Every Monday, through next October, the British carrier First Choice will bring 288 tourists non-stop from London to Liberia, in Guanacaste. According to Ministry of Tourism sources, the visitors traveling First Choice plan to stay an average 14 days in the Guanacaste beaches. They also pointed out the importance of having more seats available for European tourists, whose number has steadily increase with the larger number of flights to Costa Rica now available to them.
Costa Rica and Panama signed a free trade agreement that will allow 90 percent of Costa Rican goods to enter the neighboring countries with no tariffs levied on them. The tariffs for the remaining 10 percent will be deleted in 5 to 17 years. For Costa Rica, Panama is the fifth major trade partner, preceded by the United States, China, Nicaragua, and Guatemala. The agreement will become effective in about one month, after the proper legal reviews.
The domestic Costa Rican carrier Nature Air was declared the first carbon neutral airline in the world. Since 2004, Nature Air has developed an aggressive conservation program at the Osa Peninsula –world-renowned for its natural resources– oriented at compensating the whole gas emissions of its entire fleet. This effort was acknowledged at the World Environment Conference held in Oslo, Norway, in May. Environmentalists hail Nature Air as an example to follow if we are to preserve the planet for coming generations.
According to transport officials, about 70 per cent of the machines used to repair the country’s roads are inoperable. Most are simply old and in desperate need of repair themselves.
A new pilot program however, is seeking to remedy the problem by using Guanacaste as its first test-subject, announced the Ministerio de Obras Públicas y Transportes (Ministry of Public Works and Transport, or MOPT) earlier this week.
“MOPT will have the necessary equipment to offer continuous maintenance of the roads. This will make it so machinery is always present on our streets and will save us time by being able to mediate in the repavings,” said MOPT Minister Karla González, who added the program will run for three years.
The ministry has purchased nine new road-repair machines which will be permanently stationed at strategic points throughout Guanacaste, a region where firefighters often have to switch jurisdictions last minute depending on which roads are passable and vehicles come under constant need of repair.
An estimated 870 million colones (about $1.67 million) was invested in the new machinery and labor costs for ten roadwork crews. An additional 353 million colones (about $680,000) will be allotted for machinery repairs throughout the region this year.
The Comptroller General’s Office has given the go ahead for direct contracting and companies will begin bidding for roadwork contracts in mid July.
“I hope that thirty days after (July 10) we can decide upon the contract,” said Ms González.
“It was very happy news for us since the roadwork will help reduce our response time a great deal. When the road was bad or under repair between Belén and Huacas it took two hours to respond to an emergency,” explained Franthy Ramos, Deputy Fire Chief of the Filadelfia Station.
“With good roads we reduce (response) times to 35 or 45 minutes,” he said, remembering one particular summer fire when his brigade took more than two hours and 45 minutes to respond.
“There is a large quantity of roads in Guanacaste in need of continuous repair,” seconded Ms González.
Likewise, bridges such as the Rio Perico and Rio Grande at the entrance to Nicoya need facelifts. So do the bridges in Parrita, Paquita and Naranjo; those three, Ms González says, will amount to about $16 million (about 8.29 billion) in reparations and expansions.
Ms González says the designs are ready for Perico and Grande but her ministry is waiting for an approval from National Technical Secretariat of the Ministry of Environment (SETENA).
The Ministry of Public Works and Transport says there have been more than 150 inquiries from people interested in the $15 million concession to build and operate a new international terminal at Daniel Oduber International Airport in Guanacaste.
Some of the world’s leading airport operators, as well as heavy engineering firms are now known to be interested in the tender to finance, construct and operate a modern terminal.
Canadian, US, Spanish, Chilean and Costa Rican companies are all interested in the tender, according to Guillermo Álvarez, a member the Consejo Técnico de Aviación Civil (CETAC).
“The official bid announcement will be published next week and we expect to have a company assigned for the project before the end of the year, in order to start with the works early in 2008,” Mr Alvarez said this week, while he and other officials watched a training simulation.
“The construction should take a year, so we expect to begin the operation of the terminal in January 2009,” he said.
The new terminal, built on the east side of the existing structure, will be about 13,500 square meters and capable of handling up to 1500 passengers at a time.
The concession will only cover land-side facilities, such as immigration, ticketing and check-in counters, boarding lounges, officers, customs and baggage claim areas.
