Change in $$ Exchange Rate Announced

Today the Central Bank of Costa Rica announced a significant change in monetary policy, reported by the major newspaper, La Nacion. This change is a modification in the exchange rate that could lower the price of the dollar against the colon as much as 4%. Specifically, the Central Bank approved the establishment of the base exchange rate for interventions at 498.39 (colones per dollar), which was previously fixed this past January 27th at 519.16, a reduction of 20 colones, or 4%.

The clear winners will be those that hold credit in dollars since it will require less colones to make debt service payments. Also, coming out ahead are importers who will have to expend less colones to purchase imported goods. To the contrary the clear losers are exporters.

The primary reason cited by the Central Bank for this action is to control inflationary pressures and to re-establish the bands of exchange so as to prevent frequent interventions. However, the action came as a surprise to banks because previously the Central Bank announced it would attempt such controls through the means of raising interest rates.

For tourism the move means that your tourist dollars will not go as far as before. For the local economy it is a balance as a reduction in inflation will benefit consumers, but hurt businesses that are paid in dollars that have to be exchanged for colones (which is the case for Package Costa Rica, as it is for most tourism based businesses).

Stay posted to this Blog for further updates on this and all things Costa Rican!

Pura Vida!

New Highway from San Jose to Orotina

Continuing along the line of my last blog concerning Costa Rica roads, today an article in La Nacion announced that construction will begin on the San Jose – Caldera Highway in January of 2008. Here are highlights from the Article (follow the link to read the entire article (in Spanish)…….

-La Contraloria has ordered construction to commence in January 2008
-The idea for the Highway was borne 30 years ago and has suffered many starts and delays
-The total contract of construction (awarded to Autopistas del Sol) is valued at $230 millions, which is $72 million more than estimated in 2001 (the increase due to rise in cost of materials)
-The total length of the highway will be 77 kilometers (or about 48 miles)
-The term of construction is 30 months and completion is scheduled for July 2010
-There will be three sections: San Jose to Ciuded Colon, Cuidad Colon to Orotina and Orotina to Caldera
-The drive time from San Jose to Puntarenas will decrease from two hours to 45 minutes
-Drivers will pay a toll $2.70 (or 1,400 colones) to complete the entire route

This road will be a major boom to real estate prices in these areas. In fact, prices will inevitably rise long before the road is completed. Please stay tuned to My Blog and The Costa Rica Zine for more announcements as news develops. However, there have been been many rumors of this road becomming reality and as of yet, it has been much ado about nothing. This time, who knows?

Pura Vida

Road Improvement in Costa Rica

It cannot be ignored these days that almost everywhere you look there is road construction in Costa Rica. And not just in San Jose, but all over the country. President Arias made improving the infrastructure of Costa Rica a major campaign pledge. And unlike most campaign pledges, this one is actually being fulfilled. Let’s examine some of the areas where construction could have a significant impact on real estate prices.

Construction in General

Tourism has become the biggest economic factor in Costa Rica. And for good reason as this country offers some of the most incredible natural beauty of any on earth. Tourism industry growth generally leads growth in development and increases in real estate prices. This phenomenon is certainly taking place in Costa Rica this very moment. As the infrastructure improves, drive times between tourist locations, as well as safety, will improve as well. This can only leads to greater increases in the tourism market, which already is one of the fastest growing international markets in the world. With increases in tourism, which have no foreseeable end in sight, increases in development of tourism related real estate will also increase leading to higher prices. Moreover, the trend of tourists returning to buy and even live in Costa Rica will also increase. These factors should keep the real estate market strong in Costa Rica for years to come.

Let’s look at some specific examples of improvement…….

The Costanera Highway

The highway I am referring to is the one that extends from Jaco all the way south to Parmer Norte. It is the only real costal highway we have. The road has been traditionally well-maintained from Jaco to Manuel Antonio with the exception of two atrocious bridges on either side of the little town of Parrita, about 15 minutes north of Quepos. However, those bridges as we speak are being changed for better and bigger ones! Upon completion it will make the trip from Jaco to Quepos much quicker and also be a boost to the many developments going on in the area and to property values in general. One example is the Del Pacifico development in Esterillos. Upon completion this development will also include an 18-hole golf course (Billy Casper design) and a commercial center.

