Often the discovery of oil prompts a tectonic shift in an area’s economy, but for Cuenca, the largest city in Ecuador’s province of Azuay, the change came from a discovery of a different sort. For centuries the city's economy had centred on agriculture and manufacturing, but at the beginning of this millennium, retirees from the US and Canada found their pensions could buy a very comfortable life in Cuenca and started flocking to the south Ecuadorian city.
“We have affordable property, our city centre is on Unesco’s heritage list, we have spring-like weather all year round and the cost of medical treatments is four to five times lower than in the US. We really have an offer that is hard to beat,” says Xavier Patino, executive chairman of Invec, a local investment promotion agency.
The first US couples made Cuenca their home in 2001, and since then the expatriate community has grown to more than 6000 people. The US economic crisis of 2008 in particular saw an acceleration in the number of expatriates settling in Cuenca as many Americans, uncertain about their job situation, took early retirement and set off to live in more cost-advantageous locations.
Cuenca's popularity among foreigners came as a surprise to locals. “When people from Cuenca retire, they stay in their homes or move to live with their children. They do not move to other places like people from the US and Canada,” says Mr Patino.
As a result, some of the facilities and services catering for retirees might not have been easily accessible back when Cuenca first became popular for retirees in 2001. The situation is changing though. “We are still learning, but we are becoming more oriented towards services for the elderly,” says Mr Patino, adding that the market is still far from saturated when it comes to international hotel chains and assisted-living facilities.
Apart from tourism and retiree-related services, Cuenca also hopes to attract investments to sectors that have traditionally fuelled the local economy. Companies launching agricultural projects or manufacturing ventures in fields such as textiles, ceramics and appliances are eligible for a five-year income tax exemption. And while Cuenca is popular among retirees, the city also promotes itself as a hub for business process outsourcing, given that more than half its 600,000 residents are under the age of 24 and about 27,000 students attend Cuenca’s eight universities.
Foreign investors are yet to flock to the city at the same rate as retirees, but Cuenca is fighting for their attention. Established in 2009, Invec runs an online platform called Data Invec, which provides information about Cuenca and the Azuay province, and benchmarks them against competitors.
The agency also promotes Cuenca abroad at events such as the Annual Investment Meeting in Dubai. “In the past 10 years, we have become much more international. We want to see that trend to continue,” says Mr Patino.