Strictly Business Costa Rica

Property Values Along New Highway Soar

admin — Wed, 10 Mar 2010 23:09:49 +0000

What most considered to be an inevitable result of the new highway is confirmed by a recent article in El Financiero. Property values along the new highway from San Jose to Caldera are rising dramatically, as well as are permits for new construction. Here are a few figures quoted in the article. Prices of fincas (large parcels) of between six and seven hectares (or around 16 acres) have increased from around $8 per square meter to $18 per square meter AND that is on the low end. For smaller parcels the prices are as high as $33 and over per square meter. This is for land basically in the middle of nowhere, but near small towns like Orotina and Atenas. In fact it is predicted that in two years Orotina will be hardly recognizable as the small pueblo one always passed through on the way to Jaco. Construction permits are booming as well, rising in Orotina from 2,190 square meters last year to 7,574 in the first few months of 2010. Most of the permits are for urban and residential development, although there is an increase in industrial and commercial permits as well. In some areas, such as El Coyol and San Rafael, appreciation is 75% over prices in these areas just three years ago. Of course, the anticipated rise had already brought in quite a bit of speculative buying and now those buyers want to be sellers. This can give rise to some poorly informed buyers getting ripped off at these elevated prices as much of this land, while near the highway, is still far from other basic services. Also, ingress and egress to the highway can be challenging in these remote areas as many planned exits have not materialized as of yet. There is also the fear of development ensuing similar to what occurred in Guanacaste, where there were many developmental regulations ignored in pursuit of progress, which now has given rise to environmental and other problems.

Click for Article in El Financiero

Hotels Unite Against Crisis in San Carlos

admin — Tue, 09 Mar 2010 23:06:53 +0000

The effects of the worldwide economic crisis continue to be felt in Costa Rica’s tourism industry. However, perhaps nowhere is the degree of impact more severe than in San Carlos, especially places like La Fortuna, where virtually everyone is involved to some extent in the tourism trade. The numbers are in and reflect a decrease that is perhaps less than many feared. In 2008, Costa Rica had 2.1 million tourism arrivals. Last year that number fell by about 10.5% to 1.9 million. Yes it could have been worst, but in places like La Fortuna, where in the last few years new hotels have been popping up everywhere, the decrease is much more severe. Even this year hotel occupancies are down by 40 to 50% in many places and there is fear that this year’s low season, which starts in May, will be even worst than last years. Many hotels are simply unable to pay their bills and debt service, and with banks clamping down, some have sought protection under the law, a law similar to the bankruptcy code in the U.S., but not nearly as forgiving. Simply stated, hotels going out of business present a grave threat to the entire region due to unemployment and societal problems it engenders. That is why hoteliers like Leovigildo Villegas, of the Hotel Montaña de Fuego, are urging them to unite to combat the crisis. At Package Costa Rica, we are also “feeling it,” but with very low overhead, not as severe as many others. We hope that predictions of a dire low season turn out to be false alarms. Costa Rica still has the same appeal as before the crisis, we just need people to loosen their wallets a bit and stop putting off those vacations!

Link to Article in La Nación

Costa Rica’s Internet Market Opening Up

admin — Wed, 03 Mar 2010 23:35:33 +0000

Costa Rica’s took a first step at opening the market for Internet services by allowing the company Amnet to have direct access to the submarine cable “Maya 1.” Maya 1 one of Costa Rica’s main international connections. Amnet is the first company that Sutel (or the government body that regulates telecommunications in the country) has allowed to have such access. Amnet has actually been operating in the country for some time, but it formerly had to offer its services in connection with an agreement with Racsa, which is the government run arm that up until now has enjoyed sole access to Maya 1. Customers of Amnet were thus treated with two bills each month, one from Amnet and another from Racsa. Raúl Ibáñex, Amnet director, stated that the authorization to connect to Maya 1 marks a new era in Internet access in Costa Rica. In addition, Sutel authorized seven cable companies in various areas of the country to begin offering television access in competition with Amnet. However, so far Amnet only has access to Maya 1.

