Source (www.journalcr.com) By Peter Freeman
The road leading to Costa Blanca del Pacifico, a luxury resort in Guanacaste, is flawlessly paved. The roads winding through the hills of the surrounding Papagayo Bay are also perfectly maintained. They’re a dream come true to the foreign tourist coming to Costa Rica with recounted horror stories of potholes and muddy banks around every turn.
The government is not the first to thank for the smooth ride, however, but rather the resorts, who have personally laid and maintained the roads that service their properties.
Maintaining even roads is only a part of a more general practice in Costa Rica’s tourism industry: privately filling the holes in public infrastructure and services left undeveloped by the federal and local governments. Holes that, to the foreign tourist coming to the country to travel or retire in luxury, are aggravating. The developers are taking the same attitude towards the country’s local economies, as well. If their guests can’t find the high scale stores and restaurants in town that they’re accustomed to, the resort will build the facilities. If the medical services available in town don’t meet the guests’ standards, the resort will build a clinic that does. Because many of the foreigners entering the country these days are here to live long term, they are bringing with them their standards of living acquired in their home countries - well developed first-world economies like the United States, Europe, and Japan.
Few are able to better observe these trends than Michael Simons of Remax Tres Amigos in Playa Hermosa, the most successful Remax agency in the world outside of the United States.
“There is a very good camaraderie between the developers here. They understand that they have to bring in the water and the electricity because the government isn’t going to do it. Because they’re making the money here, not the government. And its not the buyers’ responsibility, either - its the developers’. And most of them are doing a good job,” Simons said.
Nowhere yet has private investment been as noticeable as in Costa Rica’s seventh and largest province, Guanacaste. The northwest region is currently experiencing a development boom, receiving 59 percent of real estate investment nationwide last year. “Location, location, location” still being the central tenet of real estate value, Guanacaste’s close proximity to the Daniel Oduber International Airport in Liberia, the capital of Guanacaste, is the heart of the region’s rapid growth. Proximity to the airport is so important because, as Brad Schaepp from Costa Blanca del Pacifico said,“many tourists are looking for a base camp.” The flight to Liberia from Miami, Florida is two hours long; three hours from Houston, Texas. Costa Rica is a quick, convenient flight for many, and they want the time it takes to get to a hotel or second home, drop off their suitcase, and hit the sun to be relatively as short. After touching down, tourists only have to travel half an hour to an hour to reach Guanacaste’s most popular beaches. From the Juan Santamaria International Airport in San Jose, Costa Rica’s capital, it usually takes four or more hours to reach the same destinations.
When Liberia’s airport first began servicing direct international flights three years ago, only 50,000 people a year were arriving. In 2005, 300,000 travelers landed and 450,000 came through the airport in 2006. Continental Airlines, who uses Liberia as its Central American hub, will soon double the number of weekly flights from eight to sixteen. Yet many are finding that the terminal is already too small to accommodate the traffic. It is not uncommon to have to wait outside for a taxi or shuttle to avoid the crowd inside. Of course, there is a canopy to provide shade from the sun. But it is provided by the local businesses receiving guests, not the airport itself.
The nature of the tourism market in Guanacaste is one of isolation on a number of levels. “We’re not really competing with the central Pacific,” Schaepp said. “It’s a different market.”
It’s true, the market in Guanacaste is unique, mostly because of the mega-resorts and residence communities that seem to be popping up everywhere. Enormous tracts of land – 200 acres or more - are being developed to be self-sufficient, virtual towns. Playa de Coco, a small beach town twenty minutes from the airport in Liberia, will soon become the model of this development trend in Guanacaste. Ten minutes north around the corner is Papagayo Gulf, dotted with mega-resorts, including Costa Blanca del Pacifico and the Four Seasons Resort, Peninsula Papagayo. Fifteen minutes south is the Papagayo Golf Club, a mega-resort and residence community with the region’s only golf course. In Coco, the Pacifico Beach Club is under construction and will soon be a model of an integrated business and residential community.
The Pacifico Beach Club looks like a luxury hotel in Dubai might look. Its design is clean and stylish, the beach side pools are carved into a stone patio, the water coming flush to the edge, and the tanning mattresses laid out match the beige tents and deck chairs. This area and the clubhouse are look like an oasis closed off from the beach by a large Guanacaste Stone wall. The guests socializing are noticeably international, speaking Russian, Polish, French, English, and Spanish, amongst other languages. Uphill from the club is 175 acres of land cleared for the development of 500 residences in total, including town homes for one or multiple families, custom built homes, condos, and vacant lots available for purchase and private development. Pacifico has already laid the access roads and utilities. New construction, aside from having to pass a loose architectural review, is up to the buyer to design. Pacifico is hoping that this freedom to design will produce a varied landscape of homes, rather than the matching housing complexes that many tourists find dull.
