Costa Rica Real Estate: August 2006

Friday, August 25, 2006

Coldwell Banker on International News TVJim Gillespie, President and CEO Coldwell Banker Real Estate Corporation conducted interviews on Monday August 21st which appeared on CNBC and FoxNews.

Jim, along with several local Coldwell Banker Affiliates rang the closingbell at the New York Stock Exchange. By clicking on the link below you canview the news brief.

View Clips for:

YOUR WORLD WITH NEIL CAVUTOCLOSING BELL

http://tinyurl.com/jj238

Monday, August 14, 2006

Analyst senses a stiff correction in real estate market

The Costa Rican real estate sector over the next 18 months is going to go through a major correction, and will leave many foreign and local investors wondering what happened.

This sector was based on speculation and the belief was the market will continue growing unabated and at great multiples. Thus, again as everyone dreamed of making it rich or at least living a comfortable lifestyle hopes got ahead of the numbers. Several things clouded most real estate speculative investors rational thinking and allowed for today’s current overbuilding.

The housing market was moving along okay, but when the 2002 stock market correction happened this really changed the whole dynamics of the real estate market. The investor with money now needed a new place to park his or her cash, and of course real estate was the next answer. This opportunity also allowed small and new investors to enter the speculative market with interest rates at a 40-year low. To help matters, the industry introduced several new types of real estate loans to match any investor's needs.

Thus the gold rush was on!Capitalism worked great in this instance. It allowed many to get in early and flip the real estate investment, and the rewards were great. The problem is most are still holding on hoping for even greater returns, and, of course, some have just entered not knowing the cycle was nearing the downward spiral.

Why when it comes to money are humans so irrational? Did investors believe the market had no boundaries and would continue for years to come. The data was available for everyone to make a rational decision from rising interest rates, the median family income, to the labor and housing department data, consumer debit ratio, supply/demand, planning commissions, and sentiment on the street concerning personal finance (Michigan consumer sentiment index).

The speculation in markets like Miami and Las Vegas just shows how easy it is for one to lose sight of rational behavior. It was very evident that the market was providing too much supply and hoping for demand to continue. These markets have thousand of units just waiting for someone to purchase. The many months to come will be a great time to be a buyer of real estate here in Costa Rica. The problem is that the seller in some instances will take a terrible bath in the process.

Win-win is best, but that just isn’t possible in most situations. Mortgage companies also will begin to feel the pain. Foreclosure rates for this year alone vs. last year in the U.S. market are worth a look. Also new construction starts and the publicly trade home builder stocks are vital indicators.With the fear of increasing inflation (oil) and the uncertainty with the current geopolitical situations popping up around the world, one worries about placing one's assets.

The baby boom generation still has disposable income available for investing purposes, but the wealth effect they once felt has eroded, thus leaving them unsure of what to do next.
The market here in Costa Rica even as this is being written has seen large land transactions take place by foreign investors mostly from the United States.

They are currently taking big risks to continue growth in their portfolio. The best advice now is to wait and see how tourism moves forward and what potential exists for new real estate transactions. Costa Rica will see a flattening or decrease in tourism flow from the United States this upcoming season, which, of course, places even more burden on the market.

This isn’t all bad. The market here in Costa Rica was getting way ahead of itself with housing prices, and this correction will allow for a future with real estate values more in line with similar properties elsewhere.*Mr. Walraven, a San José businessman, has academic training in economics and is an observer of the regional financial scene. See another analysis HERE!
A guest editorial
By Christopher Walraven
*Special to A.M. Costa Rica

Monday, August 07, 2006

HSBC WILL EXTEND THEIR OPERATIONS IN CENTRAL AMERICA WITH THE ACQUISITION OF GROUP BANISTMO

Official notice of Press, 20 July 2006

HSBC has signed an agreement with Grupo Banistmo, S.A. (Banistmo), the main financial group of Central America, to make a supply public shareholder and to acquire the circulating actions of Banistmo. The transaction of the Banistmo Group, with seat in Panama, calculates in USS1.77 billion dollars.

The main air side of Banistmo Group has been Panama, but also it has significant presence in the region, in where HSBC still does not operate, which provides to HSBC a significant platform with growth to future.
Banistmo is proprietor of the 99,39 percent of the bank leader in Panama, First Bank of the Isthmus, that offers an ample range of personal banking services, commercial and of investment through its 42 branches. The Banistmo Group also is proprietor of the National Company of Insurances, (`Conasé), one of the most important companies of this one country.

These operations in Panama will be complemented with which HSBC has in the country, in where the HSBC subsidiary, HSBC Bank (Panama) S.A., provides financial services to corporative clients of consumption and through their 19 branches.

Banistmo group also has an unquestionable presence in Central America, offering a complete range of personal and commercial banking services through 106 branches in Costa Rica, Honduras, Colombia and Nicaragua. In addition, in February of 2006 Banistmo Group it acquired the 56 percent of Inversiones Financieras Bancosal, S.A., the company stockholder of Salvadoran Bank, that operates through 72 branches in El Salvador.

To the 31 of December of 2005, the assets of Banistmo Group reached the USS6,973 billion dollars and countable capital USS695 million dollars. Its net utility after taxes was of USS115 million dollars in 2005 [ under IFRS ]. To the 31 of December of 2005, Salvadoran Bank had a total of assets by USS1,778 billion dollars, and countable capital by USS160.45 million dollars, with a net utility after taxes of USS16.9 million dollars during the year [ under El Salvador GAAP).

