upon second, closer look, couldn't live up to the rose-colored memory I've cultivated since my first visit a few months ago.

Au contraire. I'm falling in love all over again.

This city of flowers and eternal springtime is everything I've told you--beautiful, pleasant, clean, safe, sophisticated...

Also This Week...from resident global real estate investing expert Lief Simon:

We're in Medellin this week, where I'm finding the real estate market as interesting as I did back in August when we were last here. The per-square-meter prices are still attractive, and the Colombian peso has fallen against the U.S. dollar a bit since August, meaning prices are even more attractive for anyone (like me) shopping with Greenbacks.

We've viewed more than a dozen apartments with an eye to buying something for ourselves. I don't think we'll find the perfect property this trip, but I'd like to sign a contract for something before the dollar drops again.

Buying real estate in Colombia is a straightforward process, but you have to make sure you work with competent, trustworthy professionals--attorneys, tax advisors, and real estate agents with experience and track records helping foreign buyers.

This is nothing new. My recommendation is always to use an independent attorney (not the seller's or the developer's attorney), to speak with a tax advisor in any country where you're shopping before you sign anything, and to work with reputable real estate agents (rather than a guy you meet in the lobby bar of your hotel).

What can be complicated right now in Medellin is finding English-speaking service providers. This city, like most of this country, has seen little activity from foreign real estate buyers and less from North American buyers. As a result, the available information on things like taxes, the real estate purchase process, residency permits, banking, etc., is limited and sometimes contradictory in Spanish and almost non-existent in English.

This means that the amount of groundwork required prior to making an investment in this market is greater than in more established gringo destinations such as Panama, Mexico, or Costa Rica.

It also means, however, that you have a window of opportunity to act before the market develops momentum among foreign buyers...and prices move up.

I predict that this real estate market will see a nice little pop once the information flow improves...at least in certain neighborhoods that will prove very attractive to foreign investors, holiday-goers, and retirees.

Meantime, Medellin isn't sitting around waiting for foreigners to discover it. Plenty of new condo construction is going on here already, and units are being absorbed at a reasonable rate. It's nothing like the level of new construction that has taken place in Panama City, for example, over the past half-dozen years. But there are more new apartment buildings going up than I would have expected, many where construction is almost complete and only a few units remain available.

Who's buying the new inventory that's coming online? Local Colombians primarily (the middle class is expanding) and some Europeans.

This market is developing similarly to what we saw in Panama years ago. New construction is more expensive than resale, by as much as 50%. Buildings as few as five years old aren't interesting to local buyers, meaning new construction is more sought-after (and therefore more expensive).

In addition, prices per square meter are higher for new apartments compared with older ones because new buildings and new apartment units boast more and better amenities (pools, saunas, gyms) and higher-end finishes in bathrooms and kitchens. We viewed one building under construction where the kitchens are being finished to include even dishwashers.

This means you can find older properties (10 years old and older) available for as little as US$700 a square meter, but you'll need to put some work into the apartment, probably redoing the kitchen and bathrooms entirely. And you can find 5- to 10-year-old apartments for as little as US$1,000 a square meter.

New construction (in the areas I'm looking) is running from US$1,500 to US$2,000 a square meter.

Adding foreign buyers to this already active market, where the economy is strong and tourism is expanding, will, as I said, result in a nice spike in values. I wouldn't look for prices to double across the board in, say, five years, but between the appreciation I do expect and the excellent rental yields (net yields as high as 10% to 12%), this market should provide above-average returns over the long term.

Until this trip, I had some serious reservations about the process of investing here, specifically of bringing capital into Colombia. There are nuances you need to understand and to protect against to make sure your investment is secure.

However, after a series of conversations with attorneys and other advisors, my concerns are largely put aside, and I'm more bullish on this market than ever.

I'm writing up a complete report for my Marketwatch members.

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