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Is the real estate market cooling in Costa Rica too?


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Tim and Ryan can give a more informed response to your direct question Kahuna, but I will add a comment that tourism has been down some 30% this past year and that would indicate reduced purchases throughout our economy in Costa Rica :o

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Tim and Ryan can give a more informed response to your direct question Kahuna, but I will add a comment that tourism has been down some 30% this past year and that would indicate reduced purchases throughout our economy in Costa Rica :o

 

I am curious about your observation that tourism being down 30% this year. I read in the Tico Times this week that the figures were that it was up 15%. Both the housing market and the tourism business are o interest to me. I work in the corporate group travel business and I am thinking in terms of starting a specialty tour company.

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my comment is based on communications with local shop keepers, hoteliers and merchants in our region which is La Fortuna / Arenal and their cash flow difficulties for this past season - I do not have the hard numbers to support it as factual but do see the sell-off trend in my business - so, take it for what is is worth to you and understand the source

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my comment is based on communications with local shop keepers, hoteliers and merchants in our region which is La Fortuna / Arenal and their cash flow difficulties for this past season - I do not have the hard numbers to support it as factual but do see the sell-off trend in my business - so, take it for what is is worth to you and understand the source

Antidotal info is also valuable information, even if it is localized is important too, thanks.

 

In your opinion then, the real estate market has been driven more by speculative tourest (buy and hold) vs north americans that are actually moving there to retire (buy and utilize)?

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in Costa Rica there are two distinct marketplaces - perimeter, meaning beaches, and in past pacific beaches more than caribbean have been the speculative buy and sell spot while the central valley has been the buy and keep region - we here in the north central valley have in past been the independent folks who enjoy living within the local communities and are not afraid of change - all that is evolving . . . .

 

the big kahuna's have overdeveloped the central pacific beaches and now are beginning their californication of the northwest beaches in the Guanacaste province and the central valley is becomming saturated with overpriced properties - easy to buy but a bitch to sell - ask anyone who has been there a few years

 

the baby-boomers have not started the big movement yet and obviously, we are betting they will find our north central valley region before the sharks get in the water - so, my friend, that (and my wife's birthday) is all I know), so I hope you will get something from it . . . . . . :rolleyes:

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the big kahuna's have overdeveloped the central pacific beaches and now are beginning their californication of the northwest beaches in the Guanacaste province and the central valley is becomming saturated with overpriced properties - easy to buy but a bitch to sell - ask anyone who has been there a few years

 

Thanks, that is very helpful. I am curious about the area between Domiuncal and Uvita. I know the area north of there are seeing a lot of development. Uvita in particul seems to have wonderful beaches. I am sure it there are issues with remoteness and bad roads, but I would love to have some input if anyone knows much about this area.

 

THanks!

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Some comments and a bit of a rant:

 

I am curious about your observation that tourism being down 30% this year. I read in the Tico Times this week that the figures were that it was up 15%. Both the housing market and the tourism business are o interest to me. I work in the corporate group travel business and I am thinking in terms of starting a specialty tour company.
First, there is a VAST difference between what is reported in the Tico Times and what is reality! The newspapers here print what the government says. For instance the nonsense about inflation being about 12%. I know of NOBODY who lives here who believes that for 1 second that inflation runs at 12% 20-25%? Yeah... I could live with that. Maybe.

 

Tourism may be up 15%... but not anywhere I know of. My wife and I went to Arenal a few weeks ago during Samana Santa... Holy Week... to find 40% occupancy!! 40% during the highest of the high season! My son Will went to Manuel Antonio about the same time and returned to say the hotels there were almost empty.

 

I am fearful that the non stop (and generally overly exagerated) stories about the roads and crime in CR have taken a toll. It could also be because the PRICE of tourism here has just gone goofy.. especially since CR is about the only country that requires (expensive) passports just to visit for two weeks!

 

Now specialty tour agents are a bit different! Some up with something unique and you'll fill a niche and likely do well, but general travel here has too many players now, so I'd probably avoid that.

