Saturday, August 14, 2010
The Southern Zone is dramatically beautiful--and poised to boom
Dear Reader,
Back in the 1970s, Costa Rica's government had a dream...that this little country would one day become a major force in resort and residential tourism. Initially, they looked to the Gold Coast, on the north-west Pacific coast. They wanted to switch this place from a quiet, ranching and farming region, into a sun-and-sand tourist destination. They proposed a new international airport in Liberia, and government-backed investment in infrastructure. The dream stayed just that...until the late 1990s. Then, the Gold Coast boomed--for tourists and real estate investors alike.
The government chose the Gold Coast for its endless golden sandy beaches, washed by deep-blue Pacific waters, and sunshine-filled days. Of course, back in the 1970s, beachfront properties in the region sold for pennies. That's not the case today...
International Living first recommended Costa Rica as an overseas destination, in 1983, and they too homed in on the Gold Coast. The government dream was slowly taking shape...but beachfront properties cost a fraction of those in California. Readers who followed International Living and bought property on the Gold Coast, made a killing.
In the following years, infrastructure upgrades and increasing numbers of tourists pushed property prices in the Gold Coast skywards. Today, a half-acre ocean view lot can cost up to $600,000...and a frankly average beach condo can easily set you back $300,000. If you didn't buy on the Gold Coast back then, and missed your chance to profit, you should read on. We've uncovered a similar Path of Progress story in another part of Costa Rica. In fact, it's like watching history repeating itself...
Even in the 1980s, the Gold Coast's sultry beaches were a rough five-hour drive from the capital, San José, on bad roads. Backpackers, adventurers and surfers willingly braved the roads. Mainstream tourists didn't.
The Costa Rican government bought land in Papagayo, and leased blocks to private developers. They provided infrastructure, too. Resort developers quickly realized the potential of this location. Peninsula Papagayo, a $400 million project set in 2300 acres, today boasts a Four Seasons hotel (Costa Rica's most expensive), along with restaurants, a golf course, and spa.
Road re-surfacing and improvements helped the number of tourists rise steadily. Property prices started rising, too. But the real boom began with the introduction of regular international flights in 2002.
The developers of Peninsula Papagayo clubbed together with two other residential developers in the area, and put up a $3m trust fund to persuade Delta to start regular service from the US to Liberia airport, in 2002. They figured that without direct flights, they wouldn't get the number and caliber of guests to justify luxury resort hotels, and luxury residences, with luxury price tags.
The market really exploded after those regular direct flights to the U.S. started in 2002. This opened the Gold Coast up to a completely new market. In 2003, 50,000 passengers used Liberia airport. In 2008, 420,000 passengers used the airport, out of the record 2.5 million tourists arriving in Costa Rica.
Property prices increased dramatically once the international flights started in Liberia. Property developers quickly snapped up available beachfront and ocean view land. Prime beachfront lots quadrupled in value in the three years after the direct flights started.
More tourists traveling here meant that more tourists fell in love with the Gold Coast...and wanted to own a piece of it. The inevitable happened.
Prices soared. Starting in 2002, investment in residential development outstripped investment in tourism projects. Today, an average condo in Tamarindo, a popular Gold Coast seaside town, costs $300 a square foot. A one-twelfth share of a three-bed villa in Peninsula Papagayo will set you back $225,000. Half-acre ocean-view lots can fetch $600,000.
Don't worry if you missed out on the Gold Coast. We're watching a similar story unfold in another part of Costa Rica, in the Southern Zone.
Like the Gold Coast in the early days, getting here was tough. The coastal highway was one of the worst roads I've traveled on--more potholes than paving. The local airport is an airstrip with an open-sided hanger, and no airport amenities (forget ATMs, duty-free shopping, fast-food joints, decent washrooms...or planes with more than 18 passengers).
That kept mainstream tourists away. And it kept property prices low.
However, this area's now following the same Path of Progress as the Gold Coast. The government has selected a site for a new international airport, and the contract is out to tender. Once open, the airport will initially handle smaller planes, and a year after opening, will accommodate the world's largest passenger planes.
The coastal highway opened officially in January, after a thirty-year wait. It was worth it. Out went the lunar-sized craters and unsurfaced sections, replaced with a new smooth surface, new bridges, and new drainage systems. The drive to the Southern Zone is now fast (three hours from San José), smooth, and comfortable.
More mainstream tourists are traveling here. Already, there's an increase in commercial development--new plazas, banks, restaurants, and car rental agencies--catering to this influx of tourists. And we know what will happen next--we've seen it on the Gold Coast before...
The tourists will bring residential and resort developers, who'll search out the best beach and ocean view properties. They know that once tourists see this place, they'll want to spend time here...and own a piece of it. That means one thing: property prices should rise.
Right now, you can buy a quarter-acre home site here with superb mountain views for only $40,000...and build your own 2000-square foot home for $200,000...in a private, established community called Pacific Lots. That's around the same price as that one-twelfth ownership in a Peninsula Papagayo villa on the Gold Coast ($225,000). We don't think these low prices will last much longer. To find out more about Pacific Lots, or to arrange a chill weekend trip to the Southern Zone, click here.
Margaret Summerfield
P.S. At International Living's Live & Invest in Costa Rica event, which finished last night, 3 attendees won a $5000 coupon, valid against the purchase of a lot in Pacific Lots. The developer is offering another $5000 coupon, to Pathfinder readers, valid on lot purchases of $65,000 or more. The prize draw takes place on August 31st. Simply fill in your name and email address here, type "PRIZE DRAW" in the Comments section...and you'll have a chance to win that $5000 money-off coupon.
Posted Under:
costa rica, appreciation potential
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