Apr 132018
 

Part 3 of the series helping to understand real estateAfter venturing through the early days of real estate in Costa Rica, this is to say, the beginnings of what led up to the current market conditions in parts 1 & 2, we now embark on the boom before the crash.

Let’s say that a couple acquires their home by the usual means; scraping for the down payment and then struggling to make the payments. One day, they find themselves able to refinance their home and lower the interest rate. Along with the lower interest rate, they were able to pocket a considerable sum from the equity value of their home. (Sorry for the over-simplification of this matter, but it’s close). This resulted in the couple having an unexpected windfall of cash. “Honey, let’s take this $100k and go to Costa Rica and see if we can get us an ocean view property”. Hence, the high demand on the somewhat limited supply resulted in the spike of property values in the pre-recession Costa Rica.

I think at that time there were about 4 or 5 real estate offices in Dominical and none in Uvita. Discussions among us real estate agents were about the amazing press of buyers. Buyers were discussing the difficulty in finding an available real estate agent. Agents were discussing if there was any available inventory to show the buyers. We would joke about installing a Baskin Robbins style “take a number” system in our offices.

Over time the fincas got sub-divided, services installed and roads improved. The lots and houses got snapped up and prices continued to rise.

The majority of buyers would enter the office asking for an existing house to buy. Due to the newness of the market, there really weren’t many houses on the market. And of the few houses that there were, they were difficult to sell, at best.

The Zone was on the edge of the known universe. For those who felt compelled to venture down to Costa Rica’s southern Pacific zone, and who

Man in hat in a waterfall

Oh-so independent and individual

left their homeland behind, well… this was for the robust adventurer. “Individuality” and “non-conventional” are a couple of descriptors that come to mind and that I feel, well describe them (us?). It’s funny to write these words because I was here at the time, but don’t see myself in the same school as these guys. But the evidence to the contrary may be compelling.

Aside from the point above about leaving one’s homeland, once a person got to Costa Rica, they would have an arduous trip just to get to The Zone. There were 2 ways to get here: 1 by the coastal route and 1 by the PanAmerican that runs over the Cerro de la Muerte (pass of death) down the middle of the country.
Note: the name of the pass is not based on the danger of driving there but is reputed to be based on the former practice of farmers conveying their produce from the fertile San Isidro de el General valley to Cartago & San José. They would travel over the pass on horseback, necessitating an overnight stay in the elements. Some of these farmers were reputed to die from exposure. I can’t say for sure whether this tale is true but it is part of the local lore.

Whichever route one would choose, pot holes were a constant threat. On a highway, a well placed pot hole can break an axle, or at the very least, pinch-pop your tire. When you come from a developed land, the thought of not being able to auto-pilot your way down a highway was foreign – inconceivable actually. So it was always a concern as the rather smooth paved highway would lull one into an 80 km per hour rate of travel and then – WHAM! – a sharp edged pot hole would abruptly remind you that you are not, in fact, in Kansas anymore.

Map comparing coastal and central routes

The coastal route vss the centro Cerro de la Muerte route.

The coastal route was pretty good but was the lesser of the two choices at that time. This was primarily due to the stretch of “highway” between Quepos / Manuel Antonio and Dominical. It was un-paved. Depending on how recently it had been graded, you were in for a washboard bonanza of a drive. The roughly 25 mile stretch of road would take between 1 – 1 1/2 dusty hours. I always felt that some enterprising Ticos should open a plaza at either end of this stretch offering a car mechanic, a dentist and a therapist. After driving this stretch, your car would be beat to hell, your teeth would be loosened, and you would be in the preliminary stages of PTSD.

The PanAmerican route was my family’s preferred route to San José. It remains an extremely lovely drive, but a moderately dangerous one. It is 2 lane with essentially no shoulder. There are lots of blind curves. It was, at that time, the primary artery between Nicaragua to the north and Panama to the south, so there was a good bit of semi-truck traffic hauling products through Costa Rica. Some of the curves are tight enough that the semis have to swing wide into the oncoming lane to navigate the bend.

All of this in addition to the fact that we are in a 3rd world country. The people here, especially at that time, weren’t accustomed to cars, traffic and driving. Some would acquire their drivers license by paying off a government official. Many simply didn’t know how to drive. Passing on a blind curve, despite being contrary to conventional wisdom, was a common practice. To this day, I tell my clients who ask, that the Cerro de la Muerte route is something to see, but to do so cautiously. Always expect to see someone coming at you in your lane around a blind curve.

