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.

 


Where Is Costa Rica? 13 Million People Want To Know


I know what you’re thinking, “That’s beyond obvious, Mr. Guy In The Zone.” For those who tune into this blog on a regular basis, I agree… BUT, did you know that the search term “Where Is Costa Rica” gets over 13 million global monthly Internet searches? Two things came to mind when I saw this statistic—

  1. The Pura Vida Buzz, a phenomenon I will expand upon below
  2. Rising Interest in Vacation and Retirement
Costa+Rica+Secret+Beach

Searching for Costa Rica…?

The Pura Vida Buzz — The last time I asked the question “Where is Costa Rica?” I was waaaaay back in college.  My roommates were surfers, and they mentioned Costa Rica as a possible surf destination.   Search engines weren’t as populated with information in the early-90s, but there were a few travel books in the local bookstore.  The thing I remember jumping out at me was the color green.  Whether it was the frogs, the jungle, or the aerial views… every page seemed to jump off the page with the verde.  It took me seven years to actually make it to Costa Rica, and I was happy to find that it was as good as advertised.

where+is+costa+rica+map

Where is Costa Rica?

For those people still waiting for an answer to the question Where is Costa Rica?, I have attached a map>>>.  Costa Rica should not be confused with Puerto Rico.  Puerto Rico is an island; some refer to as the 51st State in the Union.

Costa Rica is a small country (by U.S. standards) It is bordered  by two countries, Panama to the south and Nicaragua to the north.  (Interestingly, “where is Nicaragua” garners 1/5th as many monthly, global Internet searches.)  Needless to say, Costa Rica is about the size of Vermont and New Hampshire combined, just with much warmer water.

13,600,000 global monthly searches tells me that Costa Rica continues to spark a curious flame in the hearts and minds of people from around the world.   “In part, the interest must be driven by the influx of nature shows on television and articles in print.  Without question, Costa Rica is at (or near) the top of every eco-tourism list.  Top surf destinations around the world…? Costa Rica is on that list.  Top Places to Retire…? Costa Rica is on that list.  Happiest Planet Index…? Costa Rica tops that list, and there are compelling reasons.

Vacation and Retirement — There are many reasons why Costa Rica is an appealing travel destination—warm weather, intense bio-diversity, adventure activities (think- deep sea fishing, ziplines, rafting, surfing), friendly people, easy to get to,  relatively affordable to get to, many luxury options, and so much more.  People experience so many “firsts” in Costa Rica, it makes sense why it tops the lists of friends and family.

Clearly, everyone who considered buying land in Costa Rica visited first.  That vacation probably got the wheels turning and led to a subsequent trip.  If our current real estate listings are any indicator, there are many people who purchased raw land (think- a large lot without a house) before or during the boom.  Land options outnumber houses by more than 2:1.  That being said, we have seen a major increase in demand for houses and that category on our site is growing faster than any other.  (If you don’t see what you want, keep checking as I’m adding new listings every week.)

As I mentioned in my article Why Baby Boomers Are Buying Real Estate In Costa Rica, there are reportedly more than 20,000 retired expats in Costa Rica. I would guess that number is in fact more than double given the fact that most expats, effectively living in Costa Rica, do not have their residency (yet). I expect the number of retire in Costa Rica searches will increase as the number of retiring Baby Boomers increases.  The bottom line is the same reasons that make Costa Rica a great place to visit make it a great place to retire.

I recommend our beautiful area of Costa Rica (The Zone) to visitors and relocators without reservation.  But, the only way you can make this discovery is if you turn off the iPhone and the television… and come on down.


About Tigre

My first visit to Costa Rica was in 2002. I immediately fell in love with the warmth of the climate and people. After spending two weeks in San Jose, Puerto Viejo on the Caribbean side, and Tamarindo in Guanacaste, I knew there was a good chance I would return sooner than later. Sooner came just 6 months later when my uncle mentioned he was flying down to Costa Rica to close on a piece of property in the Southern Pacific Zone. On that trip I found my own piece of paradise above the small town of San Buenaventura, home to the San Buenas Golf Resort. Two years and 8 trips later, I decided to move to Costa Rica full time. Every day I am thankful for that decision.