It will specifically not include airplane parking, taxiways or the airport’s single 2700-meter (8775 feet) runway.
“We have received letters from very recognized companies that are interested in the project,” Mr Álvarez said. “Some of them are international companies.”
Mr Álvarez confirmed Houston Airport System (HAS), which operates the three main airports in Houston and is reportedly the sixth biggest multi-airport system of its type in the world, is known to be interested in the concession.
So too are at least two Canadian companies.
One of them is SNC-Lavelin, which since the early 1970s has worked on a number of airport projects for clients in Canada, the US, Africa, Europe, Asia and Latin America.
The Spanish company, Aeropuertos Españoles y Navegación Aérea (Aena), which manages 47 airports and one heliport is known to be interested.
As is the Spain-based, AZVI Group. In fact a representative of the Airport Division of the 75-year-old Seville-based, family-run company, flew into Daniel Oduber Airport in June last year for a preliminary study and to meet with airport authorities.
The operators of Chile’s main international terminal in Santiago, SCL, Terminal Aéreo Santiago S.A., has also been in touch with the Costa Ricans. That consortium, of two Chilean, two Spanish and one Canadian company has a 15 year lease on the airport and would be looking for a similar deal in Liberia.
Airport concession’s can be a lucrative business.
The successful bidder is likely to take up to $7 from the $26 currently charged for every departing international passenger. Last year passengers paid about a million dollars in taxes, and that figure is increasing every year.
This year, for example, is likely to see about 400,000 passengers, however there are several critical periods for arriving and departing flights. During the high season it is not uncommon to see ten flights in a three-hour period from about 11am on a Saturday.
Further, Daniel Oduber is often used during evening hours as an emergency airport for flights diverted from San José because of adverse weather.
The final design for the terminal will be up to the government, which is debating two key issues — air bridges for boarding passengers and air-conditioning in key areas.
“Some feel we are contemplating an airport with limited infrastructure and other international companies consider it to be too high an investment for the area,” said Vice-Minister of Transport, Viviana Martin, who was also watching the emergency simulation at the airport this week.
“This feedback will let us see if our primary objective should be an emphasis on greater comfort…air-conditioning, and additional doors or ramps which would imply a greater investment in the commercial area,” Ms Martin said.
“Do we want more luxurious installations and lesser income, or greater income and a limited airport,” she said.
Mr Álvarez said a cost analysis was being put together to determine whether air-conditioning would be included in the tender.
Air bridges, he said, were unlikely.
“In fact, we received several comments and suggestions that deserved to be included in the tender,” Mr Álvarez said. “Many persons recommended we install boarding bridges, but the amount of passengers do not justify them.”
However, what is likely to be considered seriously, is freight facilities.
Most of Guanacaste’s produce for export is first shipped to San José, where freight facilities at Juan Santamariá International Airport allow for air cargo. Mr Álvarez said they will now look at using the old terminal for freight.
“The old terminal will be used for either local flights or cargo,” he said.
“The cargo terminal will be used mainly for flowers and fish exports because other products like melons and pineapples are very heavy and need to be carried by sea.
“The products involved (with freight) must be of high reimbursement value, since the transport costs are high.”
The airport tender document will be released next month.
The Ministry of the Environment and Energy has rejected an environmental study for a $333 million tourism development on the northern Pacific coast.
The Ministry’s National Technical Environmental Secretariat (or SETENA) has denied permission for developers to move ahead on the project known as Punta Cacique, which will include two hotels and a golf course.
The SETENA resolution rejects what it terms a flawed environmental study, citing 14 technical impediments on the headland, south of Playa Hermosa. It also points to an appeal before the Sala IV, or Constitutional Court, from a private citizen who opposes the project.
The 198-hectare property is owned by Revolution LLC, the company set up by Steve Case, Chairman of Exclusive Resorts and the Co-Founder of America Online. He is understood to have paid a reported $42 million for the property late in 2005.
In rejecting the study, SETENA points to an ”absence of vital aspects for an adequate environmental evaluation of the project.”
“…due to the developer’s failure to comply, what proceeds is to not continue with the environmental evaluation and archive the file of the Project Punta Cacique,” the resolution says.
SETENA gives the developers three days to respond and to file an appeal before the Minister of Environment and Energy.
The so-called technical impediments include the lack of detailed information on the systems to be used and the location of three proposed treatment plants.