The point being that The Zone was not a place for the faint of heart. The difficult access to The Zone served as a small-pored filter, a fine screen. The “type” of persons that would find their way down to The Zone were hardy, adventurous and individualistic. 

And so, dear reader, you came here looking for a better understanding of Costa Rica real estate. And instead, you get a stroll down memory lane for this aging blogger. Well, from where I sit, the forgoing is helpful and indeed, integral to understanding real estate here. These elements and conditions we are considering here happened a long time ago in wherever you’re from.

Let’s take San Francisco California. How long ago was it that S.F. was all large parcel holdings? Heck, I don’t know. Let’s take the historical marker of the California gold rush starting on a specific date of January 24, 1848. San Francisco was a muddy-road port town with the surrounding areas providing the produce and animal products necessary for life. Fast forward to now. What we have is every square inch of usable land is used. The intervening 170 years saw the real estate progression from agricultural large parcels to smaller and smaller properties, to where now what we see are the ultra-high-end homes, with their eaves stretching out to the property line, nearly touching those of their neighbors.

Costa Rica’s southern Pacific zone is in the early stages of its real estate development. It isn’t ancient history here to recall when there wasn’t electricity to many of these areas. My family and I would come to the coast for a Dominical beach day every week. Occasionally we would consider seeing if we could get to Uvita to go to Playa Chaman or Ventanas or some other. It wasn’t guaranteed that we could get there due to having to drive through a river or two, and the road was not paved. This was in the early 2000’s.

The advent of improved access to The Zone has had tremendous repercussions on life here. The filter now has larger pores. The Zone has become much more accessible to a much broader type of person. However, the Zone’s real estate market is still very much in its… hmmm… what to call it. I can’t say “infancy” but perhaps “toddler-ship” would be apt. The Zone is perhaps the last frontier of early buy-in opportunity in Costa Rica. This stuff can be hard to see when it’s happening. It is usually in hind-sight we get the 20:20 vision on where we’re at. Consider the real estate cycle of progression in any area, and we now have our crystal ball. We can see the future.

However, some of The Zone’s appeal are conditions that continue to require that one be somewhat robust. There are some incontrovertible conditions here that will now and forever affect growth. These conditions are things like topography and conservation. For making an investment in a property, it will help to see the big picture. The large parcels have been sub-divided. The initial sub-divisions have been further sub-divided. As always, with the ways of our money-loving world, there is concern about over-development and its impact on Costa Rica’s diverse and glorious nature.  Where is this all going?

Let’s return to our pre-recession time and we’ll discuss some of these conditions.

Photo credits:
Photo by Artem Bali and Ramdan Authentic on Unsplash

Dec 132017
 

Part 2 of a series of articles explaining the real estate market in Costa RicaIn Part 1 we considered the early foreign investors in real estate here in Costa Rica’s southern Pacific zone.  The idea being that in so doing, we’ll have have a better understanding of the real estate market here. We continue now with Bob (early visionary investor) as he proceeds to segregate and sell his large parcel (finca).

Bob’s vision for what is to come is so clear (to him) that he recognizes that he essentially stole the gorgeous ocean view property that he now possesses. The plan is to sub-divide the large property (finca) into smaller parcels and sell them at a considerable profit.

He takes his 60 hectare (150 acre) finca and segregates off 5 hectares and puts this on the market at $60,000, the price that he paid originally for the entire finca, leaving 55 hectares as a pure profit proposal.

Now granted, I’m fabricating the name and the transaction. But this I do as a composite of various such transactions that I was aware of at that time. What I experienced when I got into the real estate business here in 2004 were the ripple effects of not just one deal like Bob’s, but the after-effects of many such deals.

There is some historical precedent to the investor phenomenon that transpired at that time. Well known examples are: the dissension regarding Alexander Graham Bell being the actual originator of the telephone. Elisha Gray applied for the patent on similar voice technology, essentially on the same day as Bell. Alfred Wallace and Charles Darwin both – independent from each other – came up with the theory of evolution at the same time. It was essentially the luck of the draw that Darwin is credited as the author. And to look at the advent of American Contemporary art in the New York art scene with Jasper Johns, Andy Warhol, Rauschenberg, Roy Lichtenstein and on, is to see one of the strangest examples of unrelated, converging visionaries.

I wonder at this “phenomenon”. It is recurring in human history. Unrelated individuals and groups, all at roughly the same time, turn their attention to something. It’s almost like some cosmic force directing select ones to go and do a thing. Ok, not to belabor this point, but I find it fascinating. I mean, I could understand one guy. And then maybe that guy talks to someone else about what he’s doing and they think it sounds good and so they do it also. But unrelated, concurrent action??  Por favor! 