Possibly the worst stretch of road in the entire country is the dirt road that leads from Quepos to Dominical. Anyone who has ever had the good fortune of driving this road at night in the green season knows the horror. It is probably the busiest stretch of non-paved road in the country. Driving at night enveloped in a cloud of dust on this bumpy road is a teeth chattering experience that can lead the most patient and calm among us to loose their cool. Well this road is under construction as well. I like to divide (at least mentally) this nightmarish road into two distinct sections. The first is the section from Quepos to Matapalo (a charming little beach village halfway between Quepos and Dominical). This section of the road seems to be getting the most focus and may indeed be completely improved in the next couple years. There are many developments along this road that could benefit nicely. One that is mentionable is Hills of Portalon, which offers single family lots with nice views of the Pacific on one side and mountains on the other. Most lots are a couple hectareas in size (or about 5 acres) and range in price form $200,000 to $300,000. The other part of this road that extends from Matapalo to Dominical is another story and in my opinion it will not be improved extensively for the next five years. With all that said, it is only a matter of time before this 40 kilometer stretch of unimproved road will be completely paved and therefore now is the time to take advantage of what will surely be a boom in real estate prices over the next five to ten years in this area.

One reason I believe that it is only a matter of time is because once you reach Dominical, the balance of the Costanera is probably the newest, best marked and smoothest rides in all the country. It simply defies logic that 40 out of the some 200 kilometers of the Costanera would remain unpaved forever, especially in light of the current administration’s emphasis on attracting foreign investment into Costa Rica. The recent adoption of the CAFTA (what we call here the TLC) lends even more weight to that prediction. The fact that Costa Rica is attracting big money from the U.S. and other developed countries will only put more pressure on the government to act.

Caldera Highway

The long-awaited Caldera Highway may finally be in the works. However, on this one I would not hold my breath. Yes property values in the areas around this highway as well as its destination would get a benefit were this road to ever become a reality. But the reality of that ever happening, well who knows? Below are excerpts from an article that appeared in insidecostarica.com on August 30, 2007.

San José-Caldera Continues Stalled

The construction of the San José-Caldera will continue stalled as representatives of the banks financing the project and the construction company have yet to reach an agreement and as such the government is extending the start of construction date while the two parties continues negotiations.The project has been in the works for the last two decades and recent starts were stalled or halted as the government and various constructions awarded the contracted came to a stalemate. The latest round of stalls is just another in a long list of stalls and stopped work.Karla González, the current minister heading the Ministerio de Obras Públicas y Transportes (MOPT), assures that the work will commence before the year is over. Notwithstanding, the minister, said that the government has to respect the process and the requests made by the creditors of the construction company.The San José - Caldera project is only 77 kilometers from an idea that began three decades ago to build a highway that connects capital with the Pacific port town of Caldera.The road weaves through Santa Ana, Cuidad Colon, Atenas and Orotina and would cut travel between San José and Caldera to less than one hour from the current almost two hours.
The completion of the San José-Caldera will also greatly reduce travel to Jacó and Quepos/Manuel Antonio, as the highway intersects with the Jacó exit at Orotina, reducing San José - Jacó travel to less than 45 minutes rather than 90 plus minutes it takes now.

The Bottom Line

The above mentioned projects are only a few of those that are underway in Costa Rica. The bottom line is that Costa Rica’s roads are improving rapidly and real estate prices climbing as a result. Better to get in before the dust clears from all the road building equipment that is currently making driving in Costa Rica as miserable as ever!

Happy Driving and Investing and as always, Pura Vida!

Finally Corcovado!

After being in Costa Rica for the last seven years I finally had the experience of going to the wonderful area known as the Osa Peninsula, specifically Corcovado National Park. I had heard such amazing things about this place. Located along the Pacific Coast of the famed Osa Peninsula, the Corcovado National Park has been dubbed by National Geographic as “the most biologically diverse location on earth.” From my experience, I would not want to argue the point……..