The home sites are starting at $75,000 for a .22 acre lot with a 324 square meter buildable pad lot size. Jayson Matthews at Pacifico considers this price a steal, pointing out that, “you can’t find any comparable property in Coco for under $100,000.” The most expensive plots are priced up to $275,000 for .52 acres and a 736.7 square meter buildable pad lot size. A range of already built homes are also available with a variety of custom features and design aspects, although, as Matthews said, “the view is the most important factor in determining price.”
Pacifico’s largest selling point, however, is its savvy for community design and development. First of all, the community is gated with only one guarded entrance. “Security is a huge issue,” said Matthews. Secondly, when the buyers move in (the first closings are set for late March, 2007) they will be able to shop at Pacifico’s retail village, which will include a design center, a furniture store, and an AutoMercado, as well as various other upscale businesses. It will be open to the public, although is designed to serve the wealthier Pacifico residents. One must wonder if the jobs created by the village will balance out the economic division it will create between Coco town and Pacifico’s residents.
Such a push to the economy by developers is not an unnatural step, however, and many think that it is necessary. As Simons points out, “it always takes a while for infrastructure to catch up to growth. The same thing happens in the United States.” Simons is optimistic that the Costa Rican government will pick up speed. “In time, the government will take [such development] over,” he said. “They are doing their job already. Look, roads are better, the airport is bigger. Things will improve, especially with the new president.”
Neither are developers looking to crowd out the local economy. Costa Rica is internationally recognized as a country that takes care of its residents and its environment during economic transitions. Dave Reynolds, the owner of the Papagayo Golf and Country Club, attributes the success of his mega-resort and housing community to an intelligent, considerate business approach. Papagayo offers 138 plots for purchase (only 26 are left). Most are 1.25 – 3 acre plots at about $22 per square meter, located on and around their golf course. The houses built are ranging from $400,000 to $650,000 and the 130 condos available have been going for between $240,000 and $325,000.
Reynolds has seen that customers want to stay and live at the Club for two reasons. One, the golf: “one fifth of tourists come to Costa Rica to play golf,” he says. “And the census went up accordingly. We really don’t have any competition in the region because we are the only resort in the Coco area that has a golf course.” Secondly, however, Reynolds has been very sensitive to customers’ demands that the resort pay attention to the impact it is making on the community, especially with regard to the environment. For that reason, Reynolds only cut 52 old growth trees on the property, planted 3,000 fruit trees, and preserved 18 percent (82 acres) of the land as green space in order to maintain wildlife corridors. In addition, Papagayo uses a type of grass on the course that lives on salt water. This allows the resort to avoid using insecticides and fungicides, as well as limiting the runoff of fresh water into the surrounding coastal area. “It is usually seen as a loss not to develop land, but this sort of conservation does not loose any money,” Reynolds said. He attributes this to a clientele that comes to Costa Rica with a particular eco-friendly profile in mind and are pleased to know that they are not damaging the country’s rich environment - one reason they came in the first place.
Guanacaste’s profile is undoubtedly changing. It is many times more expensive than it was a couple of years ago, but still very cheap to the wealthy foreigners that are driving the market. As Simons points out, “most clients laugh at the prices. They see how cheap it is and say, ‘I’ll take two.’” A $300,000 house in Playa Hermosa, for example, would go for $2 million in Hawaii. One of the attractions of Costa Rica is that it’s less expensive than Florida, the Caribbean, the Virgin Islands, and Hawaii, the most comparable alternative locations. As cheap as it may be, however, it’s still all relative, he says: “Most of my transactions are in cash, and if a client doesn’t have that kind of money, he’s probably not looking to come to Costa Rica anyway.” In addition, those moving to Costa Rica right now are those who are here to retire or have a second or third home. Most of them have $300,000 or more in the bank.
Brad Pitt and Angelina Jolie celebrated New Year’s at the Four Seasons, Peninsula Papagayo. They drove out to the resort on a well paved road and did not have to worry about the high-speed Internet in their room failing, as the publicly provided Internet service sometimes does, because Four Seasons provides its own service off the public grid. Guanacaste is at the forefront of Costa Rica’s tourism boom and is the first to see these sorts of pushes towards privatization. With the pending passing of the CAFTA (a free trade agreement between Costa Rica, the Dominican Republic, and the United States), Costa Rica is gearing up for a largescale privatization of the state-monopolized telecommunications and securities industries, as well as a general economic aperture. Many see Guanacaste as the vanguard of this transformation, simply anticipating the inevitable nation-wide sweep. Much change has already taken place, but the market is still young and still a good investment on any level. And why not? The roads are nice, the shopping is great, and the beaches are beautiful.