Link to Article in La Nación

Costa Rica - A Developed Country?

admin — Fri, 26 Feb 2010 20:51:05 +0000

I read and interesting article in the Tico Times that posed this question. I have always wondered who it is exactly that determines whether a country deserves the coveted status of “developed.” The article answered that question for me…it is based on determinations by two organizations. First, there is the 30-member Organization for Economic Co-operation and Development (OECD). Then there is the United Nations “Human Development Index.” Each have their own criteria for determining if a country makes the cut. The OECD bases the issue in large part on gross national income and amount of foreign aid received. Basically, whether a country can stand on its own two feet without help from other nations. Based on this analysis a country is placed in one of five categories, the top being Developed and the bottom being Least Developed. Costa Rica at present is in the Upper Middle Income category. You cannot actually be a member of the OECD until you reach the top category and have the capacity to actually help other countries do the same. The HDI of the United Nations lists Costa Rica as the 54th most developed country in the world, with a index rating of 0.854. To be developed a country must reach a level above 0.90, with 1 being the highest possible score on the scale. Chile is the most developed in Latin America on the HDI scale and is considered the 44th most developed country. Norway is at the top of the world list with a rating of 0.971. The HDI scale is not as economically weighted and considers such things as life expectancy and education. The Tico Times article went on to note that despite Costa Rica’s rapidly rising development status, there are many contrasts that would counter the trend. Things like poor infrastructure, expending gap between rich and poor, and others. Roman Macaya, a businessman who unsuccessfully sought nomination of the Citizen Action Party (the part of Otton Solis) for Presidency, stated that there are two Costa Ricas, one for the rich and affluent and another for the poor. In my opinion that is a bit overstated. I have spend considerable time in Nicaragua, for instance, and I would say Mr. Macaya’s statements would be true if he were talking about that country. However, here it is the middle class that experts the most power, both politically and economically. So, while there are problems with crime and poverty, Costa Rica is definitely making steady progress. Laura Chinchilla made a campaign pledge that Costa Rica would become Latin America’s first true developed country (Chile might argue that point with her) and I believe if she can continue the good progress of her predecessor and mentor, Oscar Arias, perhaps the country has a shot.

Costa Rica Reaches for Retirees

admin — Mon, 22 Feb 2010 23:58:09 +0000

Important governmental arms of Costa Rican promotion like the ICT (Ministry of Tourism) and the Ministerio de Comercio Exterior have joined to make attempts at attracting more retirees, or pensionados, to Costa Rica in the national interest. All that remains necessary is for President Arias to sign on to the idea and it becomes part of the governmental plan of promotion. In which case, important things could happen that could really have an impact, like giving tax breaks on the importation of autos and household furnishings and possible even income taxes. As to the specifics of the plan, that is still to be studied, but Costa Rica has recognized that “baby boomers” in places like, Texas, Florida and Arizona may take a more than serious look at Costa Rica as a potential permanent, or temporary, retirement home. Government prognosticators have estimated that in the next few years the number of retirees could grow to 10,000, generating some $340 million in income annually and creating the need for 40,000 new jobs. The idea is to have retiree-focused communities in places like San Pedro de Poas, where a new development dedicated to retirees is already in operation (see www.retirementhomecr.com). These places would focus on the specific needs of those who are getting up in the years (this is a little offensive, since I am technically a “baby boomer, but nowhere near ready for a “retirement home”). Private hospitals like Clinica Biblica and Catolica want in on the act and propose that there be a certification for those specialized to care for the needs of retirement age persons (clarified….above 65 years of age). This all sounds like an idea whose time has come. I have always believed Costa Rica could be a retirement haven and with the rapidly improving infrastructure it begins to look all the more appealing. I just hope everyone in their rush to cash in on the growing trend resolve to keep efforts 100% sustainable, remembering always that it is Costa Rica’s great natural bounty that draws so many of all ages, shapes and sizes to its borders each year.