They also cite a lack of a de-salinization system that the developer proposes to use; a lack of supporting geological maps for the project; a lack of definition of works to protect a stream from poor natural drainage; and a lack of a plan to deal with seismic threats.
Without an environmental study, work on the project cannot proceed. The project is understood to include a Miraval Life In Balance resort, based on a similar venture in Tucson, Arizona, as phase one of his project. A One and Only five-star hotel, (part of Kirzner International Ltd) would be part of a second phase.
However, representatives of the nine companies behind the project confirmed late Thursday they would appeal the resolution.
“The company, together with its environmental consultants is working to clarify the 14 objections,” said Pedro Muñoz, a legal representative for the development companies.
Mr Muñoz, who is also a councilor at the Municipality of Liberia, was adamant all objections to the project would be clarified in due time.
“We have the conviction (that all will be overcome),” he said adding that although he could not divulge additional details regarding the rebuttal, he did concede they were working to respond to SETENA in the shortest possible time.
Mr Muñoz confirmed Mr Case’s company Revolution LLC was the parent company of a group of holding companies.
“I believe there are nine companies which represent 22 fincas,” he added.
If many of these impediments can be put right, there are two objections that may be more difficult to redress.
SETENA argues there is no attached legal basis to explain the amalgamation of 22 different properties to make a private urbanization project, using existing public roads.
More seriously, SETENA says that during an inspection it observed that the road that led to the beach Playa Penca had been closed off to the public by metal fencing and the presence of private security guards.
“…the study does not point which is the public access to the beaches of Punta Cacique and/or the mechanisms proposed so that Costa Rican citizens can enter to enjoy the public area in those beaches,” says the resolution.
SETENA also mentions the lack of an attempt by the developers to present the project to a community already impacted by the perceived over-use of water in the area: “…there is no attempt by the developers to reach out to the community to determine whether there is community support for the project.”
Within the resolution, SETENA mentions opposition to the project by a private citizen and attaches to the file the petition the Playa Hermosa resident filed before the Ministry’s System of Conservation Areas (SINAC) to declare Punta Cacique with a conservation category.
The denial comes hard on the heels of another appeal filed before the high court in previous months by citizens of Coco and Playa Hermosa and environmental activist group Confraternidad Guanacasteca demanding the right to quality water.
Although the appeal was not filed against the Punta Cacique Project, it did list it as one of the projects of concern asking to have the project’s well concessions voided.
The community objected to the projected wells’ capacity of 57 liters per second from the Panama Aquifer, considered a fragile aquifer because of its proximity to the beaches.
“The water issue is one of the points to be answered,” said Mr Muñoz, who added that the concessions were valid until 2009.
In a description of the project filed alongside the environmental study impact, Punta Cacique is presented as a low-density eco-tourism development to be developed over six years and divided into three phases.
The project envisions developing 30 per cent of the total area with a projected occupation of a maximum of 2080 people, or 10.5 people per hectare.
"You guys don't even know what is really about to happen around the corner in the following years in Guanacaste, right now you think that big farms that are selling at 20 to 40 $ per square meter is a high price. You wait and see what will happen when some of the trully big developments break out in the area. You mark my words, in the next five years this same farms will be selling for 300 $ per square meter. You don't believe me, I am actually tired of seeing it happen around the world in other areas were I have developed hotels in emerging touristical markets like Costa Rica's" This was the perspective that one of our hotel developer/client brought out when speaking about the real estate boom happening now in Costa Rica. Hard to believe?, the past few years have shown such a growth, one that if it keeps on going will take us exactly where this developer says it will.
Florida Ice and Farm Company, Costa Rica’s brewing and real estate giant, has unloaded its stake in the Hotel Paradisus Playa Conchal, one of Guancaste’s most prestigious all-inclusive resorts.
Reserva Conchal, the parent company of the 930-hectare (2,297 acres) real-estate development project of the same name, in Cabo Velas, has sold a 90 per cent stake in the 302-room hotel to Caribbean Property Group, a US investment fund.
The deal is worth $135 million.
Under the arrangement, Florida Ice and Farm Company (FIFCO) retains a ten per cent interest in the hotel, which carries the Meliá brand.
“The reason we did this is because we are not hotel operators or owners,” said Carlos Francisco Echeverriá, head of public affairs for FIFCO, late this week.
“We wanted to keep a minimum ownership only in as much as it is closely related to our real estate business,” Mr Echeverriá said.
