Guys In The Zone: Costa Rica Real Estate

Hydroelectric power is BIG in Costa Rica.

The Costanera Highway, The Caldera-San Jose Highway, The Cortez Hospital, The International Airport and The Diquis Hydroelectric Dam… it is easy to see that Costa Rica is serious about improving its infrastructure and securing a bright future.

Over the past decade, the dramatic increase in tourism and investment has sparked a bit of a power-struggle between proponents of economic growth and socio-environmental protection groups.  In this case, the “power” is the proposed billion dollar hydroelectric project called “El Diquis” near Palmar in the Osa Peninsula.  This isn’t recent news, but I believe it is worth mentioning as it will affect life in various ways in the southern Pacific zone of Costa Rica.

The Zone Is HOT

This large-scale project, facilitated by I.C.E. (Instituto Costarricense de Electricidad), is calling for the construction of a dam on the Térraba River in the greater Boruca Canyon. The dam will create a lake equaling approximately 25,000 surface hectares (over 6 million acres), the largest of its kind in Central America.  By comparison, Lake Arenal is roughly 8,500 hectares.

This station will generate up to 630 megawatt units capable of providing over one million families with electricity!  This project is about Power, both electric and economic.  According to a Continuum report commissioned by the Costa Rican government, Read the full story

Half of my family is from Canada, eh.  My mother grew up in Newfoundland until the age of 13 when my grandfather found work in California.  The extended family that stayed behind, some later moving to Ottawa, would frequently visit us in the San Francisco Bay Area, especially during the cold, winter months.

A few years ago, when I moved down to Costa Rica full time, I realized there are a lot of Canadians visiting (102,471 in 2009*) and living the area.  One of the main reason Canadians (virtually all nationalities for that matter) visit, buy land, and in some cases, relocate to Costa Rica is the weather.  As one client put it, “Shoveling snow sucks.”  I have only experienced it a couple of times in Lake Tahoe, California, and I’d have to agree.

Canadians in Costa Rica

Shorts, No Shoes
The Southern Pacific Zone (The Zone) is the tropics.  Those living near the beach are rarely (if ever) cold here, and most people walk around in shorts 365 days out of the year.  For those who “melt in the heat”, The Zone’s unique geography offers many cooler locations up in the mountains, most offering spectacular views, waterfalls, and close proximity to the beaches and/or San Isidro, one of the fastest growing cities in Central America.  It rains 6 months out of the year, but even in September most mornings begin with blue skies and sunshine.

Active Adult Communities
The landscape and its wildlife are spectacular.  In fact, I’ve seen it written that the Corcovado National Park on the Osa Peninsula is “home to more plant & animal species than all of North America combined.”  Add in the many outdoor activities available in the area— world class sport fishing, whale watching, bird watching, hiking, golf, tennis, and surfing to name a few — and retirement in Costa Rica is actually when many expat residents really start living.  In fact, I just left two clients who were headed to a waterfall, then to the Whale’s Tail in Uvita for a low-tide beach walk and snorkeling session.

Another reason Canadians love Costa Rica is the cultural adventure.  It starts with the ticos.  On the whole, the polite locals are family and community-focused, and even the toughest-looking hombre will break into a smile if you smile.  Yes, there are a few cultural nuances to adapt to—“yes” doesn’t always mean “yes”, “tico time” means being late, strange driving habits— but ultimately these are all opportunities to take a deep breath and grow a little.  The Zone has a safe, laid back feel to it… add a hammock and a good book into the mix, and it is relaxation-defined.

A “Lot” For A Little
Foreign investors continue to visit and invest in The Zone.  Add in the fact that annual property tax in Costa Rica is .25% and there is no Capital Gains Tax, and the investment picture is even more appealing.  Canadian citizens who claim non-resident status and have residency in Costa Rica are not double taxed by the Canadian government on their Costa Rica income.  If you’ve always wanted to make Costa Rica your home, please consult your tax attorney for more details.  But, in summary, to be a non-resident Canadian you must—

1. live in Canada for less than 183 days in the tax year
2. not have any residential ties (e.g., cars, houses, a spouse or dependents) in Canada.

We see a lot of people visiting, buying and relocating to The Zone.  There is so much room for growth here, success only requires imagination, a little research, and some good connections.

Beautiful weather, abundant wildlife, friendly people, and good investment opportunities… no wonder so many Canadians are buying real estate in the Southern Pacific Zone of Costa Rica!

*http://www.visitcostarica.com/ict/paginas/modEst/estadisticas.asp?idIdioma=1

Answer: 98%.  The Question… what percentage of people first visit Costa Rica as tourists before buying their own piece of paradise?

Uvita's Whale's Tail formation taken from Escaleras.

