This entry is part 2 of 2 in the series Understanding Costa Rica Real Estate

Early arrivers to Costa Rica buying land.In 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 principle. 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.

 


Costa Rica Season Change


We truly do live in a different country here in Costa Rica. I know – this sounds a bit obvious. But sometimes the place can seem just like another “state”. We can forget, when our focus is on the price of land, how to build a house, residency, how to open a bank account or any number of other tasks, the mundanity of which can cause one to forget – “hey, I’m doing stuff in a foreign land”.

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One example from the Heliconia family

I LOVE talking with the old-time Ticos (Costa Ricans) about earth matters.  My buddy Chan has his gardener, Gilbert of many years.  Gilbert knows everything about the earth.  Trees, plants and heliconias in particular. If you are in doubt as to what a heliconia is, the Bird of Paradise is one of the best known of that particular family.  It is one VERY exotic family of tropical flowers.

Gilbert has a small business of cultivating heliconias.  When he has some new plants he can be seen at the Saturday morning Farmer’s Market in Uvita selling his varieties for something like $10.00 apiece.

I had the opportunity to walk in the jungle with Gilbert one time.  What an experience! (By the way, Gilbert is in his sixties and I’ll bet he don’t read so good.) I am truly enamoured with the flora and fauna of Costa Rica.  To have the opportunity to talk with, walk with, and in general, spend time with a man such as Gilbert out in the jungle, was for me a wonderful thing.

When you are in a different land, there aren’t just different versions of plant and animal names, there is an entire other language that pertains to trees and plants. A dictionary doesn’t help.

On this day, Gilbert detected that he had a listening ear and so off he went – describing all the trees and plants and insects of the jungle. He reaches out with his machete and taps the bark of a rather large tree while saying it’s name – well, what the earthy Ticos call it.  Then, where he tapped it there comes a drip of blood red.  He wanted to show me how the sap of this particular tree looked exactly like blood.

Another one oozed a milky substance.  Gilbert lapped up the milky substance with his finger and licked it, relishing the apparent good taste, but I think that there was some sentimentality at play here. Gilbert told me that in the old days, when he and his buds would work in the jungle, they would bring or make coffee on break. They didn’t have to bring cream, thanks to this tree.

We have just passed through a very hot dry season here in Uvita – well, Costa Rica in general. What is it being called now? Global warming? Climate change? I’m sure there is a politically correct expression for what the weather is doing – everywhere. (I find it interesting the we humans can’t agree on what the weather is doing.)

Interesting how here in Costa Rica the warmer weather has resulted in more rain. I was talking with my neighbor the other day. He is of the same ilk as Gilbert.  He said this is the first actual “summer” we’ve had in 5 years. My memory says that this is very close to correct.  All of us “foreigners” living here in Costa Rica have been complaining up a storm about the heat.

Well, it all changed a few days ago.  There is a palpable feeling of “AHHHHHHH!” amongst everyone. The skies cloud up, and it rains, lightly for the moment, and the ground drinks it up, and the air is cooler – ahhhhhhh!

I don’t really understand why the “dry season” is the “on” season from Costa Rica.  For most of the expats living here (is that redundant?), the rainy season is the better time to be here. I wonder if it is going to end up being like my experience in Aspen Colorado.  When I moved there in ’79, there was only one season: the ski season.  Then, little by little, the world discovered the amazing summer season in Aspen and I think that the summer went on to either equal, or surpass, the winter.

I am seeing word start to seep out that rainy season here in Costa Rica’s southern pacific zone, is really quite delightful, and in some cases, is to be preferred over dry season.

Returning to plants and earthy Ticos.

My Abuelo (adopted grandfather) in San Isidro was truly made up of Earth. He knew it like the back of his hand. He is in his 80’s now and is unable to work.  I think that this will eventually get the best of him. He said that the earth needs to get warm and that when it unseasonably rains during dry season, it messes things up because the earth cools down.

Interesting perspective.  I think more about the water falling from the sky and he is thinking about the temperature of the ground.  In time, it turns out, I find out that the jungle flora benefits from stress. That the trees and heliconias and fruits are all much more productive when they have been given a good stress by dry season, the stress of being dry and warm.

Stress is a good thing? Well, it appears that when it comes to plants, perhaps so. One very knowledgeable long time expat tells me that if you have an orange tree, or a avocado tree, or some fruit tree, and it is not bearing fruit, to give it some good whacks with a baseball bat. It will then start to produce fruit.

So, we have weathered the first true “summer” in 5 years. We are now heading into one of me favorite times of the year, when our world tuns back to its verdant, saturated green, the streams and waterfalls all get fuller, and the temperature is… well… perfect, 24 hours a day, in typical Costa Rica fashion.