FIFCO also retains the Garra de Leon Golf Course, as well as the remaining 700 hectares outside the hotel.
The deal has been several years in the making.
It began to move when FIFCO acquired three key Costa Rican assets of SAB Miller, one of the world’s biggest brewers with brewing interests or distribution agreements in more than 60 countries across six continents.
Specifically, FIFCO wanted the Central American bottler, Embotelladora Centroamericana S.A. (ECSA), the drinks distributor, Distribuidora Centroamericana de Bebidas S.A., and critically, SAB Miller’s 42.5 per cent interest in Reserva Conchal.
That gave FIFCO an 85 per cent interest in the Cabo Velas property.
“As the controller of Reserva Conchal, we decided to sell our majority shareholding in the hotel business,” said Mr Echeverriá. “We formed a new company and now own just ten per cent, while CPG owns 90 per cent.”
The Caribbean Property Group manages the Caribbean Real Estate Opportunity Fund 2005, an investment fund of private capital of $500 million. It is sponsored by Goldman Sachs and includes Perry Capital and about 15 other, smaller investors.
According to Jorge Volio, the Chief Executive Officer of Volio Capital, since January 2006 CPG has embarked upon an aggressive acquisition campaign.
“They raised a fund from sophisticated, US investors, of about $500 million which gives them the opportunity to leverage the capital across about $2 billion in assets,” said Mr Volio.
“The purpose of the fund is to acquire ongoing concerns with cash flows already happening.”
Volio Capital represents CPG in Central America, and Mr Volio negotiated the latest deal.
CPG has concentrated on four types of acquisitions --- hotels and other assets in the hospitality industry, office buildings, commercial and retail properties, plus industrial facilities.
In Costa Rica they have acquired the Fiesta Premier Hotels in Papagayo and Puntarenas. In a deal with the Hilton Hotels Corporation, those properties have been re-branded a Hilton Hotel and a Doubletree by Hilton.
In Costa Rica, the investments of CPG include the industrial free zone of Global Park, plus the Court Marriott Hotel in San José. The group also owns hotels in the Dominican Republic, Trinidad and Tobago and Aruba.
Mr Volio said there were no plans to alter the operations of the Hotel Paradisus Playa Conchal.
“There are no plans to re-brand the property,” Mr Volio said. “The Melia is a successful hotel, it is profitable, and we would not have done this if it were not.”
Both sides in the negotiation say they expect the deal to be finalized when due diligence is complete, probably within about 60 days.
Reserva Conchal is one of the foremost tourist developments on the Pacific Coast.
It started with Paradisus Playa Conchal, the Melia-operated, five-star, 400-plus-room, hotel, finished July of 1996, and was followed a year later with the opening of the 18-hold Garra de León golf course.
Under the 15-year Master Plan, the property will eventually be divided up into three main areas.
A second resort is to be built, as well as another golf course, and an equestrian center. Plans call for more than 700 lots to be released containing a mixture of condominiums, duplexes, single dwelling houses, villas and in some cases, building lots.
The group also plans to develop Los Altos, a small outcrop of land overlooking Playa Conchal from the south. Here will be a six-star, 70-room, boutique hotel, high-priced condominiums, duplexes and villas all overlooking an isolated beach whose only access will be by boat.
Reserva Conchal is known to be in active negotiations to begin building the second resort, to take advantage of the lack of all-inclusive accommodation along the coast. Management will not be drawn on how that hotel project might be developed.
One possibility, given the recent deal over the Paradisus Playa Conchal, would be to simply sell property, allow other developers to build the hotel and use the facility to draw buyers for their real estate.
The Costa Rican government is in direct negotiations with at least four European air carriers, pushing them to offer scheduled, non-stop flights to Costa Rica, and in particular to Guanacaste’s Daniel Oduber International Airport.
The Minister of Tourism, Carlos Ricardo Benavides, confirmed this week he was in talks with Spanish, German, British and at least one Italian carrier, hoping they will offer direct flights to Costa Rica’s Pacific coast.
The Dutch are also said to be interested.
“We have started talks directly with the airlines,” Mr Benavides told The Beach Times. “I am not talking about sending representatives between us; I am talking directly to these people.”
The most recent negotiations took place in Berlin, about two months ago, during the International Tourism Exchange, known as ITB Berlin. Mr Benavides led a Costa Rican delegation to what is the biggest tourism trade show in the World.