 

BobC makes good points in all his posts about real estate. The boomers ARE coming, and with that said, prices will rise more just based on demand. Costa Rica is changing... Outta be fun to watch.

 

TG

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Tourism and real estate, I believe, are joined at the hip here.

 

In tourism I see a number of factors at work. But in the end it really comes down to the issue that vacationers may not be percieving value in their trip to Costa Rica. Part of that is that the virtues of Costa Rica are over sold. Up here in Monteverde a common tourist complaint is that they didn't see any animals in the cloud forest. Partly this is because the tourist traffic chases them away. But if anyone really expects to see anything on a canopy "tour" they better go back to Disneyland where screaming doesn't bother the animated figures. In the end it doesn't make the beating you take getting up the bad roads worth the effort.

 

We do see widlife up here. Lots of birds, sloths...but not necesarily during the peak (dry) tourist season, or near the "reserves".

 

As far as tourism numbers go all I've have heard everywhere I go is that they are down. The 15% numbers I've seen are from last year. I haven't seen any claims for this year. I'm not sure what global tourism is like but issues like the terrible hurricane season in the US, the threat of bird flu pandemic, increases in air fare due to high oil prices and a failing adminstration in Washington that continues to beat the drum of terrorism can not be helping anyone. Prices that have doubled and tripled now make for poor value in many of the places here. Again it is about delivering value.

 

Real estate still has rising prices, or should I say asking prices. I'm dumfounded at the prices people will pay when you consider the lack of services, poor infrastructure, growing pollution and uncontrolled development that exist here. It's like buying a Maserati and running on bald tires.

 

I continue to live (and enjoy it) here because I've avoided buying overpriced real estate, by living in a neighborhood with great Tico friends, and by avoiding the gringoized communities that thieves love. My trips back to the US do not make me wish to return there to live.

 

Hopefully I've said enough here to draw many comments.

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Tourism and real estate, I believe, are joined at the hip here.

 

In tourism I see a number of factors at work. But in the end it really comes down to the issue that vacationers may not be percieving value in their trip to Costa Rica. Part of that is that the virtues of Costa Rica are over sold. Up here in Monteverde a common tourist complaint is that they didn't see any animals in the cloud forest. Partly this is because the tourist traffic chases them away. But if anyone really expects to see anything on a canopy "tour" they better go back to Disneyland where screaming doesn't bother the animated figures. In the end it doesn't make the beating you take getting up the bad roads worth the effort.

 

I continue to live (and enjoy it) here because I've avoided buying overpriced real estate, by living in a neighborhood with great Tico friends, and by avoiding the gringoized communities that thieves love. My trips back to the US do not make me wish to return there to live.

 

Hopefully I've said enough here to draw many comments.

 

Thanks, this is all interesting information. THIS IS GREAT!

 

I bring a somewhat different perspective in that I work in the tourism industry. From that perspective may I suggest that the Costa Rican tourist industry might be in somewhat of a transition? I am not sure that just because some locals are seeing drops that the whole county is down.

 

I know that recently the Fairmont and Hyatt made announcements that they are developing resorts in CR. This is very significant. If the industry was down in CR or if trends were going in the wrong direction, they would not be making those announcements at this time. Certainly they have access to all sorts of data the neither us nor the government have access to.

 

I can tell you that in the world of Corporate Incentive Travel, there is a buzz around CR these days. There is a sense that the type of resort experience that attracts this market is coming to fruition in CR.

 

Based on what has happened in other parts of the world, CR should expect its tourism industry to become more and more concentrated to the destination resort locations. In Hawaii for instance, 95% of the visitors never leave the resort areas (and there is a lot of good to be said for that if you live there). When Fairmont and Hyatt come to CR they are not looking to attract the type of visitor that wants to tour the country and have unique experiences. They are looking to attract visitors that stay on their property and spend all of their money in close proximity to the resort. As the Adventure/Eco tourism traveler moves to new destinations, CR will be dependant on a more mainstream type of visitor to keep the industry growing.

 

Please don't get me wrong, I am neither offering a value judgment as to weather this is good or bad nor am I suggesting that I promote this as a desirable outcome. I am mealy suggesting that this is the most highly probabe direction for the industry in Costa Rica.