Costa Rica is attractive as a vacation spot, for retirement and investment, especially in this “buyer’s market.”  In particular, the Southern Pacific Zone (and I’m talking about the area south from Quepos to Palmar) has a number a factors that set it apart from the rest of Costa Rica—the mountains-to-the-sea geography, sunset ocean views, the verdant jungles, and the protected habitats.  In addition, up and down this coastal region, resident Ticos and foreigners from all parts of the world enjoy a “small town” community feel.

For those who haven’t been down to The Zone (as we like to call it), there are small differences between the small towns in this area–

• DOMINICAL–  Many of the visitors who choose Dominical as a home base are surfers or other people who want to be within walking distance to the beach.
• UVITA–  Those who choose Uvita have either already explored Dominical or want to be close to the famous Whale’s Tail and boat launch for whale and dolphin tours, snorkeling and scuba diving adventures.  Simply put, the magical nature of these activities brings people back, year after year, in increasing numbers.
• OJOCHAL–  Located 15 minutes south of Uvita, Ojochal is one of the more established expat communities.  Originally, the coastal road only came as far north as Ojochal, hence the pre-Costanera wave of development starting in the late 90′s.  It is known as the multi-cultural hub of The Zone and home to an amazing array of culinary options.

The Zone has received a flood of publicity over the past four to five years.  Heralded as one of the world’s eco-tourism hot spots, most tourists come to our area excited by the likelihood of seeing exotic animals up close and personal.  In fact, groups of monkeys and toucans make daily visits to our property and most of the eco-hotels in the region.

Boom Markets

Another reason for the area’s popularity, one we have written about extensively, is access — the completed Coastal Highway, the improved road from San Isidro, and the proposed International Airport in the Palmar/Sierpe area 40 minutes south of Uvita.  According to the Instituto Costarricense de Turismo, tourism is up 9.6 percent for the first half of this year compared with 2009.[1] Perhaps the stimulus package in the U.S. and Europe is working?  (That was a joke.)

We only need to look at the effect of the new international airport in the Guanacaste region—131,295 tourist arrivals in the first half of 2010[2]— to understand why tourists, retirees and investors flocked there.  Thanks to the ardent publicity of television, print, and web advertising (e.g., International Living Magazine), there was a tourism and real estate boom in the first part of this decade.  The first part of 2010 is no different, as activity is up in this buyer’s market.

The Painful 2%

As for the two percent of property buyers left out of the original answer (in fact, they are the group who sparked this article), there are actually foreign investors who buy property sight-unseen.  Just in case you are not familiar with the term, it means buying land without physically seeing what you are buying.  This often happens when prospective buyers attend marketing seminars that pitch only one or two specific developments in an area.  The simple reason for this is… these marketing specialists are often The Developer!   They lure prospective investors to Costa Rica with attractive incentives like “fly and buy” programs, where discounts are applied to immediate land purchases.

There are potential problems with following this developer’s path to your future paradise.  Here’s a common scenario; you finally arrive at the small, regional airport in Costa Rica.  You meet your bilingual feet-on-the-ground sales agent/tour guide/driver.  He explains you have a full and exciting week ahead—dinners, outdoor activities, and multiple tours of the developments— so full and exciting that you never really have time to look around and get an objective view on land values and investment opportunities.

BEWARE… their bottom line is to sell you property in their developments.  I can’t tell you how many “seminar buyers” (most of whom are from Canada?) come to us after the fact and are shocked at the real market value of their land… and this was when the market was still strong.

Ben in the field with a client.

Pure Brokering

There is a simple way to avoid this investment pitfall.  Most of the real estate agencies in the area offer what we “Guys” like to call: pure brokering.  I use the word “pure” to indicate what Ben & I like to do.  I guess you could say, it’s the Guys In The Zone style.  First and foremost on our agenda is: “find you the most ideal property that fits your objectives” – pure brokering.

People ask us daily how the market is doing, and if you’ve been tuning into our Talk Shows for the past couple of years you know the market here has reflected the global market’s trend downward.  Markets go up and down… that’s just a fact of life wherever you are.  Ask any of the real estate companies in the area, activity is up… and this is typically our slow season.  It feels like we have hit the bottom, and this high season (Dec-Feb) is expected to live up to its name.

There are a variety of factors that make The Zone an attractive place to vacation, invest, and eventually retire.  And let me tell you, the only thing better than watching a flock of toucans hopping in the trees… is when you are watching a flock of toucans hopping the trees on your own property.

[2] http://www2.prensalibre.cr/pl/la_economia/28972-ingreso-de-turistas-aumento-un-96-en-primer-semestre-del-ano.html

Education… it elicits warm images of smiling children, colorful classrooms and fundamental ideas like opportunity and a brighter future.  I am happy to say I see all of those elements unfolding here in Costa Rica, albeit sloooowly.

