Costa Rica History in knife metaphorI’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.

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 on 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 very 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 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.

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.

Bos 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 a 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’s a 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 level of 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.

Is The Zone at the Tipping Point? 1

The place is packed. More and more people who bought land in the past are building or have built (and are happy about it.) Travel & Leisure put The Zone as the #1 place to visit for 2013. What the heck is going on?

I was invited to a house christening last night by Richard & Debby up at Costa Verde Estates. It was a small gathering, made up primarily of migrators, most of whom have just recently built a house or are in the process of doing so. I observed and heard some rather interesting indicators of a tipping point there.

One of the screaming ocean views in the southern pacific zone of Costa Rica.

Richard & Debby: Living the good life in Costa Rica’s southern pacific zone. The view is partial, and is from their home in Costa Verde Estates.

  • numerous statements of an obvious love of Costa Rica and The Zone in particular
  • they were happy with their builder and the process was relatively smooth
  • comments about the resources now available to a home builder in Costa Rica
  • comments about how many people are talking about The Zone back home
  • comments on how many people there are vacationing in The Zone
  • how packed the hotels and vacation rentals are
  • guesses as to what the next 10 years are going to be like here
  • the reality (or not) of the international airport going into Palmar Sur (majority – NOT)
  • the effect of the highway being paved between Quepos and Dominical

There was a palpable feeling of “we are at the tipping point” here.

The facts that alcohol consumption was moderate, and that these people have extensive Costa Rica experience (some have been visiting since the ’70s, ’80’s and ’90s), and that most of them have gone through the building process, lent credibility to the Tipping Point indicators.

Also, the fact that these people, for the most part, were migrators helped. They have a fresh and “outside” view of what winds are blowing here in The Zone. Not like me. I live here full time. Sure, I leave Costa Rica a couple times a year and come back with a fresh view of how lucky I feel to be able to call this place “home”. But I think that my situation is a “can’t see the jungle for the trees” scenario. In my routine here day to day, I don’t see the far reaching trends. Sitting up on that beautiful terrace overlooking the lights of the coastline and out onto the pacific ocean, my evening of conversation with these friends was enlightening to me.

These folks have a life elsewhere. Many of them are returning soon to their homes, families and jobs. Many of them have plans, some up to 10 years down the road, of moving to Costa Rica full time, others just months away.

Richard & Debby designed their house to accommodate their now-grown kids and their families in the hopes of attracting said kids to the family Costa Rica home (the report is good for this strategy.)

Others have built a small villa on their large property that they can use in the interim years as a vacation home and then rent out when they aren’t here. They will then live in the villa when the time comes to build the main house. Occupancy rates for vacation rentals were impressive.

One of the exceptions to the migrators was a client of mine that purchased a lot in Costa Verde Estates some 5 or 6 years back. He was an attorney in southern California and has now built, retired and moved to Costa Rica full time. He and his wife have been in-country now for about a year, and I have run into him once during that time (now twice.) When I commented on this, he said “I don’t get out much. I have a hard time coming down from my perch and am really quite happy here.” I didn’t get much of a chance to talk with his wife aside from the hug greeting. But every time I looked her way she was smiling.

I don’t know if this type of thing is of interest to my readers, but to me it was noteworthy. Could it be that we are at the threshold (read: tipping point) of rather large and rapid growth here? One gal mentioned that she was really excited to see what the next 10 years is going to bring.

I was encouraged by some of the good comments about this blog, thank you very much.

In my recent article on State of the Market, my year-end review and guesses for 2013, I state that this season may be the last time to take advantage of the residual effects from the recession on land prices here. Houses are selling, spanning price ranges from simple to luxury. The over $1,000,000 mark is now being hit with regularity. My guess is that the $400,000 range is the bread-basket. As I state in the above cited article, I believe it is a great time to buy a lot (raw land.)

Costa Verde Estates currently has 4 lots available for sale. I’ve got one as a re-sale. As fine homes and some small interim villas are going in there, the vision of Terry, the developer, is coming into focus, and it is a grand thing. The views rate a 10 on a global scale (I don’t think they are topped anywhere. Maybe from the peak of Everest but, its cold there and they don’t get an ocean view :o), plus the quality of the infrastructure is the best in the area.   Now we can add to this a “community” feel. Certainly nothing intrusive. These folks are here to quiet down. It is a formula that suggests that these four lots are not going to last.

Rod and I are available to show them as well if you drop either of us a line. Rod is working with United Country and I am working solo on select properties.

The form below is for me. Click here for Rod.

Finally, if you ever are lucky enough to be invited to a dinner by Richard & Debby, don’t delay – accept! Richard is a phenomenon in the kitchen, Debby is the hostess with the mostess – and then there is that view…

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