SORREL DOWNER

Journalist, film producer, and media consultant, mixing it up for TV, online, newspapers and magazines. I cover travel & tourism, lifestyle, and design. Mainly. This is the HQ for previous work, and an introduction to current projects. I work all over the world and live on a farm in Cadiz which I write about at www.somewheresville.org.

Costa Rica Property Investment | FT

Ask any foreigner who has lived in Costa Rica over ten years why they bought property here, and they’ll say they came on holiday and fell in love with the place: “The people are friendly, the climate’s perfect, the scenery’s stunning, the wildlife’s incredible, the fishing’s some of the best in the world and the beer’s cheap”. Ask anyone who has bought here in the past year and they’ll tell you it’s cheaper than Hawaii, more of an assured investment than Nicaragua, merely a two hour flight from the US and Miami property’s going downhill. Several I spoke to had multiple condo units, a piece of land and – in the case of four – their own residential beach development projects on the go already.

The Institute of Tourism has been selling Costa Rica around the world for years. Its much-touted inherent qualities (it’s Latin America’s oldest democracy, has free health and education instead of an army, a Nobel Peace Prize winning president, Oscar Arias, two coastlines, a spine of extraordinarily beautiful fertile highlands, conservation areas bursting with toucans and monkeys, an average temperature of 25 degrees) attract buyers as much as tourists. Buyers also like the low taxes, lack of capital gains tax, economic stability, English-speaking real estate agents, international schools, private hospitals, and recent returns on investment averaging 300 % in the past 10 years.

Altogether this has fuelled rapid development west of the capital San Jose, and along the entire length of the Pacific coast. As proceeds from the average detached house in Britain would fetch a 50 hectare ranch, a luxury beach villa or a 6-bedroom, 4-bathroom house with 4-acres, the easier access resulting from the introduction of the very first direct flights from the UK this May should pique British interest.

With most of the prime ocean-view parcels already snapped up by developers, fenced off, sub-divided and returned to the market as lots within secure, fully-serviced, gated communities, the bulk buy boom is now focused around the mix of home-build sites, fully equipped villas and condos that make up literally hundreds of exclusive communities ranging in size from 20 to 1000 units. The speed of development is overwhelming for a country of just over 4 million people operating on a manaňa principle. Last year, according to the Chamber of Commerce, construction grew 64 percent, covering 6 million square metres, the most frenzied being in a former backwater, Guanacaste, a region in the northeast, where the opening of a second international airport opened up less discovered white sand beaches to plane-loads of international visitors. Foreign direct investment in real estate equalled 1.1 percent of GDP in 2005, and 70 percent of that was in Guanacaste where the major developers are foreign, as well as an around 90 percent of the buyers.

Looking down from a 12-seater Cessna as it rides the thermals south from Playa Panama to Hacienda Pinilla reveals new roads, bald hills, cranes, tower blocks and construction underway on a string of major projects down a coast that until recently was nothing but small fishing villages, low-key tourist towns and pristine beaches. In this 40-mile stretch alone there has been an investment in property of over $1 billion, and property prices have quadrupled since 2004. The communities represent a blip on the standard of life index. Local towns benefit – where local schools, clinics and commercial centres are below par or non-existent, developers, keen to meet the needs of prospective clientele, enhance or add them.

Inside the gates, most properties come complete with roads, phone lines, internet access, water and electricity, guards, maids, restaurants, sometimes golf courses and five star hotels. The villas and condos are air-conditioned for a micro-climate 15 degrees below the Guanacastecan heat, the working language is English, the architecture predominantly Spanish colonial (although Balinese is seeing a popularity surge). In short these are not Costa Rican homes but self-contained worlds, built in compliance with international standards.

The scale too of some projects can be overwhelming. The 4,500 acre Hacienda Pinilla Beach Resort and Residential Community will eventually comprise 900 single homes or sites, and 1200 multi-family units. But the owner, H.G. Pattillo, is adamant that the old cattle ranch with its 7km of wild coast retains the Costa Rica character that’s at the heart of its appeal. Half the property will remain undeveloped (proactively – trees are being replaced at the rate of 80,000 a year) and, beyond the 18-hole golf course, construction zones, million dollar mansions and sprinklers, it’s inherently old-school Costa Rican: vast, hot and sleepy; wild around the edges with basking iguanas, monkeys rattling the branches, empty beaches and dusty cowboys hanging out at the stables. No-one would have bought into this remote community concept ten years ago, but the first phase released at the end of 2003, sold out in a year, and the latest phase released last May sold out in a month. Pinilla offers the chance to buy homes built to its own design (as well as lots), like the Palma Real Villas, elegant and cool, in clusters of 8, and individual single-storey hacienda-style houses with fountains, courtyards, colonnades and private pools. Private and exclusive, this is the perfect retreat for wealthy jetsetters who occupy their properties for just a few weeks each year.