Well, barring an un-quantifiable cosmic event from our understanding, I can only suggest that this is simply the way of the world. “Progress” of civilizations. The time had come for this gorgeous country to be discovered and exploited for what it had to offer – its riches. And, as it turns out, there were plenty of buyers.

There were several Bob-like visionary investors who converged at roughly the same time in the early days of real estate here in Costa Rica’s southern Pacific zone. These all went on to see enormous returns (turning $1.00 USD into $120.00+-) on their relatively paltry investments. A couple of the best known Dominical-centric examples of these investments are the areas of Lagunas and Escaleras and to a lesser degree, Hatillo. 

We are now getting to the time when I began work in Costa Rica real estate. These were the conditions of the market at that time. The majority of real estate sales at that time were of raw land, and this was despite the majority of buyer’s initial request was for an existing home. There simply weren’t many to pick from. The inventory was primarily raw land. After looking at the available options for existing houses they would go to the default position of buying land and either building, or holding the land for a future purpose. 

The houses at that time were difficult to sell, despite the common preference of the buyers to purchase a house. Those early arrivers to the area were somewhat unique. I like to say that we were all a bit “out of round”. We had decided to move from our homeland to an area of the earth that was certainly not the most accommodating of environs. What houses there were, were frequently expressions of that individuality that brought them here in the first place. These were not homes for the general market. Some were lovely in their uniqueness while other were, quite frankly, atrocious. 

What I came to call the “Costa Rica Formula” for buying land had a couple of iterations. The visionaries were the big winners of the formula, but those that bought from them were also beneficiaries of having been early arrivers on the scene. The formula was to buy one of the available segregations from a Visionary. Despite having been segregated from the mother farm, these properties were generally still quite large by today’s standards, commonly consisting of multiple hectares (1 ha = 2.48 acres). To then cut off a marketable piece of that parcel and sell it, effectively reducing or eliminating the initial investment principal. Buyers at that time could almost all count on this being an option.

In 2004, some of the Visionary’s pieces  were available, as well as the lots being made available from those that they had sold to.  And there was quite a lot of work being done to bring more to market. These were the days prior to the big crash of 2007/8. The reason for the crash fed the formula, and the market spiked. We were in a boom.  The sub-prime market made for an unreal and absolutely illogical availability of money to homeowners in the U.S. This was the market I started working in at that time.

My thought is that the spike in demand, and the subsequent prices, is one of the many ripple effects from the sub-prime lending mortgages thing that resulted in the demise of the global economy in 2007.  Not to belabor the point, but I think that it’s important to understand this as, here we are some 10 years later, and the effects of the “spike / crash” on the market are still very present. I’ll get to this more in a following article on present day conditions.

 

Oct 152017
 
Costa Rica History in knife metaphor

I’d say that about 1/10th of my time spent with people looking to buy property in Costa Rica’s Southern Pacific zone is spent in the actual buying/selling of property. The other 9/10ths is a mix of conversations regarding what’s involved with living here, as well as discussing the business of real estate in Costa Rica.Understanding Costa Rica real estate

At its core, the lack of an actual MLS (Multiple Listing Service) colors all aspects of the business here, and I’ll go into that later on in this series. To really understand the business of real estate here, I have found it helpful to go back in time and see the progression of events up to the present. This helps to not only understand the current market but also, to project what is to come.

Early days:
I got into real estate in Dominical in 2004. It felt like the day I got into real estate was the day that someone threw the on-off switch to “on” in the market. Since then I’ve heard some tales indicating that the market was already simmering and poised to boil.

I made a sale on my first day in the business. A $60,000 gorgeous ocean view property sized at around 2 acres.  The property featured Uvita’s Whales Tail front and center. That property has gone on to have a lovely home, guest house and pool built on it. It has been re-sold and enjoys a stellar vacation rental history (link to rental page on HomeAway)

Quick overview of The Zone:
The Zone is made up of a string of 3 towns with Dominical at its northern end. The northern boundary is not a hard line but is decidedly fuzzy, easily extending up to Hatillo and at times, up to Portalon. (link to Hills of Portalon Development).

From Dominical heading south on the coastal highway you get to Uvita and then further south, to Ojochal. The area between Dominical and Uvita has a nicely laid out mountain range that runs parallel to the ocean. Hence the handle “coastal mountain range”. This means that you can travel inland from the beach just a short way and get to elevation where it is breezy and cool and offers expansive views of the ocean and coastline, attributes which make this area extremely desirable to investors, relocators and migrators (part-of-the-year residents).

