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By Angela
Jiménez Rocha*
Special to A.M.
Costa Rica
After
22 years of watching prices and preparing many thousands of appraisals for
the banks here along with private clients, I am amazed at the increase in
prices asked at the
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Angela
Jiménez Rocha
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current time. However, the trend seems to be going up, and the
construction costs from well known, reputable builders also have risen
greatly.
If we consider the Central Valley, especially areas like Escazú and the
newly hot area of Santa Ana, the price per square meter for nicely
finished condos with amenities and security is $1,100 and up. For
something
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like
a Trump Tower lookalike, the price is now $2,000 per square meter.
Today it is hard to find raw land for $100 in decent areas in the Central
Valley, and many developments are asking $150 to $200 per square meter for
land. One of the well known golf course communities was $50 meter 10 years
ago and now $250- to $300. 10 years ago Santa Ana was a sleepy little
town where land prices were $10 to $30 a meter. Today it is booming with
new condo developments where land is $150 a meter.
We are owners of condos and also an adviser to Avalon, which is one of the
great, new condo developments in Santa Ana. This developer has had such
great success that people are standing in line to snap up any new project
he has in advance of construction. For most of the new projects buyers are
asked to put up 20 percent for pre-sale before construction starts. This is
a risk unless the buyer checks carefully who the developer is and makes
sure there is a fiduciary or bond to guarantee completion.
But why is the demand so great? Costa Rica really has become a boom area
for much more than North American retirement and second-home buyers. The
country is attracting Europeans like never before, and thousands of rich
people from places like Venezuela. The prince of Saudi Arabia just flew in
and announced that he is increasing his stake in Costa Rica where he
already was major shareholder of the Four Seasons complex. Steve Case of
AOL-Time Warner fame announced he was starting a new $800 million project.
Famous hotel chains have been lining up from all over the world starting
new projects.
The cold hard facts are 78 million baby boomers are going to retire soon,
and Costa Rica is on the top of the list for those wanting to leave the
States. There is simply not enough space any longer in the Central Valley
to accommodate even 1 percent of these potential new arrivals.
What the new comer to Costa Rica needs to understand is that
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there
is a two tiered market here. Housing like you see in the States and the
local Tico market. Zoning for all practical purposes does not exist here,
and the only way to assure high-class neighbors is to pay high prices for
land. Does that mean you cannot find a Tico-style house for $25,000. I
appraise these every day for the Costa Rica housing bank which is
guaranteed by the government. There are lots of them, but most Americans
would never feel comfortable or secure living in these areas.
Buyers come in all shapes and sizes, and there are lots of people who think
nothing of paying $500,000 and up for a house. But the local people see
that as a television dream since the average wage is $500 month. Many Ticos
are leaving the Central Valley to live in areas like Puriscal which is nice
area but does not offer the services most North Americans are used to. Even
here prices are moving up rapidly.
I have nothing against real estate agents, but my profession is strictly
licensed and regulated by the goverment where real estate brokers are not
required to have any license.
My advice to a buyer is to inspect and appraise carefully before buying.
Real Estate agents are fine for locating property but usually have no
expertise in all of the risks that exist here which are much differnt than
the U. S. Just making sure of the road quality leading to a property is
something most take for granted, but Costa Rica roads and bridges often
fail and the authorities are often strapped for funds to repair these
quickly.
A couple of weeks ago there was a photo of 100 meters of road
that collapsed near the University of Peace in Ciudad Colón where several
upscale projects are located. No one knows how long it will take to fix the
road or if there are other problems about to surface.
We have a recent client who has upscale desires, and we inspected and
appraised a terrific house in Escazú for $545,000, which we found worth the
asking price. But when our attorney checked the documents he found a
clouded title the seller forgot to explain.
Next the buyers asked us to inspect a six-bedroom, 500 meter condo with
incredible views and an asking price of $990,000. Our appraisal came in at
$712,000.
On the other side, we appraised a tract of beachfront land two years ago
which was titled. Many such tracts are not titled but are granted through a
local concession. The seller was offered $450,000 by one of the largest
tourist operators here, and we appraised this property at $850,000. The
seller sold it off our appraisal at around $1,200,000 and, as I understand,
it is now on market for $2 million.
* Ms. Jiménez,
an appraiser licensed by the Colegio Federado de Ingenieros y Architectos
for the last 21 years, has conducted thousands of appraisals.
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