Did you know that the Costa Rican government is constitutionally required to budget at least 6% of the country’s GDP on educational programs?  In fact, the only countries that spend more on education (as a percentage of GDP) are Saudi Arabia and Norway at 9.5% and 6.8%, respectively.[1] Costa Rica also sports the highest literacy rate in Central America at 95.8%[2].  That said, there are a couple of gaps this learning curve, and I’m specifically referring to the parents and educators in this rural region, not the kids.

Elementary school classroom.

Ben and I often receive school-related questions from potential clients.  So, here’s a quick synopsis of public and private education in our region of Costa Rica.  Public school is free and for children between the ages of 6 and 13 (e.g., 1^st through 6^th grade).  Unlike most of the public schools in the United States, Canada and Europe, students are required to wear a uniform, typically dark blue pants with a white or light blue shirt.  The curriculum includes the usual core subjects of Spanish, Math, History, and Science.  Since 1998, English and Computer Sciences are also standard.  After kids pass their final elementary school testing, they have the option of a five-year stretch in colegio (i.e., high school in North America and Europe).

Judging from the local tico parents I have spoken with, their public school system offers a decent education for their children.  Judging from the growing number of expats living in the area, the school system is far from acceptable.  Leveraging my sources, namely my girlfriend (who has an 11 year old son) and a variety of local parents with school-age children, I embarked to uncover the real education story.

Frustration In An Emerging Country

“They don’t have school today… again!”  My girlfriend was beside herself.  Apparently, the parents of her son’s public school (he was in 5^th grade) chained the front doors of the school demanding the removal of an (allegedly) drunk principal.  This comical Latin American story quickly turned ridiculous, as the protest went on for almost a week?!   Then, there was the teacher’s constant infirmity with no substitute.  Then, there was the partial flooding of the campus for a few days during the rainy season causing… yep, no school.  In reality, her son probably only attended half the number of days scheduled.

On top of that… the school didn’t have any books.  The teacher cited the importance of learning dictation and penmanship, but at what expense?  Early in the first parent-faculty meeting of the year, my girlfriend asked for an explanation?  The answer was they didn’t have any money.  Then, education in rural Costa Rica came into focus when each of the parents decided to budget money ($2.75/month for 10 months) for a “Christmas Party” for the kids.  The party turned out to be a success; the kids sang a few songs, played a few games, and ate what amounted to $20 worth of candy and cake.

This year, her son is attending a new “better” public school in Uvita.  The only problem is they don’t have any text books either.  But, hold on… before prospective mothers and fathers cross Costa Rica off the list, please allow me to share another option available.

Multi-Cultural, Global Citizens

“By learning you will teach, by teaching you will learn.” – Latin Proverb

I remember when I first met Ben, and he told me the main reason he moved his family of five from Colorado to Costa Rica was because he wanted his kids to be bilingual and have an enriching life experience.  In fact, those are two of the main reasons most families move down here.  The third being… it’s a tropical paradise.  They lived in San Isidro, and they homeschooled their children who turned out happy, healthy, and yes… fluent in Spanish.

All that being said, we understand home schooling is not a viable option for some parents.  In Part 2 of this article, I will share arguably the best educational option in Costa Rica— private school.  It will also include continuing education for adults specifically, learning Spanish!  Until then, please feel free to share your questions and comments in the space below.  Saludos.

[2] United Nations Human Development Report 2007/2008 (Unfortunately, in some countries literacy is defined as being able write your name.)

Typical Latin American Greeting

When we first moved to Costa Rica in 1999, my son Neil was 11 years old and my daughter Hannah was 15.  In those early days, after coming home from a visit to the town center, maybe to the grocery store or whatever, they would complain “Dad, why do they stare?”

The answer was and is “because they are Ticos.”

One of the major reasons that I chose to move to a foreign land with my family was that we, as a family, would learn another culture & language.  Well, I’m happy to say that it worked.  We learned a language and a culture, but lord knows it wasn’t all smooth sailing.

It really helps to keep in mind the objective: that of learning a new culture.  That way when things are different, we can tell ourselves: “that’s why I came here.”  The problem is that sometimes different equates to strange and uncomfortable.

The eye contact thing was something that, for me, took a little getting used to, and even more so for my kids. In time we all have come to appreciate it.  In Costa Rica you always acknowledge the presence of the other person, whether it be driving along a dirt road and passing a guy walking along, or in the grocery store as you walk past the stocker.

I think that my gringo, privacy-loving heart, is a little afraid that if I engage with this person, they will take a bunch of my time, or need something from me.  I think that it was somewhere right about the 200th greeting – the 200th greeting that happened for the simple love of the greeting, I began to accept it.  Touch base, say hello, share a good feeling and move on with your day. Read the full story