More History:
Before the incoming press of foreign interest in The Zone, the Ticos (Costa Ricans) owned all the land, and their land holdings were always in the multi-hectares (1 hectare = 2.48 acres. Think 2.5 to make it easy).

There was a time in the not too distant past when land in Costa Rica was nearly value-less. There were land-grant programs whereby a man simply had to be willing to take responsibility for a property and the government would “grant” him the land, with conditions.

At that time it was not known that “nature” had a lucrative aspect to it. Instead nature was largely viewed as “in the way” and needed to be tamed, subdued, or eliminated. So, one of the conditions to receiving a land grant was to cut the trees down and raise cattle.

I suspect that this era may have coincided with the “McDonalds” explosion. This is an arguable point, so let’s just say it coincided with an extreme demand in the U. S. (and world) for beef.

After some time of cutting down enormous canopy trees and attempting to raise cattle in former rain-forest environs, there was a shift in our world’s appetites; nature became (and is) an important commodity. Granted, beef has continued to be an active commodity, but it was also learned that former rain forest land doesn’t necessarily make for the best pasture land.

Raising cattle in Costa Rica was a daunting struggle. The farmers found themselves up against nature. Having to maintain former rain forest jungle land in “pasture” condition presented its trials, as well as the fact that the beef business (exporting meat, bureaucratic inefficiencies, and 3rd world infrastructure or lack thereof) made a guy scratch his head and wonder if having all this land was such a good idea.

The Tico culture was/is multi-generational. These large, granted tracts of land, would end up being populated by the man who acquired the land, his now grown sons & daughters and their families, and the grand kids (soon to also have families.)

So despite having lots of land, a condition that in first-world countries equates to being wealthy, these farmers were “subsistence”. They lived off of what their land produced. As a child would grow to adulthood, Abuelo (abuelo = grandfather) would simply build them a house and apportion off some land (or not) and they would continue on contributing to the sustenance of the family. The land itself was not thought of in lucrative terms. It was a simple fact of life.

Abuelo just happened to acquire a land grant on, let’s say, 60 hectares of land that reaches from the inland side of the maritime zone on the coast up to the highest point of the coastal mountain ridge. He’s not thinking “oh boy! I’ve got some ocean view land here.” No, he’s thinking: “man I hope this land is fertile.”

Enter foreigner:
One day Bob, a tourist, is exploring the area and decides that he’d like to buy Abuelo’s property. Bob offers Abuelo $60,000 for the land. Abuelo has never even considered the remote possibility of maybe someday having such a sum. In fact, he’s never even seen that much money. He talks it over with his family and they (very understandably) feel that this would be a wonderful thing for them to do. So, they sell their land.

Bob is a visionary. He sees what is likely coming and so he stakes his early claim. Now, keep in mind that there is no electricity to this property, the access is horseback and the water is from an onsite or nearby spring that is bubbling out of the ground. Abuelo has run a pipe from the spring to an elevated storage tank near the family homes. Bob qualifies for the handle “visionary” in that – what foreigner in their right mind would possibly want such a remote and forbidding piece of land?

To understand this is to understand the element that is credited with making the world go round. We all have different likes and dislikes. I wonder at the likes of Steve Jobs, Bill Gates and Paul Allen’s and their focus on the personal home computing idea at the time that they had that focus. I’m not of this ilk and so my hat is off to such ones. I view the early investors here in The Zone as being made of the same stuff.

In looking back over the history of the first wave of investors here, I marvel at their foresight. My then wife and I looked at some Whales Tail view property in Uvita around 2002 and, despite its being gorgeous and nicely priced, I felt that it was simply too remote. This was in the same area where 2 years later I sold my first property.

Ok, so I said that to understand the real estate market here in Costa Rica, it helps one to know a bit of the history. Granted, we’ve gone back to what I appropriately call the first-wave of intrepid and visionary investors – The Visionaries. We’ll continue on in the next article with Bob’s next steps and incredible gains on his visionary act.

Sep 062014
 
Uvita Costa Rica Walk-to-the-Beach development Villa Del Sol

Video done by Chuck Chastain of Aerial Media

Typically the type of property that I have sold over my years in Costa Rica real estate have been multi-acre, ocean view properties. These have been sold to hardy individuals that have deemed themselves up to the task of taming these jungle laden acres to their will – and then keep them that way.