There were discussions with carriers from Germany, Britain and Italy, although Mr Benavides declined to name specific airlines.
Mr Benavides indicated he favored a carrier from either Germany or from the United Kingdom “because they have been the most serious about our conversations.”
The Costa Rican negotiations are concentrating upon scheduled flights, rather than air charter companies.
“I am mainly working with scheduled flights,” Mr Benavides said. “They are offering a product that represents something more long-term, more stable for the tourism market. It is a product we can count upon.
“It doesn’t mean we are ignoring charter flights, far from it,” the minister said.
“But sometimes a destination starts with air charter companies, and moves on.”
The Minister’s comments came after a ceremony at Daniel Oduber Airport Monday where he and other tourism and business leaders welcomed the first direct charter flight from Europe, a First Choice Airlines Boeing 767-300 from London’s Gatwick Airport.
The arrival of 258 passengers direct from London (see story page 12) is a major breakthrough for the Instituto Costarricense de Turismo (ICT), and represents about two years work for both the airline and the Costa Rican government.
“This is very important,” Mr Benavides said. “Of course we have to look out for our largest market --- the North Americans --- but it would be a very big mistake if we did not pay attention to the Europeans.”
“It’s a new door that opens to Guanacaste to communicate with Europe,” said Alvaro Conejo, President of the Guanacaste Chamber of Tourism.
“We have great expectations as to the arrival of other airlines coming from Europe,” he said. “We know there is interest from Spain, Germany and the Netherlands.”
In fact Iberia, Spain’s biggest transport group and the fourth biggest in Europe, has already said it will fly into San José Juan Santamariá Airport in July. Further, the ICT has been in talks with Air Comet, the ten-year-old, Madrid-based carrier which operates long-haul flights to a dozen destinations in Central and South America. It too, is eyeing San José.
The European route is potentially hugely lucrative, particularly for those airlines bold enough to pioneer the route. Given the size of Europe, any scheduled carrier is likely to pull passengers from neighboring countries. Passengers from Belgium, France, Germany, Holland, Britain, Italy and Spain, could all reasonably pick up a flight from a single European city.
Delta Airlines, for example, pioneered direct flights to Liberia from the US in December of 2002, and quickly grew to daily schedules, last year ferrying more than 100,000 passengers between its Atlanta, Georgia hub and Liberia.
Delta, once the leader in Liberia, has been overtaken by Continental Airlines. Last month 37,869 passengers went through the airport. Delta carried 10,299 of them, Continental 14,268. American Airlines is the third biggest carrier.
“The first year after Delta arrived, another three airlines followed,” said Mr Conejo. “We feel that it is reasonable to assume that a similar situation can happen with the Europeans.”
The Europeans will also be looking for a way around flights that currently go via the United States.
Stringent security, long lines for check-in and immigration, and custom clearance even for transiting passengers have made the United States a less than palatable experience for international travelers.
“It is true,” conceded Minister Benavides. “There are many people and many airlines who just don’t want to fly through the US.”
And while the ICT continues to actively promote Costa Rica to the Europeans, the Ministry of Public Works and Transport (MOPT) is working to ensure Liberia Airport’s beleaguered facilities can cope with the increased passengers.
Last week the government invited more than 100 investors, airlines and construction companies to a presentation in Escazú, where details of a concession document for a new terminal at Liberia were outlined.
The Concessions Vice-Minister, Luis Diego Vargas, told the meeting he expected to have the final concession document ready mid-way through next month. Offers would be evaluated in the following six months and the contract with the selected company would be signed early in 2008.
The successful bidder will then have 12 months to complete the first phase of the project.
More than 20 companies around the world have shown interest in the job, according to Guillermo Alvarez, of the Consejo Técnico de Aviación Civil (the country’s board of Civil, or CETAC).
The winning bidder will build a 15,000-square meter facility, air-conditioned and capable of processing 15,000 people per hour. At its busiest (Saturdays between 11:45 am and 2:30 pm), the airport currently sees about 700 people in an hour.
The new terminal, costing about $13 million, will cater for up to a million passengers a year, the number of passengers expected to arrive at Liberia by 2017, according to Civil Aviation estimates of a ten per cent increase in passengers annually for the next five years.
A second stage includes a 12,000 square meter construction and a bigger runway, scheduled to be ready by 2011.