Link to Article in La Nación

Carretera Caldera - My Ten Cents

admin — Tue, 16 Feb 2010 22:25:56 +0000

Well now that I have utilized the new and greatly anticipated “carretera Caldera” that extends from Escazu to Esparza (where it connects with the Pan American Highway), I do have an opinion on the matter. I have heard the criticisms about the fact that the road is only two lanes in some areas, that there has been some environmental damage and that residents in communities along the highway have been negatively affected in various ways. But I guess with a project this big, there is always going to be some controversy, i.e., someone’s ox will get gored. I am sure that some of the criticism is valid and deserved. However, on the whole, my opinion is that this highway is the best thing that has happened in this country for a long time, at least as long as I have been here, even better than passage of the T.L.C., whose anticipated positive effects may take as long to be realized as the highway did to construct. In short, the new highway cuts drive time by about an hour to points along the entire Pacific Coast. I made a trip to Monteverde using the new highway to get from San Jose to Esparza and then the Pan American to the point where you exit to go up the mountain in a little over TWO HOURS! That is nothing short of amazing. Moreover, I used far less gas than I would have before and the trip was far less stressful, both to my car and to my nervous system. This highway is a godsend for people who want to travel within Costa Rica and that includes just about everyone. I anticipate it will be good for foreign investment and real estate values (I read recently that Atenas is already gearing up for it) and it will be good for tourism. One of the most oft-heard complaints from tourists is the difficulty in getting from Point A to Point B in Costa Rica. Well, this new highway, while not perfect, is a major stride towards fixing that issue. The times I have used it, which have been both during the week and on the weekend, my average speed was around 80 kph, or more, versus the less than 50 average one would experience crossing the mountains either via San Ramon or the dreaded (though picturesque) Monte de Aguacate route. The new highway should also relieve some of the congestion from those old routes as the many trailers will opt to take the new highway..and they were the principal source of the problem on those more mountainous routes. I was highly skeptical of all the talk over the last decade of how great this new highway would be, primarily for Jaco. However, now I am convinced and the benefits will extend far greater than Jaco, which as of late has gone from being Costa Rica’s most popular beach town to Cost Rica’s biggest eyesore. My hats off to the Arias administration for getting the job done. Thirty-two years was a long time in the making, but better late than never. Okay Laura, let’s see some more of that over the next four years! But start with a pocket full of ”monedas” for the many tolls on the road (5 in all) and gas up, because you won’t see any gas stations along this route, probably for a while.

Franklin Chang Elected to Cummins Board

admin — Wed, 09 Dec 2009 21:35:14 +0000

Costa Rica’s beloved astronaut, scientist, businessman and inventor, Franklin Chang Diaz, has been elected to serve on the Board of Directors of Cummins, Inc., a U.S. company that designs, manufactures, distributes and services engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems (click for link to press release). Chang will serve on the Board’s Safety, Environment and Technology Committee, as well as the Audit, Finance and Governance and Nominating Committees. Chang, 59 years old, graduated from MIT with a doctorate in nuclear engineering and has flown seven missions with the space shuttle. He founded Ad Astra Rocket Company, which is developing the VASIMAR rocket engine that could cut space travel time for Mars missions in half. Chang resides part-time in Houston, Texas and partly in Liberia, Costa Rica. He and his wife, Peggy, have four daughters, ages 14 to 36. In addition to his participation in the NASA space program for 25 years (he retired in 2005), Chang has been instrumental in improving education opportunities for the youth of Costa Rica.