There is a new trend popping up in various areas around The Zone that the term “urbanization” aptly describes. These are boulevards & lanes lined with single family home lots. The developer provides the services: water, electric and the road. The lots are 200 to 1,000 meters in size (1 acre = 4,000 mtrs). These bring to mind a common suburban residential area in other areas of the world.

These new developments to the area have made the thought of, and the ability to, buy a property in Costa Rica and in particular The Zone, a reality for a new breed of property buyer, not to mention the investors whose left eyebrow goes up when the concept is presented.

I was approached a couple of years ago by an investor who had a question. He was looking to pick my all-knowing Costa Rica realtor brain (OK, he was going around talking with various realtors.) He had purchased a large property just south of Uvita. Uvita was growing faster than any other growth that I have seen in my one-half-century-plus life. At that time we had 3 banks, 3 pharmacies, 2 Internet cafes, doctors, a dentist and numerous auto mechanics in Uvita. This was all just a few short years from a time when just getting to Uvita was a dubious bet. The growth was truly explosive.

When he bought, it seemed that there was no end in site. Uvita was a robust real estate market and the concept was blue-chip through and through. There would be a residential community behind a commercial center that fronted the coastal highway and – here’s the biggie – you can walk to the beach. It is located on the ocean side of the highway which made the blue of the blue-chip concept quite royal.

Then, 2008 happened. Someone turned off the lights on the world economy. The recession shut down the market so completely here that sellers who had repeatedly lowered their pricing were told: “you can lower your price to $5.00. It won’t matter. There simply are no buyers”.

This resourceful developer asked me what I thought about an urbanization idea. A walk to the beach neighborhood, complete with sidewalks and nice landscaping. The utilities are all underground and the lots themselves will be in the 500ish meter size range.

My response to him was “Michael, this has never been done here before, so we have to guess. My guess is that it will work, but it is just a guess.” To me the concept was akin to the early investors that bought land here in the area – I like to refer to them as The Mavericks – they bought land here in Costa Rica’s southern Pacific zone at a time when there was no rational reason to do so. It was so rustic and jungly that it required genuine “visionary” status to make a buying decision.

The Mavericks saw some insane returns on their decision. Turn a dollar into $120 and you’ll get an idea of the early days in the Costa Rica real estate market around these parts.

The spread for this 2nd tier investor is nothing like that. He is setting out to get his initial investment back and so with the bar set low, he has set out with an untried concept and voila! We have a neighborhood project just on the south side of Uvita where you can buy a lot for $40,000 and by the time all is said and done, you’ve got $200,000 into a beautiful home in a nice area with that oh-so-desirable walk to the beach component that so many are looking for.

Villa del Sol: 5 have sold so far. There is a lovely model home done and 1 house broke ground yesterday. I understand that one of the other sold lots is going to start construction soon.

Funny thing about this concept – others have had it as well. I am currently aware of at least 3 other such projects in the Uvita area. Two of which are being developed by Ticos (Costa Ricans) and one other by a US developer who has previously had some success with luxury homes. It appears that it is an idea whose time has come.

I can’t speak much about the other projects yet. I ran into one of the Tico developers the other day and asked him how his project is going. He has sold 15 lots in the $12,500 range. They are half the size of Villa Del Sol lots and the electrical wires are above ground, which is an important point. The net result, to my way of thinking, is that these won’t appeal to foreign tastes and will mostly sell to locals but… we’ll see. I assume that the US developer will go underground with his. I’ll post more as I get the data.

 

Aug 012012
 
dollar+airplane+scarlet+macaw

The strongest principle of growth lies in the human choice.   – George Eliot

Now that the Costanera Sur (Coastal Highway) has been completed, the new international airport for the southern Pacific zone is the single, most popular, regional question we receive. Most investors want it. Most environmentalists are alarmed by the thought of it. But, everybody wants to know how it is progressing and when/if it will be built.

dollar+airplane+scarlet+macaw

Can money and a safe environment co-exist?

As per a recent report in the July edition of Enlace, a small local newspaper here in the southern Pacific zone, the Costa Rican government just concluded a meeting to determine the future of the International Airport in the area.  They also discussed how this airport would also be the 1st “green” airport in Latin America.

Another Airport Article?

I’m skeptical when I see news articles for the new International Airport in the Sierpe/Palmar area.  There has been talk of building this airport since I moved here in 2006.  Although Costa Rica has developed by leaps and bounds over the last 10-15 years, slow progress is the custom here.  The difference with this recent announcement is Continue reading »

Dec 092011
 

Pre-postscript:
This article will serve as an update to what is happening in the golf project San Buenas Golf Resort (SBGR) here in The Zone. Guys In The Zone is a real estate agency, now affiliated with Properties in Costa Rica. We make our money on commissions paid by sellers for sales that we broker. Buyers of land sometimes operate on the mistaken notion that if they go directly to the seller, they will get a lower price because of there not being a commission involved.
Even though the price paid is the same either way. We are more than happy to assist you with your purchase of land in SBGR.

