Guys In The Zone: Costa Rica Real Estate

Disclaimer:
This article will serve as an update to what is happening in the golf project here in The Zone. The name has been changed to protect the innocent. Guys In The Zone is a real estate agency. We make our money on commissions paid by sellers for sales that we broker. Buyers of land sometimes operate on the mistaken notion that if they go directly to the seller, they will get a lower price because of there not being a commission involved. Even though the price paid is the same either way, we still have to deal with this thought process. So I have changed the name of the golf resort to Guys In The Zone Links or GITZL, which has a nice ring to it anyway. This way, if buyers are intrigued by what they read here, and they do a Google search for the golf course, they’ll just come full circle back to us, and we can then broker the deal.  We make money, and they get our representation in their purchase of a  golf course property in Costa Rica’s southern zone. Everybody wins.

Yes, there is golf in Costa Rica's southern zone.

It could be that the Guys In The Zone Links (GITZL) is heading for one of those “critical mass” experiences. The resort has been there, going through the Costa Rica labyrinth of disorganized bureaucracy for the past three and a half years.  As GITZL emerges, we see other such projects in Costa Rica languishing in the throes of various obstacles:

• a global economic crisis
• conflicting philosophies among founders
• lack of funding
• a nearly impossible Latin American permitting process
• etc…

For the thirty-some land owners in GITZL, who bought untitled land years ago, the titles are almost in. I know what you’re thinking: “Haven’t I heard this before?” Hmmmm, yes, I believe you have heard this before. So, we’ll see. However, at this point, and this time around, all permissions, permits, signatures, departments, laundry lists and handshakes have been made, acquired, stamped and clamped. There is no logistical obstacle and they are now just simply waiting for the documents to be delivered.

GITZL has not paid one colon/cent under the table to achieve its current fully permitted status.

I used to be a shareholder in GITZL and I used to sit on the board of directors there. All of that changed when the GITZL Corporation was unable to make its mortgage payments. Instead of folding and hurting all those who put their belief in the words of dealers (such as yours truly), and bought untitled land there, the shareholders got together and prioritized… -(now prepare yourself. We are talking here about behind the scenes corporate maneuverings, in an effort to make vast sums of money) – the wellbeing of those who had bought land in the project. The shareholders, at personal expense, allowed the project to go to the primary shareholder without a struggle. This primary shareholder, of his own volition, felt that it was important to protect the land owners there, that their ownership would be recognized and guaranteed.

I know, you’re thinking that you have stumbled upon a science fiction account of life on another planet. But you haven’t, and this is not. What you are reading is a firsthand account of my observations over the past 4 or so years. I am also one of those shareholders who lost in excess of $100k in the process (but who knows? The fat lady has not yet sung.)

My recent re-involvement in the project was inspired by one of our unexpected leads that came to us looking for a hotel plot. These prospective buyers really want to be able to offer golf to their guests as well. Their idea was to purchase a piece of land that would accommodate not only the horizontal hotel layout, but also nine holes of golf. There really is no such property left here in Costa Rica’s southern pacific zone. Enter GITZL.

There is a piece of land in GITZL that is slated for a hotel. It has been thought that one of the big franchise hotel names might approach GITZL and ask if they can put one of their monolithic hotels on it. (This Costa Rica real estate blogger is hoping not, but that’s just me putting in my unsolicited, tree hugging two cents.) Lord knows it would be a financial coup for GITZL. But in keeping with its surroundings, and even the design of the project, a more intimate layout of free standing bungalow villas sprinkled around a central restaurant / lobby would be more appropriate.

Locations of hotel plot and finished model condominium - Click to enlarge

This all coincides nicely with what our European investor was/is looking for. His budget easily buys the land allotted for the hotel, valued at two million USD.

So, we’ll see what happens with that deal. Presentations are being made in various offices in London and Malaga, and so we wait. The point, however, isn’t to crow about The Guys good fortune to have such a prospect, (although we are certainly to be able to crow about such things.) But all of this is about re-connecting with this odd little golf project here in the nether reaches of Costa Rica’s southern pacific zone.

Paspalum is a fancy name for grass

The place is beautiful. The existing nine holes roll around gorgeous Costa Rican trees and fauna, and are vibrant with an amazing array of birds and, well, life. Look anywhere on the course and you feel like you are observing a contrived setting, staged for some international golf magazine, complete with white sand bunkers.

The paspalum grass is a marvel. I witnessed a small tractor pulling a liquid tank that was spraying a fairway. Expecting to be told that this was an herbicide, or some such chemical, I was told that it was salt water. Weeds die in a saline environment, Paspalum thrives. Hmmm, can we use the overused “green” handle here? If so, I imagine myself making a presentation there, standing alongside one of the holes, able to say “and this is a truly green green” – get it? Ok, I know. I should apologize – but really, what is the point of being alive if we aren’t going to live, verdad?

So the weeds are handled without chemicals, what about fertilizing and bugs? Enter the ultra-acid soil of Costa Rica. The antidote is lime, or calcium. Mix this into the soil and you manage your PH, while driving off any pests. The little blighters thrive in acid but not in a balanced PH environment. So yes, I believe we can call this project green.

