Costa Rica Power Team

With the passage of the Intellectual Propety law yesterday, Costa Rica is now ready to ratify the Tratado de Libre Comercio (TLC) and join the Central America Free Trade Agreement (CAFTA)

After fours years of debates and stalling, resulting in the first ever public referendum vote, the TLC is more a reality today than it has ever been in the past.

Missing two deadlines, March 31 and September 30, Costa Rican now has up to December 31 to prepare all the required documentation and executive orders to be able to deposit with the Organization of American States (OAS) the document that goes into effect on January 1, 2009.

The TLC has meant, among other things, an opening of the telecommunications and insurance market to competition - ending a decades long monopoly in both sectors, something opposing legislators didn’t want.

Costa Rica is the only signatory country to the trad deal that has yet to ratify the agreement, while Nicaragua, El Salvador, Guatemala, Honduras and the Dominican Republic have all ratified and implemented their respective trade agreements with the United States.

Although all the hurdles have been cleared, the last being the passing of the intellectual properties law, used by the opposition to stall the process in the hopes of not meeting the last of deadline, the actual ratification is not assured, as the government still has a lot of work to do before it can give the OAS the thumbs up.

Costa Rican president, Oscar Arias, said that his government will quickly finalize the paperwork needed for the TLC (CAFTA) to take effect.

“After more than four and a half years of debate, two extensions and one historic referendum in which the majority said they agreed with the free trade accord, we are finally closing this chapter,” said the president’s spokesman and brother, Rodrigo Arias.

Costa Rica’s agriculture sector stands to benefit the most from the new agreement, particularly specialized fruits and vegetables such as pineapple and yucca. Costa Ricans are also hoping competition in the cellular phone industry will lower costs and offer more services.

Under the state-run monopoly, it was difficult to even get a new cellular telephone line as the state owned agency, the Instituto Costarricense de Electricidad (ICE), battles with the bureaucracy that has dogged the institution for decades. The same with insurance, although the Instituto Nacional de Seguros (INS) has been more proactive in the face of a competitive market.

While several telecommunications companies have expressed interest in starting up businesses in Costa Rica after January 1, there hasn’t been the same level of interest in the insurance industry, mostly because of the global financial crisis.

Chamber of Commerce President Manuel Rodriguez said the accord “opens a window of opportunities for small businesses.”

The pending deal has mobilized large protests in Costa Rica in the past, but Tuesday’s news came with no public opposition.

U.S. President-elect Barack Obama has opposed CAFTA, arguing it “did not contain the sorts of labor provisions and environmental provisions that should have been embedded and should have been enforceable in those agreements.”

The final vote on the intellectual property law came at 12:11pm, 38 voted in favour and 13 against, closing the final chapter to a long, long soap opera.

Article reprinted from insidecostarica.com

San Jose, Costa Rica. The Costa Rica Power Team, a unit of San Jose based Crystal Clear Properties (www.deededparadise.com), announced today its “Certified Green Worldwide” Environmental Standards Program.

In keeping with its corporate commitment to maintain high levels of environmental awareness, the real estate sales company instituted its twelve point “Certified Green Worldwide” program. According to Jason LaFlesch, the President of the Costa Rica Power Team, before the company becomes associated with any new community development, it makes sure that the community’s development plan adheres to the protocols set forth in the “Certified Green Worldwide” program.

“As a company, we are involved in Costa Rica because we love the country. Like our buyers and certainly like the citizens of our host country, we enjoy all Costa Rica has to offer – its natural beauty, its wildlife, its fantastic way of life. Through our “Certified Green Wordlwide” program we are doing our part to ensure that Costa Rica remains the attractive, natural place that it is”, Mr. LaFlesch said.

Mr. LaFlesch went on to detail many of the key components of the “Certified Green Worldwide” program. These include the setting aside of ample open space for recreation and the maintenance of natural wildlife habitats, soil erosion safeguards, preservation of wetlands and aquifer regeneration watersheds, self-contained or municipal utilities, and other natural features of the land including steep slope guidelines and the maintenance of natural geologic contours. The program also will impose strict air quality initiatives in order to limit the carbon footprint resulting from human activity.

“The Costa Rica Power Team is taking the lead in setting the standard for responsible development in Costa Rica. We encourage other developers and sales companies to adopt our standards and earn “Certified Green Worldwide” designation”, Mr. LaFlesch noted. “Our Certified Green Worldwide program can be adopted and applied by developers globally,” Mr. LaFlesch added.

Heather Dopson, the Costa Rica Power Team’s Vice President of Business Development, said that the Power Team created the standards after many years experience working with environmental professionals in the United States and Costa Rica. “We recognize the importance of ‘green’ development and honor Costa Rica’s commitment to becoming carbon-neutral in the next few years,” stated Ms. Dopson.