Golf in Costa Ricas southern zone

Yes, there is golf in Costa Rica’s southern zone.

It could be that the San Buenas Golf Resort is heading for one of those “critical mass” experiences. The resort has been there, going through the Costa Rica labyrinth of disorganized bureaucracy for the past three and a half years.  As SBGR emerges, we see other such projects in Costa Rica languishing in the throes of various obstacles:

  • a global economic crisis
  • conflicting philosophies among founders
  • lack of funding
  • a nearly impossible Latin American permitting process
  • etc…
SBGR is fully permitted

For the thirty-some land owners in SBGR, who bought untitled land years ago, the titles are almost in. I know what you’re thinking: “Haven’t I heard this before?” Hmmmm, yes, I believe you have heard this before. So, we’ll see. However, at this point, and this time around, all permissions, permits, signatures, departments, laundry lists and handshakes have been made, acquired, stamped and clamped. There is no logistical obstacle and they are now just simply waiting for the documents to be delivered. (UPDATE: Titles are in)

SBGR has not paid one colon/cent under the table to achieve its current fully permitted status.

I used to be a shareholder in SBGR and I used to sit on the board of directors there. All of that changed when the SBGR Corporation was unable to make its mortgage payments. Instead of folding and hurting all those who put their belief in the words of dealers (such as yours truly), and bought untitled land there, the shareholders got together and prioritized… -(now prepare yourself… we are talking here about behind the scenes corporate maneuverings, in an effort to make vast sums of money) – the well-being of those who had bought land in the project. The shareholders, at personal expense, allowed the project to go to the primary shareholder without a struggle. This primary shareholder, of his own volition, felt that it was important to protect the land owners there, that their ownership would be recognized and guaranteed.

I know, you’re thinking that you have stumbled upon a science fiction account of life on another planet. But you haven’t, and this is not. What you are reading is a firsthand account of my observations over the past 4 or so years. I am also one of those shareholders who lost in excess of $100k in the process (but who knows? The fat lady has not yet sung.)

My recent re-involvement in the project was inspired by one of our unexpected leads that came to us looking for a hotel plot. These prospective buyers really want to be able to offer golf to their guests as well. Their idea was to purchase a piece of land that would accommodate not only the horizontal hotel layout, but also nine holes of golf. There really is no such property left here in Costa Rica’s southern pacific zone. Enter SBGR.

There is a piece of land in SBGR that is slated for a hotel. It has been thought that one of the big franchise hotel names might approach SBGR and ask if they can put one of their monolithic hotels on it. (This Costa Rica real estate blogger is hoping not, but that’s just me putting in my unsolicited, tree hugging two cents.) Lord knows it would be a financial coup for SBGR. But in keeping with its surroundings, and even the design of the project, a more intimate layout of free standing bungalow villas sprinkled around a central restaurant / lobby would be more appropriate.

Map of golf project

Locations of hotel plot and finished model condominium – Click to enlarge

This all coincides nicely with what our European investor was/is looking for. His budget easily buys the land allotted for the hotel, valued at two million USD.

So, we’ll see what happens with that deal. Presentations are being made in various offices in London and Malaga, and so we wait. The point, however, isn’t to crow about The Guys good fortune to have such a prospect, (although we are certainly to be able to crow about such things.) But all of this is about re-connecting with this odd little golf project here in the nether reaches of Costa Rica’s southern pacific zone.

Paspalum is a fancy name for grass

The place is beautiful. The existing nine holes roll around gorgeous Costa Rican trees and fauna, and are vibrant with an amazing array of birds and, well, life. Look anywhere on the course and you feel like you are observing a contrived setting, staged for some international golf magazine, complete with white sand bunkers.

The paspalum grass is a marvel. I witnessed a small tractor pulling a liquid tank that was spraying a fairway. Expecting to be told that this was an herbicide, or some such chemical, I was told that it was salt water. Weeds die in a saline environment, Paspalum thrives. Hmmm, can we use the overused “green” handle here? If so, I imagine myself making a presentation there, standing alongside one of the holes, able to say “and this is a truly green green” – get it? Ok, I know. I should apologize – but really, what is the point of being alive if we aren’t going to live, verdad?