Link to Article in La Nación

Walmex of México Acquires Walmart Centroamérica

admin — Tue, 08 Dec 2009 23:39:30 +0000

Walmart of México, also known as Walmex, has acquired 100% of the stock of Walmart Centroamérica. The acquisition includes the 51% stake held by Walmart Stores, Inc. (of the U.S.) and the remaining 49% held by partners in Costa Rica (CSU) and Guatemala (La Fragua). The transaction will take place primarily in 593 million new shares of Walmex stock. A smaller portion, $110 million, will be paid in cash. As a result of announcement of the deal, shares of Walmex shot up 3.19% to 58.1 pesos (or, a little over $4.00) on the Bolsa Mexicana. In addition to the initial compensation, Walmex will issue an additional 55 million shares in an “earnout.” These shares will be kept in treasury and issued to shareholders of Walmart Centroamérica once the merged entity reaches a predetermined level of profitability. The deal also gave the shareholders of Walmart Centroamérica the opportunity for some participation in corporate governance of the merged entity. The president of Walmex, Eduardo Solórzano, expressed his pleasure about the growth prospects the deal brings for Walmex, adding that this deal is the first time that Walmart Stores, Inc. has shown sufficient confidence in a foreign company (in the case, Walmex) as to allow it to gain control of Walmart’s operations in other countries. Walmex operates 1,410 commercial units in México, including supermarkets, clothing stores and restaurants. Walmart Centroamérica operates 519 units in Central America, plus 11 distribution centers, and employs 30,000 in Costa Rica, Guatemala, Honduras, El Salvador and Nicaragua. For the fiscal year end of September 2009, Walmart Centroamérica had sales of $3.3 billion. With this transaction, Walmex expect to reach sales of $25 billion.

Link to Article in La Nación

Costa Rica Developing at an Unsustainable Rate?

admin — Wed, 02 Dec 2009 20:01:39 +0000

So says the recent report entitled, Estado de la Nación (State of the Nation). The bottom line according to the report is that Costa Ricans are consuming more resources than the country can provide and generate more waste than it can absorb. All this seems to fly in the face of Costa Rica’s avowed harmony between development and care for the environment. The report goes to show that to maintain a proper equilibrium between these two often competing forces is a very delicate balancing act. The report evaluates Costa Rica’s impact along two measurements, “bio-capacity” and “ecological footprint.” Bio-capacity has to do with the capacity of an ecosystem to produce biologically useful material and absorb waste generated by humans. Investigators found that Costa Rica’s bio-capacity per person is 1.66 hectares. That is, to produce a sufficient amount of material and absorb the resulting waste from consumption each person in Costa Rica needs 1.66 hectares of space. This measurement takes into account the current actual lifestyle of a typical Costa Rican, in terms of rate of consumption and generation of waste. As for “ecological footprint” the report found that each tico has a footprint of 1.86 global hectares. When you subtract Costa Rica’s ecological footprint from its bio-capacity a deficit is produced. This basically shows, according to the researchers, that Costa Rica would need 12% additional territory to meet the needs of development. In short, the development is unsustainable and thus dependent on the bio-capacity of other countries. Costa Rica thus is viewed as an eco-debtor. Even so, Costa Rica is nevertheless well below the average ecological footprint of other countries of the world, which stands at 2.7 global hectares per inhabitant. The report cites as the cause for the deficit both patterns of consumption along with population growth. Also contributing to Costa Rica’s poor showing are high emission of contaminating gases, the consumption of its forests, and inefficient use of its resources.

Link to Article in La Nación

Bamboozled

admin — Tue, 10 Nov 2009 22:23:18 +0000

A professor at the University of Costa Rica (UCR) has invented a new system for attaching bamboo to walls, foundations, and other structures. The commercial name for this new invention is Guaduatec and it is the invention of Alejandro Ugarte, professor of architecture at UCR. Architects have problems with using bamboo because of its geometric shape and the fact that its dimension change over time due to variances in environmental conditions. Bamboo normally is attached to other surfaces by using perforations in the canes, but this over time can cause fractures and thus connections with screws and nails will loosen. The new mechanism adapts to the changing dimensions of the bamboo cane and thus prolongs and expands its usefulness as a construction material. It consists of two plates that mold to the shape of the cane that are joined by a springed tensor that runs through the stalk, holding the two plates together and the cane firmly in place. If the bamboo increases or decreases in dimension, the plates will adjust by means of the tensor. Bamboo is environmentally friendly and can substitute for wood in many structures. It has the potential to play an important role in reforestation and can also be more easily recycled and reused as a construction material.

Link to Article in La Nación