As for the Critical Mass mentioned at the outset, I just wonder if, as the GITZL folks quietly go about their business out there, if one day the world doesn’t wake up and there is a mad dash to be part of this amazing project. They’ve got a show condo – 2 bedrooms, granite counter tops, all teak wood ceilings, cabinets and furniture for $219,000 – a price that would have been impossible to believe prior to the economic tumble.

I suppose this could come to be viewed as the upside of the downtime – (OK – sorry about that one.

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Regional to International, the Osa Airport Dilemma

A week ago, I was reading the Tico Times and the headline “Liberia Airport Renovation Nearly Finished” jumped out at me. It’s only been nine years since that airport opened, and now it’s getting $41 million dollars worth of renovations?? I had to figure out why, if only because it might offer a flash forward to what we can expect when (emphasis on “when”) the International Airport opens up in the The Zone, also known as, the southern Pacific zone of Costa Rica.

Long Lines

Whether it’s checking into a restaurant, hotel, or airport… people do not like to wait, especially when the line stretches out the door. Long lines and airports are synonymous, but the leaders at Liberia International (and the Guanacaste business owners) have figured out that a bad traveling experience doesn’t inspire repeat customers. The Liberia airport is scheduled to re-open any day now, and just in time for the tourist season.

The Profitable Impact

Did you know that 225,224 passengers arrived at Liberia’s airport last year*? That’s an average of 18,768 people per month and just over 625 per day. In January, foreign visitors in Guanacaste, increased by more than 28% over January of 2010. With the upgraded facilities (think mini-Juan Santamaria), services, and new carriers (JetBlue, Air Berlin), they are clearly anticipating an increase in arrivals in the near future.

The Liberia airport has done wonders for the development (read- boom) of Guanacaste. Not only does the airport employ hundreds of people from the community, it also stimulated new business opportunities in the immediate area, including— hotels, car rental companies, and commercial centers.

Conversely, there can be, and usually is, a relative downside to rapid development. Have you been to Tamarindo lately? I went two years ago, and the sleepy beach town I visited in 2002 was almost unrecognizable. The main strip looked like it had a SoCal facelift, the renown beach break was packed with surfers, and I found myself longing to be back in quiet and verdant Zone.

How It Relates To The Zone

The second most popular question we get is “When is the International Airport in Palmar going to open?” My answer: “I have no idea.” It’s not that I don’t read up on the subject, it’s just difficult to believe the words of Alberto Cole or the Minister of Tourism.

As I mentioned in an article a year ago, the construction of this airport goes hand in hand with the construction of new hotels. (At this point the area doesn’t have enough beds to accommodate an extra 400+ people/day in The Zone… especially in the high season.) Adding small to mid-sized boutique hotels isn’t an effective and complimentary plan. For the airport to be viable, large 100+ room resorts will need to be built and one need look no further than Guanacaste and its growing pains to be concerned.

To date, Ben and I have not heard anything concrete regarding new resorts in the area. Taking that one step further, there are only a handful of residents who want this airport to be built. Simply put, the majority of people who most desire this new International Airport… are people who don’t live here.

Tiger Heron in the Osa Peninsula

The Ecological Impact

Some of our reader saw the recent article in the Environment section of the The New York Times. The article outlines the potential ecological impact on the Osa Peninsula, an area that boasts 3% of the World’s known biodiversity. The author writes, “Construction is planned in two phases from 2012 to 2016… (initially) designed for 50 passenger planes.” IF (notice the big IF) that timeline is accurate, there will be a global blast of articles and special features, then… an influx of investors. Real estate and development markets will surely be stimulated, and these investors and relocators will have a large raw land inventory to choose from when they do arrive.

As real estate experts, Ben and I are standing in the path of progress and we are experienced “tour guides” in Costa Rica real estate. However, like the majority of people who move to The Zone, we also love our small town community and the postcard paradise that surrounds us.

* Costa Rican Tourism Institute

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

A longtime associate in Costa Rica real estate stopped by our office after being out of the country for an extended period.  One of his first questions was, “So, what’s going on with the international airport?”  My response was, “What airport?”  He found that amusing considering the broker he just spoke to was talking it up like the asphalt trucks were lined up and ready to pour the tarmac.  We both had a good laugh.

I’m not saying major infrastructure projects aren’t being completed here in Costa Rica.  There have been many projects completed in the past two years—

• San Jose-Caldera Highway
• Quepos-Dominical Highway (affectionately known as, “The Dirt Road”)
• Re-paving of the Dominical-San Isidro Highway
• The Bridge at San Buenaventura
• The Bridge at La Cusinga (almost)

From that list it is easy to see the progress and the progression.  What I mean by “progression” is the land routes need to be completed first before an international airport is built in The Zone.

International Airport In Paradise?

