An experienced appraiser addresses issue of property value

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 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 like a Trump Tower look-alike, 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 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 neighbours 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 government 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 different 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.

That flood of retiring baby boomers is just a few years away

By the A.M. Costa Rica staff
and wire service reports

Anyone who was wondering where all those expats will come from to fill those Pacific condos and build out those lots need not worry. But the trend spells trouble for North American businesses.

In 2011, the so-called baby boomer generation of Americans born after World War II will hit 65 and start looking at its options for retirement. While more than 78 million baby boomers are contemplating how to spend their golden years, businesses are bracing themselves for labor shortages and the biggest brain drain in history.

According to a recent study by the Conference Board, a global research and business group, organizations are not prepared for the retirement of the baby boomers. Diane Piktialis is a baby boomer working with the Mature Workforce Program at the Conference Board.

"The baby boomer population is going to be retiring in record numbers and the number of workers coming up through the labor force behind them is not enough to fill all the positions that are going to be left vacant," she said.  "Companies not only don't have enough bodies to replace retiring workers, but most organizations have not formalized any programs to transfer knowledge from those mature workers to others coming up through the organization."

A baby boomer is someone born in the United States between 1946 and 1964. After World War II, the United States experienced an unusual increase in birth rates, now commonly described as the baby boom. Piktialis says that, instead of worrying about the retirement of the baby boomers, companies should start finding ways of keeping them on board.

The good news is that while baby boomers may be old enough to retire and cash-in on their benefits, most of them
 don't want to give up active lives. Many are willing to go on working as long as it's on a part-time or flexible schedule.

Some will do so when they move their lives to Costa Rica and other offshore retirement havens. They will be assisted by improved Internet connections.

"All of the studies show that somewhere between 70 and 80 percent of these baby boomers, when asked, said that they would like to continue working in some capacity," she explained.  "Part of the reason is the fact that they are better educated and healthier than in the past. People want to stay engaged. They want to contribute. They want to keep their minds intellectually challenged."

To tap into the potential of the baby boomer generation, according to Piktialis, companies and non-profit groups need to rethink their approach to recruitment and start including older people in their search for talent.

Stephen Kotlikoff, a Boston University economics professor, says that the major impact of the baby boomers' retirement will be financial. He says once they retire and no longer are earning a salary and paying taxes, policy makers will have to find ways to finance government programs in a fiscally responsible way.

"The real issue with the baby boomers retirement is that there are going to be a lot of old people to support relative to the number of workers that are making Social Security contributions. We are currently handing out $30,000 per old person in Social Security, Medicare, Medicaid benefits. And when the baby boomers retire, that number in today's dollar will be about $50,000. You are talking about close to $3 trillion, $4 trillion a year in outlays."

The government and the private sector have been busy for years trying to find solutions to the problems the retirement of baby boomers will cause. They have less than five years.