Locals who have lived in the area for years react differently when disaster strikes. Some decide to rebuild their homes and businesses, others decide they can’t face the heart-breaking loss and put their property on the market. After the 9/11 terrorist attacks in New York, for example, many long-time Manhattan residents decided to leave the city, causing a boost in the upstate New York real estate market.

Others saw an opportunity to buy property that had decreased in value and to own a residence or business in a city that they had been unable to afford before. 

For those interested in real estate, there are both opportunities and pitfalls in buying property in places that have been hit by a disaster.

“Buying simply because a disaster has hit and property values have dropped is a risky kind of play,” he said. “It’s like putting money on the roulette table and letting it ride on black or red. You may win big, but you may not.” He used Florida resort area Bonita Springs as an example. A few years ago Bonita Springs was hit by hurricane Charley. “A number of investors came in and said ‘I’m going to come in and make an investment that will pay off overnight’ because property prices dropped. But there are still infrastructure problems from that hurricane two years ago and those investments did not yield immediate payoffs.” Many investors became tired of waiting for the market to rebound and two years later sold for the original purchase price. “Investors need to remember that they may have to sit on the property for a number of years to make the profit they anticipate,” he said. “Don’t take that risk if you can’t afford to wait.”

With that said there are some less risky investments that become available after a crisis. For those who can afford it, real estate in large cities, such as New York and Paris, is always a good investment. New York market prices have rebounded after the short 9/11 sag. And Paris has remained a boom market despite the well-documented riots that occurred in November 2005, said Miranda Bothe, director of international client services for Flat Hunter, a Paris-based property agency. 

“Property prices weren’t really affected by the riots for a variety of reasons,” she said. “The troubled areas were outside of central Paris and most people interested in the city knew that. People who buy in Paris are pretty savvy investors and they know that if they see a bargain and don’t buy, then somebody else will. Paris is Paris and nothing will change that.” 

She said the rental market also remained consistent. “I had a few calls from clients in the U.S., but it was mostly to make sure everything was okay. They were still excited to visit Paris and none cancelled or changed their travel plans because of what they saw on the news.”

Real estate investment opportunities in areas that were completely devastated, such as New Orleans or Phuket and Khao Lak in Thailand, can be more risky but also extremely viable. 

Again, a purchase in any of these areas should be considered long-term investments, and unless you have a large expendable income you should buy because you love the location, not because you plan to rent the property immediately or sell within a year or two. Realtors say the chances are good that you will have to wait longer for these markets to completely rebound.

“New Orleans is a checkerboard right now,” said Bouler, who works for Prudential Gardner. “Many places are uninhabitable and right now it is not known if they will ever be habitable. There are places that are still under 10-to-12-feet of water. It was really a horrible situation; many people had very bad experiences and are hesitant to go back. Others will be unable to come back because they will have lost everything.”

Areas that were not flooded when the levies were breeched are hot now, he said. “The dry areas uptown are selling like crazy. People who have always wanted to purchase in New Orleans see it as an opportunity and are buying. 

They believe the city will be back again and they want to be a part of that. Then there are others saying they want a lifestyle change and are selling and moving away.”

Bouler said he was surprised by the number of commercial queries he received in the months after the hurricane. “The storm sparked a lot of interest,” he said. “The city will never be the same, but it will be back in some form. I don’t think a lot of the poor people will come back, I think it will be a wealthier city in the end. I think it will be younger, livelier and wealthier.”

Several small business owners contacted Bouler in the past few months saying they wanted to invest in the city before it becomes a major force again. He believes these entrepreneurs want to invest now with the hope that their companies grow with the city.

“I have had several young, small business owners call and say they wanted to move down here,” he said. “I got calls from as far away as Boston and Canada. I think people realized they wanted to be a part of this great city and that this is their chance.”

Marcus & Millichap’s Bovero said he also believes areas such as New Orleans offer some good commercial investment opportunities.

“In Florida, often commercial developers are able to purchase mobile home parks and build apartments or condominiums on prime pieces of property after a hurricane hits because people are fed up and they want to move or they don’t want to rebuild,” he said. “It can be an extremely lucrative investment.” 

Any investment in New Orleans, commercial or residential, would be lucrative in the long term, not the short term. The bickering about how to rebuild will undoubtedly last for years and, in the end, nobody can be sure now what the city will look like when reconstruction is complete.

Similarly, Erwin Trepka, general manager of Andrew Park realtors in Phuket, Thailand, said the area has yet to fully recover from the heart-breaking, devastating tsunami. He noted that it is important for investors to remember that the tsunami was a natural disaster that may occur only once in a lifetime. The area is not a hurricane or typhoon region where there is a more constant threat of ruin.

While Phuket has rebuilt its infrastructure and tourists are slowly returning, nearby Khao Lak is still recovering, he said. Khao Lak is a famous beach resort about 65 miles north of Phuket. It was extremely popular as a departure point for scuba diving trips and had a variety of water sports activities that drew tourists to the beautiful beaches. Khao Lak was one of the areas in Thailand that was hit the hardest by the tsunami.

“The best time to invest is right now, simply because later the prices will increase. They are up about 30 percent in Phuket, but remain the same in Khao Lak,” he said. “Khao Lak is not the same now as it was before for sure, as they suffer from the lack of tourists.”

Trepka said he has made sales in Phuket since the tsunami, but has yet to finalize a deal in Khao Lak. Locals have shied away from the area because of religious beliefs about ghosts and spirits, which has kept the market in the region a little depressed.

“Thai people are afraid of the ghosts of the many people who died in Khao Lak,” he said. “Foreigners without these beliefs could make a fortune right now as the price will grow within the coming year for sure. We have beautiful beach land for between 3 million Thai Baht (US $76,122) and 6 million Thai Baht (US $152,245) per Rai (1,600 square meters). Before the tsunami the prices were double and will be again – I think after two to three years and with all the efforts now the prices may even be higher than before.”

Trepka said he is looking for land himself in Khao Lak. “It’s a beautiful place,” he said. “As soon as I find the right land in the Khao Lak area I will purchase myself as it is my favorite place of all. Tourists will return again and things will one day be back to normal.” 

This is undoubtedly true. A tsunami warning system has been constructed and everyone is much more aware of the potential danger. However, like New Orleans, the area will also be different than before. Just like many poorer residents may not return to New Orleans, many Thais may stay away from Khao Lak, which will definitely change the feel of the region. 

So, what should potential investors consider when considering a purchase in an area that has suffered a major disaster? First, make sure you carefully check out the land, the land title and the paperwork connected to the property. Hire a good lawyer and find a real estate agent you trust.

Consider the issues that will affect your property in the years to come: Will it be difficult to get flood insurance for your home and will it be extremely expensive? Is the property in an area that may be at risk again in the future or was the event an unusual occurrence (like the tsunami)? How long will it take for the infrastructure to return to normal? Can you live without the infrastructure repairs for some time? How will the disaster change the area? Do you have a plan in case another catastrophe occurs? For example, if the property is in a hurricane zone, does it have a safe room? Is the house hurricane proof – or at least hurricane safe? If not, how much work will you have to do to make the property safe? What are the escape routes if another catastrophe was to hit again?  Can you afford to hold on to the property without renting it out or do I need immediate rental income?

Most importantly, ask yourself this: Do I love this property and would I have bought here before the disaster? If you plan well and prepare for a long-term investment, the chances are good that your investment will be beneficial.