Edited by Kahuna
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Some comments and a bit of a rant:

 

.. especially since CR is about the only country that requires (expensive) passports just to visit for two weeks!

 

 

TG

 

 

I believe this is changing everywhere. My understanding is that starting in 2007 you will need a passport to get into Mexico and the rest of the Caribbean Countries. Starting in 2008 you will need a passport to get into Canada from the US.

 

 

 

.

Edited by Kahuna
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Some comments and a bit of a rant:

 

First, there is a VAST difference between what is reported in the Tico Times and what is reality! The newspapers here print what the government says.

 

 

 

Mr. Grande: Would you mind clarifying and/or supporting what strikes me a very bold assertion? Are you saying that (A) the press in CR is manipulated/controlled by the government or (B) journalists are so lazy (or stupid or ignorant) that they don't verify government data? In either case, are you suggesting that government officials do more than tweak the data about stuff like tourism and inflation and actually just make it up? I'm cool with a "rant" as well as anecdotes which suggest that neither the newspapers nor the bureaucrats always have everything exactly right, but the implications of what you write go way beyond this so I'm definitely curious. Gracias, Ken (Type A Wannabee)

Edited by kenn
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Thanks, this is all interesting information. THIS IS GREAT!

 

I bring a somewhat different perspective in that I work in the tourism industry. From that perspective may I suggest that the Costa Rican tourist industry might be in somewhat of a transition? I am not sure that just because some locals are seeing drops that the whole county is down.

 

I know that recently the Fairmont and Hyatt made announcements that they are developing resorts in CR. This is very significant. If the industry was down in CR or if trends were going in the wrong direction, they would not be making those announcements at this time. Certainly they have access to all sorts of data the neither us nor the government have access to.

 

I too think tourism is changing here. It is partly effected by the ICT incentives favoring the big, new development projects. If the big guns open properties here they will promote them and increase awareness of Costa Rica in general so there should be spillover. After all this is not Jamaica where the tourists are terrified to leave the properties.

 

My anecdotal evidence includes a stay at Los Suenos midweek in peak season. It was a ghost town except on the docks where a fising tournament was in progress. Even the golf course was empty. Outside the resort on the nearby beach only one restaurant had any customers and the waiters commented that it had been a horrible season.

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Mr. Grande: Would you mind clarifying and/or supporting what strikes me a very bold assertion? Are you saying that (A) the press in CR is manipulated/controlled by the government or (cool.gif journalists are so lazy (or stupid or ignorant) that they don't verify government data? In either case, are you suggesting that government officials do more than tweak the data about stuff like tourism and inflation and actually just make it up? I'm cool with a "rant" as well as anecdotes which suggest that neither the newspapers nor the bureaucrats always have everything exactly right, but the implications of what you write go way beyond this so I'm definitely curious. Gracias, Ken (Type A Wannabee)

Hi there dear Mr Type A wannabe and call me Tico!

 

This may be a long one and may turn into a rant... so be warned!

 

I usually try to be pretty clear on what I say, but maybe I was not in this example.

 

I am saying that if the government SAYS there is a 12-14% inflation rate, the Tico Times and other papers PRINT 12-14%.

 

If the current US administration says that Dick Cheney is doing a mahvalous job dahling, then the US papers PRINT that Dick Cheney is doing a great job.

 

You the reader must agree or disagree. Now the Cheney example will bring out a partisan response and that is just opinion, but anyone who pays the bills knows if a 12-14% inflation rate is in line.

 

If you find your food cost is up 56% from last year at the same markets, and if you see that it now costs you 21,000 colones to fill your tank and you know it cost 13,500 colones last year, and if you see that your electric bill last year was 23,000 colones per month but this year it is 31,250 colones (with one less person in the house), and blah blah blah, you MIGHT just get the impression that something is amiss.

 

And when you ask me, “In either case, are you suggesting that government officials do more than tweak the data about stuff like tourism and inflation and actually just make it up?”

