It’s 3:10am Monday. We went to bed last night at about 8:30pm. Like the night before and the night before that. Because there is no TV and no internet here, nothing to keep us awake. When I woke just now, I was dreaming I was in rush hour on a train. It was one of those dreams where no one spoke, all action, moving from one event to the next with no in-between stuff. Like snippets of time. We (strangers and I) got off the train and starting moving quickly up a big hill, in a hurry to get somewhere. Everything was kind of damp, like it had been raining for some time. Not wet. Damp. Like here in the southern Pacific zone. At
the top of the hill, Richard Gere was in full Ju jitsu dress, doing a demonstration. Then he started teaching me. Then he fell in love with me. What can I say, it happens. I woke up before any really good stuff happened, still married to Hellboy. More on Hellboy later.
You know how you pull a pendulum all the way to one side and let go? It swings high to the other side, hesitates at the top of the swing, then falls. The swings get smaller and smaller, the hesitation less and less, till it comes to rest. That’s how my mind works when I’m investigating: YES, NO, YES, NO, YEs, No, yes, no, y… Maybe because I’m a Libra, but my mind does “on the other hand” ad nauseam till the bob comes to rest.
Oro is Spanish for gold. They call this 25 mile stretch of Costa Rica real estate, from Dominical to Ojochal, the Gold Zone because the market has been so hot the past three to four years. You could argue it runs down to Golfito. Even including the Osa Peninsula. This market will likely go flat before the Osa is all dug up. As Kim pointed out in her comment, booms go longer than you ever think they will. But one can hope.
Speaking of comments, if you’ve commented in the last few days, I haven’t seen it because there is NO INTERNET HERE BUT DIAL UP. Zero internet at my cabina and only dial up along the gold coast. ALL of it. How you can have a multi-million dollar real estate boom in an area without hi-speed internet is beyond me. I.C.E. (the gov’t monopoly power company) is rumored to be bringing hi-speed to everyone just any ol’ minute. One of many promises you need to be taking to the bank.
Costa Rica is famous for promises that never get off the ground, projects that take years and years and years of starting and stopping… they are just as likely to get completed as not. Like there is promise of a new international airport so you can fly direct from Miami to Ojochal. This airport has been promised since the ‘80s and so far nada. But Costa Rica’s government is big on the gold zone, so it might actually get built.
Construction of the brand new 85,000sf hospital is practically complete. (Hopefully, someone thought of affordable housing for the staff. And where will the doctors and nurses will come from?) The zone already got a miraculous stretch of highway about five years ago, so maybe this other stuff will come about.
The electricity still goes off and on regularly. It’s 4:05am and
the juice has been off and on four times already. Since I can’t get online here, I visit
an internet cafe (it offers wireless on a dial-up connection with
electricity going off and on – ohmygoodness, that’s a good time) to post and check my email. I have a ton
of pictures and a totally enthralling video of miles of empty highway
to put up, but posting just words on this connection takes for frickin’
ever so the visuals will have to wait. Besides, I’ve still got real estate to
visit and information to gather today, gotta keep that pendulum in motion.
This morning, my gold zone pendulum is on the no side. Even though I’ve fallen in love with the place, this boom is making me nervous. It’s palpable.
On one hand, Uvita, Dominical, Ojochal are tiny sleepy gringo-surfing/tico-fishing villages. The only paved road is the highway; all the other roads are goat-track-river-bed dirt roads. ALL the other roads. I am so sick of bumping around in our car, I can’t tell you. All the businesses are mom ‘n pop stores, no big franchises (except real estate offices). The “towns” are about two blocks long and well off the highway. Down a goat track. When Hal and I first arrived, we drove right past Dominical, had to turn around and go back to find “downtown.” We expected with all this multi-million dollar real estate boom going on, there would be a town… au contraire. Far from it.
On the other hand, there is a land grab in full swing. Today’s buyers are not people who’ve fallen in love with this place staking out a claim, making a life. That happened a couple of years ago. What’s happening now is land speculation, like in Miami in the early 20’s. Buy a bunch, cut it up, sell it off. Name your price: people from all over the world will buy it. What fueled this is what fueled Miami’s: easy credit in the home country and a world awash in paper money. Signs indicate this boom has peaked.
Like I just spent the weekend looking at property in a development with three other couples. ALL of them were looking at buying properties as speculators, not as end-users. Not one of them was looking at a property to use and enjoy. A market with a shortage of end-users is a big bad sign.