So the weeds are handled without chemicals, what about fertilizing and bugs? Enter the ultra-acid soil of Costa Rica. The antidote is lime, or calcium. Mix this into the soil and you manage your PH, while driving off any pests. The little blighters thrive in acid but not in a balanced PH environment. So yes, I believe we can call this project green.

As for the Critical Mass mentioned at the outset, I just wonder if, as the SBGR folks quietly go about their business out there, if one day the world doesn’t wake up and there is a mad dash to be part of this amazing project. They’ve got a show condo – 2 bedrooms, granite counter tops, all teak wood ceilings, cabinets and furniture for $219,000 – a price that would have been impossible to believe prior to the economic tumble.

I suppose this could come to be viewed as the upside of the downtime – (OK – sorry about that one. 🙂

Nov 162011
 

A week ago, I was reading the Tico Times and the headline “Liberia Airport Renovation Nearly Finished” jumped out at me. It’s only been nine years since that airport opened, and now it’s getting $41 million dollars worth of renovations?? I had to figure out why, if only because it might offer a flash forward to what we can expect when (emphasis on “when”) the International Airport opens up in the The Zone, also known as, the southern Pacific zone of Costa Rica.

Air port in Costa Rica

Regional to International, the Osa Airport Dilemma

Long Lines

Whether it’s checking into a restaurant, hotel, or airport… people do not like to wait, especially when the line stretches out the door. Long lines and airports are synonymous, but the leaders at Liberia International (and the Guanacaste business owners) have figured out that a bad traveling experience doesn’t inspire repeat customers. The Liberia airport is scheduled to re-open any day now, and just in time for the tourist season.

The Profitable Impact

Did you know that 225,224 passengers arrived at Liberia’s airport last year*? That’s an average of 18,768 people per month and just over 625 per day. In January, foreign visitors in Guanacaste, increased by more than 28% over January of 2010. With the upgraded facilities (think mini-Juan Santamaria), services, and new carriers (JetBlue, Air Berlin), they are clearly anticipating an increase in arrivals in the near future.

The Liberia airport has done wonders for the development (read- boom) of Guanacaste. Not only does the airport employ hundreds of people from the community, it also stimulated new business opportunities in the immediate area, including— hotels, car rental companies, and commercial centers.

Conversely, there can be, and usually is, a relative downside to rapid development. Have you been to Tamarindo lately? I went two years ago, and the sleepy beach town I visited in 2002 was almost unrecognizable. The main strip looked like it had a SoCal facelift, the renown beach break was packed with surfers, and I found myself longing to be back in quiet and verdant Zone.

How It Relates To The Zone

The second most popular question we get is “When is the International Airport in Palmar going to open?” My answer: “I have no idea.” It’s not that I don’t read up on the subject, it’s just difficult to believe the words of Alberto Cole or the Minister of Tourism.

As I mentioned in an article a year ago, the construction of this airport goes hand in hand with the construction of new hotels. (At this point the area doesn’t have enough beds to accommodate an extra 400+ people/day in The Zone… especially in the high season.) Adding small to mid-sized boutique hotels isn’t an effective and complimentary plan. For the airport to be viable, large 100+ room resorts will need to be built and one need look no further than Guanacaste and its growing pains to be concerned.

To date, Ben and I have not heard anything concrete regarding new resorts in the area. Taking that one step further, there are only a handful of residents who want this airport to be built. Simply put, the majority of people who most desire this new International Airport… are people who don’t live here.

Air port in Costa Rica

Tiger Heron in the Osa Peninsula

The Ecological Impact

Some of our reader saw the recent article in the Environment section of the The New York Times. The article outlines the potential ecological impact on the Osa Peninsula, an area that boasts 3% of the World’s known biodiversity. The author writes, “Construction is planned in two phases from 2012 to 2016… (initially) designed for 50 passenger planes.” IF (notice the big IF) that timeline is accurate, there will be a global blast of articles and special features, then… an influx of investors. Real estate and development markets will surely be stimulated, and these investors and relocators will have a large raw land inventory to choose from when they do arrive.

As real estate experts, Ben and I are standing in the path of progress and we are experienced “tour guides” in Costa Rica real estate. However, like the majority of people who move to The Zone, we also love our small town community and the postcard paradise that surrounds us.

 

* Costa Rican Tourism Institute

Oct 122010
 

The Costanera Highway, The Caldera-San Jose Highway, The Cortez Hospital, The International Airport and The Diquis Hydroelectric Dam… it is easy to see that Costa Rica is serious about improving its infrastructure and securing a bright future.