Hermosa Highlands’ development is a consortium effort headed by CRDC’s CEO Mr. Ott is the visionary who created this magnificent Mediterranean community in the majestic highlands of Cerro Fresco in Jaco the heart of the Central Pacific.
Under Mr. Ott’s direction this master planned community’s cutting edge architectural elements have been cooperatively created by CRDC’s design and development team, as well as some of the most experienced and knowledgeable engineers and architects that Costa Rica has today. Mr. Ott assembled an elite development team to build this world class project, which was also responsible for building some of Costa Rica’s finest resort communities in the past. DEHC. One of Costa Rica’s most esteemed engineering firms was consulted on this project, and other spectacular projects, including the Four Seasons hotel, Marriott Hotel and Conchal Resort.
CRDC’s flagship property, Hermosa Highlands, has been in the planning and development stage for well over a year. The awe-inspiring ecology, the alluring typography of the dual mountain ranges, the lush river valley, and the tropical landscape of this site were all taken into account before the first two communities of this 241 acre resort were master planned. The development team paid close attention to and maximized the client’s lifestyle experience in all aspects at Hermosa Highlands.
Cerro Fresco
The mountain range that Hermosa Highlands resides on is named Cerro Fresco which means “Fresh Mountain” and is known for its tropical beauty, exotic flora and fauna and it’s world renown temperate climate. The summit of Cerro Fresco where Hermosa Highlands is located, which was named La Gloria by the area inhabitants many generations ago, towers high above all other peaks within this range. A river originates from this towering 3000ft elevation from which you can hear the serene sounds of waterfalls, flowing down this majestic landscape. Scarlet Macaws, families of white faced monkeys, and dozens of toucans can be seen from this breathtaking locale in the early morning. And awe-inspiring views of the Pacific Ocean can be seen from virtually anywhere on this world class location.
Hermosa Highlands amongst the forefront of resort communities in all of Costa Rica, Strategic location, Awe-Inspiring beauty, and cutting edge design. Come and view history in the making, Hermosa Highlands is waiting for you….
The real estate market in Costa Rica, in response to booming investment and international attention, is entering a stage of sophistication. With better financing options, more established developers, and more savvy consumers and businessmen alike, Costa Rica is a secure and transparent investment. As the market matures, however, it is also tightening, and prices across the country are reacting quickly. Nevertheless, very few buyers are feeling excluded from the rush and the full gamut is making the plunge.
Costa Rica, with an average annual growth rate of 4.5 percent over the past ten years, has become increasingly seen as a strong and sustainable economic environment for both foreign and domestic investors. Where the country used to rely on exportation of produce like bananas and coffee, real estate is the currently indispensable market.
The economic environment over the past few years has reflected investor confidence in Costa Rica. Capital investments in 2006 grew at a rate large enough to cover the public sector’s account spending. There were $1.89 billion worth of private capital investments in 2006, which translates into 8.7 percent of Costa Rica’s gross national product (GDP). Similar investment in 2005 was limited to $1.4 billion – 6.8 percent of the country’s GDP.
According to Dr. Luis Massalles, Costa Rican economic think tank analyst, a large portion of this investment is coming from foreign direct investment in real estate. Real estate FDI alone accounted for 1.1 percent of GDP in 2005, and Masalles expects it to amount to a similar figure for 2006 and continue to grow.
The real estate hot spot last year was the northwest Guanacaste region, Costa Rica’s seventh and largest province and home of some of the country’s most coveted beaches. In 2005, Guanacaste captured 53.2 percent of real estate FDI. The San Jose province, including the Central Valley, captured 25.4 percent. The Puntarenas province, including Jaco, Manuel Antonio, and the South Pacific, received 29.7 percent. Alajuela received 12.7 percent, Cartago 7.9 percent, Heredia 13.7 percent, and Limón 4.4 percent.
Guanacaste is dominating both the volume and nature of real estate investment in the country. It has some of the country’s most beautiful beaches and can be quickly reached by the Daniel Odubar International Airport in Liberia, the province’s capital.