One hopes that in a future most of the operations of Banistmo it adopts mark HSBC. Sandy Flockhart, General Manager of Group HSBC, President Ejecutivo and General Director of Financial Group HSBC in Mexico, and President of HSBC Bank (Panama), S.A., commented: "we are pleased of to have reached an agreement to acquire the control of the financial group leader in Central America. It represents the culmination of two years and means of work to examine the region and to choose our partner."

"This agreement will give to HSBC a strong presence him in a region of fast economic growth, which, with the ratification of the CAFTA (Free Trade Agreement of America Center), augurs promissory prospectos. It will allow us to expand to us in new markets, in a region with 83 million inhabitants, including Colombia, and in which a great part of the population still is not bancarizada."

"It pleases to give the welcome to us to the clients of Banistmo to Group HSBC. Banistmo will bring a significant participation of market as well as opportunities to us of growth in all the markets. On exception of Panama, HSBC does not count on operations in the other countries where Banistmo operates, thus we hoped to receive a benefit of the scale and the knowledge that Banistmo must to operate in the region. This acquisition will allow to respond us to the necessities of our regional and international clients."

Alberto Vallarino, President Ejecutivo of Banistmo Group, added: "With its significant international network, I know that the acquisition of Banistmo by HSBC will bring real benefits to our clients. HSBC has recognized the value of the model of business of Banistmo, as well as of its position of leadership in this market promet

Construction Up 48%

The building of condominiums, houses, and business buildings has boosted construction by 48 percent in the last 12 month compared to the same period that ended in 2005.

The rhythm of construction accelerated as of last December, taking advantage of the dry season, construction sector sources said.The chief executive of the Costa Rican Chamber of Construction (CCC) Randall Murillo pointed out that the most dynamic areas are the coastal ones, based on the facts that the increase in Guanacaste was 152 percent the first five months this year, followed by Puntarenas at 121 percent.

Even though all of the provinces have experienced an increase in construction, Alajuela placed third with an 84 percent increase.

Thunderbird Resorts Announces Casino-Resort Project

Thunderbird Resorts, Inc. announced the completion of the acquisition of land for a new casino-resort project in Costa Rica. The "Thunderbird Resort - Tres Rios" project encompasses approximately 11 hectares of scenic land located in the "under-served" eastern suburbs of San José.

The development theme for the entire project is consistent with the natural beauty of the area. The property is one of the only available locations zoned for tourism development and has excellent access by way of Costa Rica's main East-West highway. Across this highway from the project site is a new highly successful "super mall" called "TerraMall". The Thunderbird resorts Tres Rios project will target the eastern San José population of approximately 500,000 middle and upper-class residents who reside in La Union and throughout the province of Cartago.

The Cartago area is one of the important tourist destinations for Costa Rica's more than 1.5 million annual visitors, who spend over us$1.5 billion annually. Currently none of these markets are served by a resort hotel, convention center or casino product. Thunderbird Tres Rios will be anchored by a luxury resort hotel, a Las Vegas style casino, a world-class convention center, a world-class spa and health club, commercial real estate and a private residential community.

The Tres Rios development conforms with Thunderbird's mission to become the leading recreational property developer and operator in each of its markets, whose resorts are anchored by casinos.Thunderbird Resorts’ subsidiary, Thunderbird de Costa Rica, has focused intensely on Costa Rica since late 2003. The market stability, talented work force and large tourism sector have made Costa Rica a bright spot for foreign investment in Latin America. Thunderbird de Costa Rica has rapidly increased its market share and is currently operating four casinos in the San José area, including Thunderbird’s flagship casino, Fiesta Casino Costa Rica at the Garden Court Hotel which opened for business in March of 2005. The other Thunderbird de Costa Rica casinos are the Fiesta Casino, at the Presidente Hotel; Gran Hotel and Casino; and the Fiesta Casino Heredia.

Tuesday, August 01, 2006

Aerial Photos To Help in Property Registration

Next time you are outside, look up and smile. You could be on camera.

Say what?

The government has launched an ambitious program called "Propiedades inscritas y seguras" by the Regularización de Catastro y Registro, which, with the help of NASA, will photograph every inch of the national territory, to avoid mistakes and problems with the land registry.The first flight began this week with the area of Límon, was confirmed by the director of the Centro Nacional de Alta Tecnología (Cenat), Pedro León, who says they hope to cover 90% of the national territory by the project's end.The program will cost us$92 million dollars and is party financed by a loan from the Banco Interamericano de Desarrollo (BID).The program is strengthen the national registry to avoid and eliminate many of the problems with the registration process and in the hopes of also attracting more investment dollars to the country, by having a sound and solid property registration program.Many owners and buyers of property have run into problems with title and have had to spend money and time to correct many of the problems that have gone unchecked for years. In some cases, property owners have lost part of their property due to mistakes in the registry.in other cases, buyers have been left holding the bag when the property they thought they bought was non-existent or never registered. Problems with the property registration has been a nightmare for many.The aerial photos will be used to verify property demarcations of the 1.2 million property registrations and plans on file at the Registro Nacional. TheThe aerial photography part of the program is to take about six weeks to complete, which is expected to take about 8.500 photos in 66 flights.

Costa Rica Real Estate