Rumors to Reality

The list of rumors regarding the southern zone Airport is long and varied— operational for international flights by 2010, moving to a new site in Sierpe, moving south closer to the border in a joint venture with the Panamanian Government… to name a few.  The reason I am sharing this news story released by La Nacion a few days ago and forwarded by a reputable broker in the area is it actually sounds like the government has a (more) realistic plan.

In summary, Costa Rica’s third international airport will be located in the same exact spot currently occupied by the Palmar Regional Airport.  To comply with Aviacion Civil (the FAA of Costa Rica) standards, the runway will be extended 400 meters and facilities for immigration, customs, and security will be constructed.  The “facilities” will include extra hangers, buildings, and even a terminal that will provide hangers and services for commercial shipments.  The price tag on this project is quoted at $25 million dollars, half the proposed cost of the mega-terminal in a new location.  They did not release a projected completion date, but I would be shocked if it was ready in two years.

One of the most interesting points in the announcement is the Minister of Tourism’s call for more hotels to be built in the area.  It is a similar point echoed by the longtime mayor of the Osa Canton, Alberto Cole.  It’s safe to say, major hotel projects are going to get the green light, moving forward.  One of the more interesting things to me is exactly how they are going to accomplish this with no Plan Regulador (e.g., zoning plan) for the area?  Where are these new hotel-resorts going to be located?

What Does It All Mean?

It means that at some point in the future there will be international flights landing in Palmar.  It means there will be more hotels, and the beaches will be alive with activity.  It also means there will be many, many more investors buying in the area.  People look at me funny when I say this area is poised for another b-o-o-m, but all of the regional signs—improved access from every direction and significantly lower property prices— point that way.

It means property in areas like Tres Rios and San Buenaventura, once thought of as “too far south of Dominical” will be a 15-minute taxi ride from the terminal.  Check out Tres Rios Estate and Tres Sandalo 17 as examples.  We only have a few listings in Palmar (see photo left), but I guarantee that number will double before the high season.

Most of the expats in The Zone have adopted the “I’ll believe it when I see it” philosophy.  We have also been surprised by the recent completion rate of infrastructure projects.  Safe to say, the completion of the 3rd International Airport in Palmar will be the crown jewel for the region.  If you are interested in buying Costa Rica real estate, this recent news bodes well for smart investors.

I was standing in the outfield at the Saturday Softball game in Uvita, when the feeling hit me. It was the warm feeling you get (and I’m not referring to the direct sun variety) when you are with a group of people having fun. In a word: community.

We have a special one down here in the Southern Pacific Zone of Costa Rica. Perhaps it is the international mix of ex-pats— Germans, French, Italian, Swiss, Argentinean, Canadian, Mexican, African, Chinese, and the list goes on. A variety of backgrounds and personal stories better than any television series— the crazy Italian chef turned humble bread maker, the ex-radio personality turned successful bar owner, animal activists, people activists, retired couples from Atlanta to Ibiza…. the list is long and varied. It’s diversity meets adventure meets pura vida, and we love it.

For many investors, Costa Rica has been (and continues to be) primarily a smart place to put your money. And, that’s fine; investing is encouraged given the bright future of the country and region. But, for those people considering a permanent (or semi-permanent) move down to Costa Rica, the reasons stretch beyond democracy, economy and sunshine.

Variety evolves culture. This is especially true with the exotic cuisine found in the area; there is even a restaurant named Exotica, and it is excellent. In addition to numerous Tico restaurants, international options include—French fusion, organic Italian, Japanese sushi, Curry Night, and yes even elements of “the western diet” satiate the The Zone’s inhabitants.

In addition to these restaurants dotting the landscape, a staple of any conscious community is the farmer’s market. There are in fact two weekly farmer’s markets in The Zone—Thursday and Friday in the fast-growing city of San Isidro, and the Saturday Farmer’s Market in our sleepy beach town of Uvita. This relatively new farmer’s market offers an increasingly broad array of (mostly) organic produce, baked breads and pastries, homeopathic elixirs, and hand-made gifts. I consider all of these wonderful vendors “artists”, as you only need to grow or create something and share it with others to qualify. In fact, we have more photographers, painters, writers and musicians per capita than any place I’ve ever been. Perhaps it is this artistic quality that blends so nicely with the laid back, friendly nature of the Ticos.

Most of the people living here agree that the economic downturn is no excuse to lose sight of the importance of doing what we love. In fact, it compels us to re-adjust our sights on something uplifting and sustainable. Simply put, Ben and I love helping people invest in property in the Southern Pacific Zone of Costa Rica. We love every aspect of this service—putting deals together, hiking around large farms, chopping tall grasses with machetes, designing new websites…. all of it. In fact, work doesn’t feel like work at all. Experience tells us the recent drop in property prices will soon hit bottom (if it hasn’t already), and another long rise will begin.

This coastal area, as my friends in California like to say, is golden. The reasons are many—low population & construction density, great value, the Coastal Highway is almost paved between Quepos and Dominical, an International Airport in our future, it’s a tropical paradise. And, let’s not forget the original inspiration for this article—community. It’s not something you can put a price on. It’s something you feel.

Especially on days when you observe 20 gringos cheering for a Tico kid who hit his first home run.