The controlling trend is the development of resort and residence communities designed to provide the services and amenities of a full town. The Los Suenos Resort in Jaco was the leader of this trend, although communities like Pacifico Beach Club and the Papagayo Golf Club in the Playa de Coco area seem to be popping up everywhere. Like the course of development booms everywhere, infrastructure and services have taken a while to catch up to the speed of construction in Costa Rica. Instead of waiting for the government, such projects are taking the initiative to flesh out the local economies with anything from luxury furniture stores to medical clinics. The Four Seasons, Papagayo Peninsula in Guanacaste provides its guests Internet access from their own private grid, for example, because they feel it is more consistent than the service provided by the government run monopoly, from which the rest of the country connects.
The condominium market is also in full swing in areas of Guanacaste like Tamarindo, and the rates of appreciation are offering various opportunities for investors to make a quicker profit than through the purchase of land. Many think that prices have peaked in the area, however, for the time being.
The Central Valley is becoming a less expensive alternative to the beach, as well as having access to more developed infrastructure and governmental services. In addition, the Juan Santamaria International Airport in San Jose is centrally located in the middle of the most populated suburbs. For those who are raising a family, the education is notably superior to the options in periphery, especially for private schools.
In contrast to the residential developments dominating the coastal regions, the driving force in the Central Valley is commercial construction. Most of this investment is in speculation of a future residential boom, although many think that it is outpacing residential growth and an over saturation of the market is occurring.
In the southern Nicoya Peninsula region, prices have been shooting up for the past five years. Properties are appreciating at rates between 20 and 100 percent and the low-end market is becoming non-existent as a lot of any size five minutes from the beach can’t be found for less than $150,000.
The low end market is still robust in the South Pacific regions of Golfito, however. The Caribbean side is largely undeveloped and cheap, although has not seen much investment due to security concerns.
Countrywide, analysts are seeing the beginning of a boom, and there are a number of reasons why the market is growing now and will continue to grow. Due a number of factors regarding Costa Rica’s economic and political climate, Costa Rica is, according to Jim Gale at Paradise Brokers in Dominical, “one of the best and most secure real estate purchases in the world.”
The number one reason Gale cites is accessibility, principally convenience of travel to and within the country. There are now two international airports - the Daniel Oduber International Airport in Liberia, Guanacaste and the Juan Santamaria International Airport in San Jose - welcoming almost 1.7 million tourists last year. The large majority of those tourists are still form the United States, who fly here in two hours from Miami, three from Dallas, Texas, for example. After touching down, the beach can be as close as 20 minutes away from Oduber, never more than a three hour car ride from Juan Santamaria.
The second most influential factor is an aging demographic of buyers sitting on retirement funds. Gale has seen evidence of the baby boomer generation putting the same pressure on foreign markets as it has in the United States. 70 percent of his customers are from the United States, he says, mostly looking for a retirement getaway.
Second home sales surged this past year, equalling a third of the market in the United States; Costa Rica is the size of West Virginia. Most attribute the attractiveness of Costa Rica to the growth potential, citing the figure that properties can appreciate three or four times before they reach the price of a comparable property in the United States or Europe.
Another motive to get away has been the rising concern over terrorism amongst United States citizens. Aside from creating a drive out of the States, Costa Rica, with a long tradition of democracy (some say Latin America’s longest, although Venezuela would debate that) and no standing army, is a refreshingly peaceful option.
Gale, along with investors around the country, have seen a recent maturation of the financial markets. The availability of financing, especially through pre-packaged mortgages and standardized plans, has attracted investors that may have been wary to put money into the country before. “Investors and buyers alike are not willing to invest until they see that these things are already underway,” says Brad Schaepp of Costa Blanca del Pacifico in Guanacaste. “Now, we are seeing the market become more sophisticated. The process is becoming standardized.”
Financing options are also expanding on all levels, says Schaepp. “Banks are competing for mortgage financing, where before, investors were financing themselves or reaching out to private lenders. Approved financing options are taking off, as well. “I am very excited about [Banco Nacional] organizing around qualified projects,” Schaepp says.
The market to the south in Manuel Antonio is seeing a similar development. Banks there are starting to offer 30 percent down financing with the option to defer payments, for example. “This is a new thing,” says Richard Lemire from Manuel Antonio Estates, one of the area’s leading real estate agency.
The standardization of the financial market is only one aspect of the progress Costa Rica’s real estate market has made. The growing market has also created more sophisticated business standards. Investing and developing in the country is becoming a more educated, professional practice. One only has to Google ‘Costa Rica’ to learn the in’s and out’s of the whole process of investing here. Much of this information is intentionally made clear by the development companies as an effort to ease buyers’ tension about dealing long distance “Developers are coming in to build up the marketing and advertising markets,” says Schaepp. “As well as more professional P.R.”