Over the past decade, the dramatic increase in tourism and investment has sparked a bit of a power-struggle between proponents of economic growth and socio-environmental protection groups. In this case, the “power” is the proposed billion dollar hydroelectric project called “El Diquis” near Palmar in the Osa Peninsula. This isn’t recent news, but I believe it is worth mentioning as it will affect life in various ways in the southern Pacific zone of Costa Rica.

Hydroelectric power is BIG in Costa Rica.

The Zone Is HOT

This large-scale project, facilitated by I.C.E. (Instituto Costarricense de Electricidad), is calling for the construction of a dam on the Térraba River in the greater Boruca Canyon. The dam will create a lake equaling approximately 25,000 surface hectares (over 6 million acres), the largest of its kind in Central America.  By comparison, Lake Arenal is roughly 8,500 hectares.

This station will generate up to 630 megawatt units capable of providing over one million families with electricity!  This project is about Power, both electric and economic.  According to a Continuum report commissioned by the Costa Rican government, Continue reading »

Sep 172010
 

A longtime associate in Costa Rica real estate stopped by our office after being out of the country for an extended period.  One of his first questions was, “So, what’s going on with the international airport?”  My response was, “What airport?”  He found that amusing considering the broker he just spoke to was talking it up like the asphalt trucks were lined up and ready to pour the tarmac.  We both had a good laugh.

I’m not saying major infrastructure projects aren’t being completed here in Costa Rica.  There have been many projects completed in the past two years—

  • San Jose-Caldera Highway
  • Quepos-Dominical Highway (affectionately known as, “The Dirt Road”)
  • Re-paving of the Dominical-San Isidro Highway
  • The Bridge at San Buenaventura
  • The Bridge at La Cusinga (almost)

From that list it is easy to see the progress and the progression.  What I mean by “progression” is the land routes need to be completed first before an international airport is built in The Zone.

Rumors to Reality

The list of rumors regarding the southern zone Airport is long and varied— operational for international flights by 2010, moving to a new site in Sierpe, moving south closer to the border in a joint venture with the Panamanian Government… to name a few.  The reason I am sharing this news story released by La Nacion a few days ago and forwarded by a reputable broker in the area is it actually sounds like the government has a (more) realistic plan.

In summary, Costa Rica’s third international airport will be located in the same exact spot currently occupied by the Palmar Regional Airport.  To comply with Aviación Civil (the FAA of Costa Rica) standards, the runway will be extended 400 meters and facilities for immigration, customs, and security will be constructed.  The “facilities” will include extra hangers, buildings, and even a terminal that will provide hangers and services for commercial shipments.  The price tag on this project is quoted at $25 million dollars, half the proposed cost of the mega-terminal in a new location.  They did not release a projected completion date, but I would be shocked if it was ready in two years.

One of the most interesting points in the announcement is the Minister of Tourism’s call for more hotels to be built in the area.  It is a similar point echoed by the longtime mayor of the Osa Canton, Alberto Cole.  It’s safe to say, major hotel projects are going to get the green light, moving forward.  One of the more interesting things to me is exactly how they are going to accomplish this with no Plan Regulador (e.g., zoning plan) for the area?  Where are these new hotel-resorts going to be located?

What Does It All Mean?

It means that at some point in the future there will be international flights landing in Palmar.  It means there will be more hotels, and the beaches will be alive with activity.  It also means there will be many, many more investors buying in the area.  People look at me funny when I say this area is poised for another b-o-o-m, but all of the regional signs—improved access from every direction and significantly lower property prices— point that way.

It means property in areas like Tres Rios and San Buenaventura, once thought of as “too far south of Dominical” will be a 15-minute taxi ride from the terminal.  Check out Tres Rios Estate and Tres Sandalo 17 as examples.  We only have a few listings in Palmar (see photo left), but I guarantee that number will double before the high season.

Most of the expats in The Zone have adopted the “I’ll believe it when I see it” philosophy.  We have also been surprised by the recent completion rate of infrastructure projects.  Safe to say, the completion of the 3rd International Airport in Palmar will be the crown jewel for the region.  If you are interested in buying Costa Rica real estate, this recent news bodes well for smart investors.

 

Interested in Costa Rica real estate as an investment. They primarily live somewhere else, but they own property in Costa Rica for the asset appreciation potential as well as possible rental income. Some just buy and hold (land-bank). For developed properties, the investor has a vacation home to visit as desired.

Migrators spend a regular amount of time in Costa Rica during each year.

Re-locators are those that are looking to move to Costa Rica from wherever they are. They will live full-time in Costa Rica.