The Costa Rica Power Team recently sold out its single family home community near Playa Bejuco in the Central Pacific region of Costa Rica. Tim Kopatich, the company’s Vice President of Operations said that two new communities adhering to the company’s “Certified Green Worldwide” standards have recently been launched. Las Colinas de Miramar is a master planned subdivision near Puntarenas and Quintanar de Los Reyes is an exclusive community of lake front homes perched overlooking Lake Arenal and the Arenal Volcano.

Costa Rica Real Estate Investors Market Update - Finance Minister says Costa Rica is in a “very strong and very favorable” financial position.

Scott Oliver - 12th October 2008

I have received numerous emails from people this week along the lines of:

“With the incredible financial meltdown in many countries and with real estate drastically losing its value all over the world, why not address this issue in one of your next newsletters. We, up here, need some “objective” and “real” analysis of what’s happening in Costa Rica. It would be hard to believe that all this is not affecting Costa Rica.”

Since discussing the state of the real estate market a few weeks ago in my article entitled ‘Prices For Quality Costa Rica Real Estate Remain Stable - In contrast to sensational and unsubstantiated claims made by some’ with feedback from numerous real estate experts in various parts of the country, little has changed here.

The number of actual real estate sales have certainly dropped in the past year - especially with regards to buyers from the USA - but for the most part, prices in Costa Rica remain stable, we have not seen any significant ‘across-the-board’ declines.

They say that misery loves company and I’m sorry we are not going to share any miserable stories with you about Costa Rica because the more you look, the better you are going to feel about investing in Costa Rica:

1. In looking at Costa Rica’s balance sheet, you will quickly see that according to the country’s Finance Minister Guillermo Zuniga, Costa Rica is in a “very strong and very favorable” financial position.

2. Costa Rica is enjoying a budget surplus.

3. Imports and exports are only declining slightly.

4. Costa Rica is less reliant on the USA than we have ever been.

5. Not only is Costa Rica in the best financial condition its been for over a decade…

6. Costa Rica’s banks are also in very good shape.

7. On the 8th October 2008 the President of the Banco Central de Costa Rica Francisco de Paula Gutiérrez stated that he: “does not see any economical indications of the world financing crisis affecting Costa Rica.”

8. As an example to confirm that, you’ll see that as of 10th October 2008 while the Dow Jones Industrial Average is down about 40% over the last year, the Costa Rica Stock Exchange is up 11.06%

Looking at how mortgage interest rates have risen in Costa Rica it would appear that - unlike many countries - the Costa Rica market has been uncannily accurate in predicting a period of much higher risk.

According to the Banco Central de Costa Rica (BCCR) the weighted average of all Costa Rica mortgage interest rates for the state banks in colones was at its lowest at 9.64% in April 2008. On the 7th October 2008 it was 14.65%. For the private banks, it was at its lowest in April at 8.09% and on the 7th October 2008, was at 13.22%. Mortgages in US dollars at the present time range from about 8.57% with ScotiaBank offering 11% mortgages (for the first three years).

As anyone will tell you who has applied for a mortgage in Costa Rica - myself included - the banks in Costa Rica are very much more conservative than the banks have been in the USA and they were never in the business of giving out ridiculous mortgages to low income people who could not afford the payments.

This is reflected in a recent statement (11 October 2008) from Maria Isabel Cortes, the President of the Costa Rica Banking Association (La Asociación Bancaria Costarricense) when she said that: “The increase in interest rates is still is not affecting the punctuality of mortgage payments from the Ticos.”

Banco de Costa Rica and Bancrédito both confirmed the healthiness of their mortgage portfolios at the present time.

According to the US Mortgage Bankers Association “Among mortgages on one- to four-family homes, 9.16% were a month or more overdue or were in foreclosure in the second quarter.”

Meanwhile in Costa Rica Arnoldo Trejos Dobles, the Assistant Director of Bancrédito, stated that from September 2007 - September 2008 the number of people 90 days late on their mortgages has improved from 0.97% to a mere 0.74%. So compared to Costa Rica, on a percentage basis the US has over twelve times more people late with their mortgages!

Costa Rica banks were also not in the business of investing in their monies in the various meltdown mortgage funds and SIV’s that did invest in these sub-prime mortgage products and other toxic derivatives or as Warren Buffet called them: “… financial weapons of mass destruction“.

Having worked as a professional investment advisor in Costa Rica since 1999 I can also confirm that individual investors in Costa Rica are not particularly sophisticated, and they too are very conservative with their investments.

One reason the US trade deficit is so large is the practice of US corporations offshoring their production of goods and services for US markets to countries like Costa Rica. When these products are brought into the US to be sold, they count as imports. Thanks to Intel and a few other high-tech companies Costa Rica is among the world’s top 4 high-tech exporters and is one of the most competitive destinations in Latin America for service operations.