Like inventory is at an all-time high. Everything is for sale and everyone is selling it. I am not exaggerating. We haven’t met a single person who doesn’t have at least two lots for sale.
Key West’s bubble went so high almost everyone was priced out of the market. That’s happening here, but it’s a double-whammy for Costa Rica. Developing nations and third world countries (Costa Rica in particular due to its stable government and no military) have always been retirement and run-away destinations because of one thing and one thing only: price advantage. If you can buy or rent a similar property in your home country, with its services, its familiarity and your family nearby, for close to the same money as you’d spend in a foreign country without services and family… why would you? Affordability is a huge part of the equation.
At first glance, the gold zone sounds affordable: buy a mountain-top ocean-view lot for $135K, put up a house for $75/sf ($90,000 for a 1200sf house with no high-end finishes). Add in appliances ($5,000), furnishings ($25,000), pool ($20,000), misc. ($5,000), travel ($5,000). Done in a year for $285,000 cash. Great for an end-user wanting a home in a remote jungle with an ocean-view out over the mountains.
For a flipper, it’s kinda high. If there is a 20% increase in value over the year you are building (said 20% return each year forever being promised by sellers here – I’ve heard the words), your selling price is $342,000. As long as there are end-users when the time comes to sell, selling expenses are 10%. Which leaves 10% to you. Why wouldn’t you rather put your money in a 6% cd and be done with it?
From everything I’ve gleaned, speculators far outnumber end-users. There have been 20%-5000% (that is not a typo) increases in value over the last several years, depending on who paid beads and who paid actual money. This kind of appreciation is not sustainable, not even the 20%. To start with, buyer’s incomes are not increasing like that.
Can someone make me an argument that this rise in prices will continue besides the “people have a lot of money, they come here and fall in love with it and can’t wait to spend that money no matter how much it costs” argument? That one worked for awhile in Key West, but it just doesn’t hold water anymore.
If and when the promises become reality – the international airport is completed (which has not been started), the hospital is staffed and open, the road is paved from Quepos to Dominical, banks start offering financing (today, you have to have cash to buy), electrical service gets reliable, hi-speed internet gets here at all, plus amenities like a good grocery store and more than two good restaurants… if all this happens, if promises are fulfilled, these will keep this market going. Credit will give it a huge boost, but even that is years away. Can all this happen fast enough? I don’t know. I do know that people continue to surprise me.
Oh: Hellboy is Hal in the middle of his efudex treatment. Efudex is like chemo for your skin: it’s a white innocent-looking cream you apply over a three to four week period that burns off skin cancer cells… it gets wicked ugly. No worries: Hal’s in there somewhere. I may have dreamed about Richard Gere, but he can’t have me. I’m still in love with Hellboy.
I like your perspective in trying to balance out the real estate ‘boom’ as is now in the Uvita-Ojochal Gold Coast stretch and the eventual outcome with the ‘ifs’ in place being hosptial, airport, paved road from Dominical to Quepos.
I bought in Ojochal in the first phase of lots way back in 1990 when it was a huge over-grown jungle finca and the only way to look at lots was on a horse’s back for fear of being bitten by the fer-de-lances that lurked everywhere. I remember saying to Andre Bastien of Agro-Sur, the first developer who started the whole ‘Ojochal-Playa Tortuga’ thing with about 75 lots all measuring approx 2 hectares or more (5 acres)in 3 phases at the time (not Sylvaine from Ventanas, she copied his idea) OK,OK, it’s enough of the window shopping and signed a contract that night while fighting off bugs at the unfinished company hotel, La Posada. Jeez, I didn’t even know there was Ballena, Uvita a few minutes away because the trail in the jungle was just that, an univiting trail and what seemed like miles away.
When I bought there, back in Canada, people said we were crazy, paying out money for a 5 acre lot somewhere between a cow pasture and the jungle. Andre took 4 years to finalize our companies, register the planos, and finally transfer the companies to the buyers. Imagine the monumental task that guy had at that time. AT the same time, the company looked out for our interests in regards to squatters, built the roads, installed the electricity, and set up the water works to the majority of lots. He was honest, hard-working and most of all, visionary and his idea succeeded.