But it’s also clear from the resale values that whether you want to live here or not, these properties are hot investments in every sense. A detached house with large pool and impressive 2-storey atrium owned by someone in Seattle, is on sale for $1.8m, double the price paid for it two years ago. Palma Real villas (described as townhouses) are selling for between $840,000 and $940,000 and untouched lots have trebled in value in four years. In fact half-acre ocean-front lots are reselling for $1m, the amount Pattillo paid for the whole ranch 33 years ago, and the addition of a JW Marriott hotel will push values up still further. “We want Pinilla to be a community, not a bank” says sales executive, Oscar Perez.

The reality, at least for the time being, is that within these gated communities up and down the coast there is a high percentage of absentee owners sitting on properties, generally letting them through rental management schemes, while values appreciate. “With returns of 25-30% per year it’s tempting to buy and sell, to flip properties” says Terry Thompson, a Canadian, at the gated community down the road, Reserva Conchal. “Everyone’s developing something.” He and his wife, Maureen, bought and sold their first condo here for a profit within a year in late 2001, immediately re-investing $300,000 on a second now valued at $850,000. Suitably encouraged they’ve added a family lot and a couple of properties outside the reserve as well. A tour over the sea-view mounds and trim lawns of the 930 hectare property in a golf cart, and examination of the figures confirms the familiar astronomical profit margins. “Condos with 3-bedrooms and office sold at pre-construction phase for $650-700,000 resold for $1.1-1.2 million in 18 months” says Andre from sales. “Plus while not occupied they let for $3,500 a week.” But built on the solid foundations of a largely Costa Rican-owned, established and successful hotel and beach resort, Reserva Conchal does have a bustling community feel to it with entrepreneurial beach vendors at the gates, seven on-site restaurants, a Robert Trent Jones golf course, bus stops and a core population of appreciative tourists. When the first phase properties, (terracotta-painted villas with lush foliage and tile roofs) were released Conchal was pitching to senior citizens. But the demographic changed and buyers now tend to be mid-30s to mid-40s”.

That influx of families has added cement to the community. The Thompsons who have three children themselves, manage to spend half the year in Costa Rica by working remote and switching their children between an international school and one back in Toronto; a schism they regard as beneficial to quality of life. “There are nine kids their age at the resort” says Thompson, “I could sit in an office in Toronto or sit here – I’m looking at the same computer screen. But here, they’re outside from school to bedtime. The 11-year old is out right now, golfing.”

The foreign property investment boom is rolling down the coast; steamrollering some say. Some of the 90 plus residential projects underway in the Central Pacific region will be a coconut’s throw away from smaller, sustainable communities already established for those keen to enjoy quintessentially Costa Rican pura vida jungle living, albeit in style. Says Richard Turire, long-time resident and owner of Manuel Antonio Estates: “Now every Joe getting off the plane is a developer or a broker for a developer. The big US developers are coming in and alternative smaller, local developers are getting squeezed out.” Concerns over environmental impact are frequently voiced. Las Baulas National Marine Park one of the five most important leatherback turtle nesting sites sits at the heart of the most densely developed part of the Guanacaste coast; the number of nesting turtles has plummeted from around 1500 to 57 in twenty years and some suggest the two facts are connected.

Further south a new marina development has sparked land sales in Golfito and, for the first time, serious interest in the wilderness flanking Corcovado National Park, effectively ending hopes of expanding it in order to save the dwindling population of jaguar; challenging the viability of even preserving it. There are many areas of such unique and extraordinary biodiversity it’s ludicrous to imagine them bulldozed irrevocably to make space for the second or third homes of foreigners looking for a place, any place, that’s cheap and warm and appreciating.

Says Anke Hertz of Sotheby’s International Realty, “I hope developers respect the parks and wildlife are valuable in the long term to Costa Rica; the reason people come. But it’s all happening so fast.” The laissez faire attitude towards development, the contentment with the status quo, that served Costa Ricans well in the creation of a tourism industry based on empty spaces, is putting many at a distinct disadvantage now. “Costa Ricans sell land that has been in their family for generations and have no way back in, and that’s through lack of education. I’ve known land to change hands for a car – and not even a car that worked, but to someone who has never owned one, that’s a temptation. If they had known the real value they’d have never sold at the price they did.”

Hertz’s family reflect the push and pull of the property market. Young, smart and bilingual, she has a good job on the back of the property boom. Her American father, a long term resident, is alarmed by the pace of development. “He keeps saying ‘What are they doing!’ He thinks the country is being destroyed. But my mother who’s actually Costa Rican is excited by the changes, by the new stores, services, infrastructure. She says ‘people want us to remain the Indians – but why shouldn’t our country develop?’”.

SORREL DOWNER / FINANCIAL TIMES

This is the HQ for archive features, and an introduction to current projects. See also somewheresville, the travel blog; Vimeo for videos, LinkedIn for skills and contact details, 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Information

This entry was posted on October 1, 2007 by in Architecture, Central America, Costa Rica, Houses, Design, Style, Latin America, Life, Society and tagged , .

Top Posts & Pages

Blog Categories