The businesses themselves are internally more sophisticated, as well. “Projects are coming in with an understanding of pro forma,” says Schaepp. This is a necessary step to reassuring and attracting capitalized investors. “This security is driving up investment because it is much easier to foretell how the process will run and how the market will reward the investment,” Schaepp says.
Costa Rica also has famously low taxes. Today, a homeowner has to pay four percent property taxes. Setting aside alternatives in the United States and Europe, Costa Rica is seen as a better investment than its neighbors. In Panama, for example, property taxes are payed on an accumulating scale that adds up to almost six percent once the value of the house exceeds $100,000. In Nicaragua, taxes are lower than in Costa Rica but the political situation is tenuous for foreign investors. In addition, there are no capital gains taxes on properties in Costa Rica and the rates of business taxation are comparably low.
No matter who you are, you will not be restricted from owning property in Costa Rica. This is not the case in Mexico and most ofCentral America and is a huge draw for foreign buyers looking to retire and put legalities behind them.
What buyers are demanding once in Costa Rica is recreation and convenient amenities. Costa Rica is the land of recreation, ranging from the extreme rip cord rides through the rain forest canopy to the decidedly safe suntanning. The retiring demographic, while probably more active than the average, is favoring the more leisurely activities. According to Dave Reynolds at Papagayo Golf Club in Guanacaste, one fifth of foreigners coming to the country are coming to play golf. The second largest leisure activity is boating and fishing, and the proximity to a marina is increasingly determining where homeowners settle.
No matter what the taste, Costa Rica is internationally recognized as being able to deliver. If one can’t already find satisfaction in the existing landscape and economy, it can probably be created. The range of possibility is has been attractive to the range of real estate investors; what is actually attracting them is the increased sophistication of the financial market. With it, the business community on both sides of the transaction is maturing.
For its seemingly irrational fluctuations and high prices, there is a firm foundation being laid to the real estate market to support a sustained growth to match the country’s strong economic progress.
Spanish airline Iberia is planning to bring 92,000 European tourists to Costa Rica a year, thanks to its newly announced nonstop daily flight service from Madrid’s Barajas Airport to San Jose’s Juan Santamaria International Airport, which will being in June. Iberia currently flies to San Jose seven times a week, but only one of those flights is nonstop.
Frontier Airlines has applied for federal authority to fly to Costa Rica, joining Spirit and First Choice in the race to add Costa Rica to their destinations. The Denver-based carrier has asked for an exemption from the U.S. Department of Transportation to allow it to fly between points in the United States and various points in Costa Rica “and beyond.” Frontier asked for permission to operate scheduled and charter flights, and said it would use its 132-seat Airbus A319 airplanes. No airline currently flies nonstop between Denver International Airport and Costa Rica. Frontier said its entry into the U.S.-Costa Rica market would expand options for travelers and stimulate more leisure travel. Frontier earlier this year applied for blanket authority to fly to any country that has an open-skies agreement with the United States, including Costa Rica.
Reports are that Frontier Airline has received approval to fly to Costa Rica from the U.S. Department of Transportation. The Denver-based carrier had asked for permission to fly between points in the United States and various points in Costa Rica “and beyond,” with plans to use its 132-seat Airbus A319 airplanes. No airline currently flies nonstop between Denver International Airport and Costa Rica.
Foreign investment opportunities and increased business development in Costa Rica’s top tourist areas is luring private banks to open new and more modern offices outside of San Jose. Banks such as BAC San Jose, Corporacion BCT and Banco Cuscatlan are flocking to high-growth areas in Guancaste and the Central Pacific, betting on attractive, state-of-the-art facilities, 24-hour automated services and bilingual personnel to capitalize on the growing number of real estate investors and foreign residents moving there.
The number of visitors coming to Costa Rica through the two international airports, San Jose and Liberia, began to rebound in the past four months, after seeing a decrease during 2006. In the last 12 months ending in March, 1,508,241 people arrived at the two airports. From January-December of 2006, the number was 1,460,300. During 2005 the number of visitors rose 13 percent over the previous year, hitting a record number of 1,569,751 arrivals and then seeing a drop of almost 7 percent in 2006. The rebound over the last several months is generating optimism in the tourism sector.