In 2001, after a 11 year break I came back to see if the lot was still there and more than that expected squatters took possession or whatever. My intention was to sell the property so I re-surveyed it, put in fences, choppiaed the whole damn lot, burnt the dead vegetation, the whole gamit so it was presentable for selling. Two years on the market and nobody was interested in buying even though the lot was in an enviable location (the ocean view is gone now since the trees grew in the meantime)and a killer mountain view and more.
In January 2004, probably because of the tropical heat and Imperial induced reasoning, I decided to build and started the construction in July of that year and everything was totally done (excepting the landscaping), house and pool, on January 1st, 2005. That’s another story!
Here is the result : http://playatortuga.blogspot.com/
Speculators always have been a part of the scenario in the area since the early years it’s no secret and it is surprising to see the end-users who want to build in Ojochal and area are not doing it at an alarming rate. Probably fault of finding contractors to do the job. We have heard it all again and again, when the road to Quepos-Dominical is paved, this will truly be the Costanera Oro. Yes, it will be but the topography of the area means building is in the background in the mountains. You visited a lot of developments in the area and it is a trek in a 4×4 to reach them. Crossing rivers in the rainy season is not fun at night and driving up muddy steep hills is more than an adventure most people want to take on. I’ve seen people at Exotica pack up their dinners as take-out because the thunder and rains were on the brink of a torrential downpour and just maybe, the river would be hazardous to cross in the next 20 minutes or so.
The Ballena Marine Reserve makes it impossible to repeat errors as in Tamarindo and other Pacific locations. The area is spectacular with a coastline of where the mountains meet the sea and the only place to build is high-up. Also, it is the only available place to buy. There are no lots to buy in Ojochal even though everything is for sale, houses yes, but even at the prices on the market, they sell and sell and sell.
Europeans are buying at a dizzy rate and find the market inexpensive in regards to their country. Last year, on Calle Papagayo where I invested, 3 neighbouring properties with houses were sold to the same family and purchased by the 80+ matriarch of the family as a family compound. She invested approximately close to a million US in buying and probably will invest more in chages and landscaping and whatever her heart desires. Old money from Europe I guess where probably she couldn’t buy a tenth of what she bought in Costa.
They are all living in Ojochal now with adjacent huge lots with no intention of dividing the property into small 2000m lots.
Throw it to the wind and invest for your client, it is still in the early stages and is undoubtedly one of Costa Rica’s best kept secret!
You just posted woowoo five. Riding the Oro Pendulum.
You know the lovely friend Russ I mentioned was coming to call on Sunday? Yeah, his last name … wait for it … is Oro.
cindy, excited for you to get back to high speed …
Oh my, Samuele, you are a throw it to the wind person! is that you dancing? lovely!!! woo woo cindy, you will love this one…
Samuele, is your house for sale? Your blog looks like a sales site. Just curious… it’s beautiful.
I bought property in Ojochol with Ed Mercer of Ventana Del Pacifico. I wish I hadn’t. The area although seemingly remote is beautiful but Ed has since been exposed as a liar from his agressive sales tactics, I discoved that he is not the owner of Ventana Del Pacifico. Ed promised me and many others things he cannot deliver like high speed internet, fixed rental income and to resell my lot if nessesary. One day I look forward to being in the area more often but not with them and their poor management!
Can you tell me if you have had any other expereince with this developer? Do they have legal problems as I have heard?
Hi Andre, Sorry to hear you are having troubles there. It is such a gorgeous spot. While I was down there I heard rumors about EVERYBODY… reminded me of Key West. I basically spent a long weekend there, was very impressed with Ventanas, enjoyed the people I met… but not long enough or intense enough to really know who or what to go with. I’m amazed people go down and buy on a whim, but they do. Many many people do, all over Costa Rica.
I don’t know what to tell you except to go down and do your own investigation. You will hear wild tales about everyone from everyone else, again just like any hot market. But if you spend long enough, you will start to figure out what is fact and what is fiction.
From living in Costa Rica, I would hesitate to believe that hi-speed internet will be down that way anytime soon. Agents anywhere that promise a certain rental income should have to wear a backwards ballcap. And no one can promise a re-sale. Rental rates and re-sales are determined by the market. Which go up. And down. Good luck with it.
Yeah. Ed Mercer is a real jerk. And you aren’t the only one he’s ripped off.
Look at http://www.ventanasdelpacifico.biz
It looks like a whole bunch of people have been where you have.