Archive for the ‘costa rica’ Category

Once upon a time there was a farmer that sold milk to his neighbors. He lived in a shack on his land where his cattle grazed, close by to a volcano. The area the farmer lived was beautiful, with lush rainforest, a lake and of course the scenic volcano which provided a show of red lava every night.

Arenal Volcano

Over time more and more people came to visit the area but there wasn’t much in the way of accomodations.

One day the milk man decided that his land, with the scenic views of the volcano, would be the perfect place for a hotel. He sold a small section of his land to some gringos for $8 a meter and then went to the bank. The bank was happy to lend him some money for the hotel construction project. And so a millionaire was born.

Today that small section of land he sold is now worth $100 a meter. And the milkman? He is building his third hotel project. Some say La Fortuna is now overbuilt, there is too much inventory of hotel rooms for the demand. The banks, especially with the global credit crunch, are not lending as easily on construction projects.

But the milkman doesn’t care, even a downturn in the economy won’t bother him much at all.


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Pink Flower in the Rainforest

I’ve now been back from a 2 week trip from Costa Rica for a week. It was a bit harsh, re-integrating myself back into my life. The bills (especially all my mortgages). The cold (yes this is San Francisco, we don’t get summers). The sheer pile of things to do. I missed having wonderful breakfasts cooked for me.

Being invested in real estate, I always look for clues on the local market. I didn’t have to look very hard, the real estate boom is alive and well in Costa Rica .. particularly on the pacific coast where I spent most of my time. My first week I stayed in Jaco. Jaco is a beach town 2 hours due west of San Jose, the major city in Costa Rica. It was dark when I journeyed from the airport, but even then I was struck with the differences of this country compared to others I have been to. The lack of trash, the landscaped strip malls (!!), and the massive proliferation of billboards advertising real estate projects … that were all in English!

Jaco Towers sign

I saw signs advertising lots and condos. One sign must have been 25 feet high and it had spotlights so that it was quite visible at night. The properties offered were not very cheap, $200K seemed to be a popular starting price, the cheapest I saw was some lots starting at $59K that were some distance from the ocean (although the scenary was nice).

Real Estate project near Jaco Beach

According to the local residents, the boom started about 5 years ago. That was when they started noticing the projects sprouting up around them. But the activity certainly intensified in the last two years. I could see that for myself. There were at least two cranes on the horizon looking towards the beach. I could hear work start in the early morning on the towers you see half completed here. As I lazed away the days in a hammock, I watched trucks chug back and forth carrying dirt away from a construction site (with no structures yet) to the north. No one was quite sure about the intent of the site, some thought it would be a private villa.

It is said that the housing crisis is most impactful on the entry level market. That the pricier properties are still selling. Well I hope that the affluent buyers are the target market for the Costa Rican boom, otherwise the real estate bust will surely spread there as well.

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