 

Oh absolutely!! And I would immediately reply, “Are YOU suggesting that government officials WOULD NOT more than tweak the data about stuff like tourism and inflation and actually just make it up?

 

Let's discuss this. What are the risks if it is all reported accurately?

 

Roads are terrible. Crime is up. We need more police. Costa Rica gets bad press all the time (like the 7 page Michael thread that is currently running in these Forums). See it here.

 

They hear about our violence. They hear about crime against tourists. Bars on the gates. Razor wire around the homes.

 

Now comes the Costa Rica government and says tourism is DOWN??? Prices are UP! And you add THOSE comments to the stuff Michael wrote!

 

What does THAT do to tourism and development?

 

Remember those Florida car hijacking of tourists some years back where they were robbing the tourists as they left the airports in marked rental cars? The Florida tourist industry was damaged badly for months!

 

So now do I think that the Costa Rica government should have been more upfront about the rash of tourist related robberies at the San Jose airport where the baddies were robbing US tourists using automatic weapons? Yeah, I do... sort of... but I also completely understand why they did not, and why it was NOT brought up until someone discovered on one of the back pages of a US Embassy report and ultimately it got published in AM Costa Rica. (AFTER the baddies were caught!)

 

And do you think the that some of the nice people in Lake Havasu will not read Michaels article and some will cross Costa Rica off their travel or retirement list? Yeah.

 

Do you think that some larger paper might not pick up his article and either syndicate it or at least excerpt it? Remember.. dirt sells! I do.

 

Just because a government puts out THEIR figures on inflation or their opinion on Dick Cheney does not mean anyone with an IQ over room temperature needs to buy into that horsepucky.

 

Sadly, some people simply listen to CNN castigate George Bush or they watch FOX who tells everyone that the elite liberals like Big Ted are the great evil in the universe. Now... if you are a liberal or conservative, you'll buy into that crap. I don't. I don't much like Bush... but I didn't like Clinton any better and in fact the last one I DID like was Kennedy, and he sold out the country by giving up the Monroe Doctrine!

 

You may infer whatever you like from my writings. Do I think the newspapers are in collusion with the government? Come on. Do I think the newspapers here confront the corrupt administrations sufficiently? No. But that is part of the culture (I think!) Ticos are non confrontational. They are also respectful! I also think Ticos are not dumb and they know that a little too much bad press will cause a drop in tourism... the cash cow. They are different journalists for sure.

 

Gringo newspaper writers are “in your face/sell a newspaper” artists who sadly no longer deal with the truth anyway. They make it. Does anyone respect those clowns any more? I think not.

 

Reporting in the USA is biased and filled with personal opinion. In fact, the HUGE rise in blogs is because people have figured out that reporters are not a very truthful lot. When news breaks anywhere in the world, it is the BLOGGERS who provide information and it is changing completely the face journalism. A perfect example was Hurricane Katrina. Who told the REAL story withing hours that the journalists did not tell for WEEKS!!

 

In fact, at the risk of dating myself... remember Kent State? I was there... or more accurately very close by, and I KNEW what really happened there. The only news service that reported it accurately for 48 hours was the BBC.

 

I learned a lesson early-on that the journalists just print what the press offices release. Later they may investigate, but only if it is in their best interest... and they seldom police their own (do they Dan Rather?)

 

Back to tourism...

 

So I visit the most likely candidate for the #1 tourism destination in Costa Rica (Arenal) during Semana Santa and it is a GHOST TOWN!

 

My son does the same at the vaunted Manuel Antonio... same thing.

 

I run a travel related business and it is down maybe 17% over last year. I deal with travel agents all the time and all but one tell me their bookings are down a lot. No numbers.

 

So... the government tells us tourism is UP? OK... It's UP!

 

Frankly. it is just not in the government's best interest to print that the real inflation rate is maybe 22-26% or that the tourism is going down. In fact, after this HUGE rant, I understand and I sympathize with the reasons for not being 100% up front, and I am not sure I even disagree!

 

Now... As for the big hotels?