Getting There

There are two basic ways to get to Corcovado, either by car or by plane. I chose car, probably because I like to do things the hard way. If you are driving from San Jose, I suggest you spend one night in Dominical to break the trip up a bit. It is about four hours from San Jose to Dominical (either by way of Quepos or by way of San Isidro General). We did spend a night in Dominical. The next day the sun was shining and we set off for adventure. The road all the way from Dominical to Palmer Sur is one of the best in the country, so you can make pretty good time. From there things get a bit more interesting. Your final destination will be Puerto Jiminez, a little town on the Golfo Dulce. By the way make sure to stop at one of the scenic points overlooking the Golfo Dulce, because it is truly magnifcent. You will have to pass over some pretty rough roads to get to Puerto Jiminez. Just take your time and enjoy the scenery (maybe that will take your attention away from your sore @#$). You can also choose to take a direct flight from San Jose to Puerto Jiminez. The flight on Sansa runs about $100 (with taxes and fees included). Remember, however, there is a pretty stringent weight requirement and you will pay dearly if you have too much luggage or equipment.

Puerto Jiminez

Puerto Jiminez is the most happening place in the area. There are restaurants, some shops, a disco, internet cafes, a bank (with cash machine) and many great places to stay (I address accommodations below). The place is on the water and has a very nice vibe to it. The people down here are very inviting and I did notice that the women are quite pretty (hey, I can notice things like that. I’m not married!). While there we took a boat across the gulf to Pavones. The boat ride took about an hour and costs us $200. The drive would have taken us 6 hours. Pavones is famous for surfers and boasts the longest left breaking wave in the world. The day we went there was not much there, but it can get quite big. Anyway, the boat ride over was stunning and we saw some beautiful coastline and several schools of dolphins.

Places to Stay

There are many hotels that range from hostels to really nice resorts. Two that stand out are Yellow Coco and Lapas Rios. Yellow Coco is located on the beach about 15 minutes from Puerto Jiminez. It boasts a beach house that sleeps nine as well as two bungalows that each sleep 3 to 4 persons. Yellow Coco does not have a restaurant or a pool. Meals will be on your own, i.e., you can bring groceries in to cook (each accommodation has a fully equipped kitchen) or go to any of the many local restaurants (the ones we tried were excellent, by the way). Lapas Rios is a little farther away and about half way to the entrance of the Corcovado Park. It is about a 45 minute drive from central Puerto Jiminez. The Lapas Rios resort is beautiful beyond description. The resort has won several awards for sustainable tourism. They actually run programs out of the resort to teach rain forest conservation. The rates run about $295 double and include the round trip transportation from Puero Jiminez and all meals and non-alcoholic drinks. I have heard that the food at Lapas Rios is out of this world delicious. The resort also offers several packages that include a variety of tours.

Corcovado National Park

The highlight of any visit to the Osa Penninsula is Corcovado National Park. It is one of the most biologically intense locations on earth and houses an astonishing variety of plants, insects, birds and large mammals. It is one of the only places in Costa Rica where you can still find Jaguars (although experts estimate there are only about 100 left in the park) and it is the only place where you can find all four species of monkeys native to Costa Rica (which are the spider, squirrel, howler and white face). On my trip I did not get to see the elusive big cat, but did see a Danta (Tapir) and almost ran over a Sloth crossing the dirt road. We actually drove into the park and had to cross many rivers (one of which was deep enough that the water covered the hood of the SUV). One of the most amazing sights I saw was a tree full of Scarlet Macaws.

You Need to Go There

Over the last four years we have brought about 1,000 tourists to Costa Rica. However, only a few have experienced this magical place called Corcovado and the Osa Peninsula. Places like Arenal and Manuel Antonio have put Costa Rica on the world tourism map. Yet people are missing out on places that are more remote like Corcovado. We currently have a great package that even includes a flight into the Serena Station deep in the park with a naturalist tour guide. This is called our Eco-Tourism package and I would highly encourage you to consider it.

Pura Vida!