 

Kahuna writes: “I know that recently the Fairmont and Hyatt made announcements that they are developing resorts in CR. This is very significant. If the industry was down in CR or if trends were going in the wrong direction, they would not be making those announcements at this time. Certainly they have access to all sorts of data the neither us nor the government have access to. “

 

Two quick comments! I think both the Fairmont and Hyatt folks get their information from the Costa Rica ICT and no place else. I do not think they have spies at the airports counting passengers in order to verify the ICT figures.

 

I also think that both these chains know what a LOT of us already know; There are a bunch of people age 58-61 who are just now pooping their pantaloons and wondering how they can live on the social security. They can't and they will leave.

 

There are also the OTHER ones in that age group who will have a ton of money an will travel!

 

Guess where both groups will be heading?

 

TG

 

Opinions are like feet. Everyone has 'em. Everyone thinks theirs don't stink.

 

I have two!

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Two quick comments! I think both the Fairmont and Hyatt folks get their information from the Costa Rica ICT and no place else. I do not think they have spies at the airports counting passengers in order to verify the ICT figures.

 

Hi TG,

 

Good rant! Good stuff.

 

I have a couple observations.

 

First, Costa Rica is by no means alone in its efforts to massage the reality of their tourist trade. It’s the oldest trick in the book and it is done everywhere. (Remember the politicians in the movie Jaws?).

 

No way would the big hotel chains base their business decision on self-serving governmental figures. I would suggest that governmental data is the last thing that they would look at.

 

The success of the Four Seasons in Guanacatle is far more significant.

 

They also collect data from their own customer base.

 

To a certain extent they will look at the flight records from the airlines.

 

The big resorts will not necessarily look at the travel patterns of the Costa Rican tourism industry during its “mom and pop” phase of development. The fact that the numbers are down in Arenal and Manual Antonio would be inconsequential to these corporate decision makers. To the contrary, they may actually see this as a positive.

 

Within the world of mega-resorts, there is a “if we build it they will come” mentality. In the late 70’s and early 80’s the tourist industry was transformed in Maui when the 4 big, high-end resorts were built out on that island. In 1977 the road to Kihei and Wailea was a dirt road!!!! There was nothing in Wailea but nude sunbathers, hippies and wild pigs. By 1984 you had movie stars and corporate big wigs that were lining up to get into the Grand Wailea and the Four Seasons Wailea. Despite the fact that Maui is one of the most beautiful places in the world, 95% of the visitors that come never leave the resort areas. Weather you like it or not, that is they type of traveler that the mega-resort attract.

 

After nearly 20 years as possibly the world’s premier destination, there are signs that Maui is finally becoming a bit passe. Traffic sucks, too crowded, been there, done that.

 

So the question becomes, what is the next Maui from the standpoint of the resort chains? I am certainly not in a position to get into the heads of the corporate executives that make these decisions. But I do have insight into corporate meeting planners that coordinate high-end corporate events to exotic locations. In the minds of those people that plan these events, Costa Rica is on the upswing. Weather that perception corresponds to reality on the ground or not is somewhat irrelevant.

 

I lived on Mau for 7 years and I left because there is no more opportunity there. In my work I visit 20 to 30 resort locations a year. In my estimation, Costa Rica has reached the critical mass to go to the next step. Do not underestimate the significance of the Fairmont and they Hyatt following the Four Seasons to your country.

 

The big resorts are looking for the “next Maui”. The timing is right for another mega-destination. My best guess is that Costa Rica, of all the resort areas I have visited, and despite its currant shortcomings, is the best-situated take this mantle. In some regards, Costa Rica has a lot of things going for it that Hawaii does not.

 

If you had the opportunity to visit Wailea (Maui) in 1977, the sort of transformation that I am suggesting would not seem far-fetched at all.

 

The downside of all this is that they mom and pop operations will be increasingly marginalized. Many of the more remote locals may continue to see declining visitors. While the “average visitor” will spend a lot more money, there will be a smaller percentage that will trickle down into the economy as these multi-national companies gobble up more of the dollars.

 

 

THanks for the feedback .......... Kahuna

Edited by Kahuna
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