This is not good news for American jobs but this is good news for Costa Rica. It gives investors confidence when they consider investing in Costa Rica and it’s even more apparent when you examine the kinds of companies that continue to move to, and expand in Costa Rica.

The most recent news being Amazon.com’s new operations in Heredia where they will be hiring 700 people, Citi Business Services hiring an additional 200 people for their Global Operations Centre in Santa Ana and Western Union hiring another 550 people (also in Santa Ana).

If you want to take a look at the financial markets in Costa Rica, the Costa Rica Stock Exchange is the largest in Central American and is comprised of 30 different company’s shares, equivalent to the Dow Jones Industrial Average except that just this last week the Dow Jones Industrial Average declined by 18%, capping the worst week in its 112-year history with Friday being its most volatile day ever and for the most recent year - 10th October 2007 - 10th October 2008, the Dow Jones Industrial Average is down about 40% and the the Costa Rica Stock Market index is up 11.06% during that same period.

Seeing this it is crystal clear that there is zero correlation - so far - between Costa Rica’s stock market and other stock markets. The UK, European, Russian and Asian markets are also dying on the vine and unfortunately this is just the beginning folks…

“California may need a $7 billion emergency loan from the federal government to pay for “teachers’ salaries, nursing homes, law enforcement and every other state-funded service” this month, Gov. Arnold Schwarzenegger warns.”

Unless the national economic crisis subsides and California can secure private short-term loans “the state’s cash reserves would be exhausted near the end of October.” And “Payments for teachers’ salaries, nursing homes, law enforcement and every other state-funded service would stop or be significantly delayed…” “And California’s 5,000 cities, counties, school districts and special districts would face the same fate.”

This is happening at an inconvenient time when infrastructure is crumbling and more investment is urgently required. “In 2005 the American Society of Civil Engineers estimated that $1.6 trillion was needed over five years to bring just the existing infrastructure into good repair. This does not account for future needs.”

“If America does not act, says Robert Yaro of the Regional Plan Association (RPA), a body that plans for the New York-New Jersey-Connecticut region, it will have the infrastructure of a third-world country within a few decades.”

How many other states in the USA are in similar, very dire straits? “One prime example of this problem is Jefferson County, Ala., where the state’s largest city, Birmingham, is located. The county is now saddled with $3.2 billion in debt from sewer upgrades and finds itself on the brink of a $3.2 billion bankruptcy, the largest municipal bankruptcy in U.S. history.”

The States of New Mexico, Maine, and Massachusetts also have serious liquidity problems.

How will rapidly declining real estate values in the USA affect property tax collections? If the municipalities are collecting far less money, how will that affect them?

Many people feel that times are tough now in the USA, unfortunately the tough times in the USA are just beginning…

What about the decline in the amount of construction in the USA? “For every area job lost in construction, real estate or banking, three other positions will disappear, according to the U.S. Department of Commerce.”

“September’s job report was the worst in five years, and over the last year, 1.1 million jobs have been eliminated. Since September 2007, construction in particular has lost 760,000 jobs, dropping from 9.5 million to 8.74 million employed workers.”

As consumers spend less, how will declining sales tax revenues in the US affect the bottom line?

How will this financial crisis affect employment? Are companies hiring or firing people? Some economic experts believe the true unemployment numbers in the US is already over 14%.

How is this catastrophic decline in the global financial markets affecting already underfunded pension programs? Maybe your pension program? Why is nobody talking about that?

According to Rosa Brooks: “It’s been a quick slide from economic superpower to economic basket case.”

During my decade working on Wall Street as a registered investment advisor in the 80s we used to talk about a “flight to quality” when investors were moving their capital away from riskier investments to the safest possible investment vehicles, and with the stability being shown by Costa Rica’s financial and real estate markets in comparison to what has been going on elsewhere (and didn’t that bailout work well?), it’s a “no-brainer” to conclude that Costa Rica remains a great place to invest.

This article was reproduced with permission of Scott Oliver of www.WeLoveCostaRica.com.

Did you know that the Costa Rica Power Team’s weekly radio show is now heard live in the San Francisco Bay Area? That’s right! The Real Estate Power Hour, the Number One Rated Real Estate Investment Program in Phoenix, can now be heard in the “City By The Bay”! We broadcast live from the studios of KKNT 960AM in Phoenix at 11AM PDT every Sunday. You can also catch us in Northern California at 1220 on the AM dial on station KNTS.

Listening to Jason, Bill and Tim every week is a great way to stay on top of what’s happening in Costa Rica. The Real Estate Power Hour is your show too! Call in with your questions or comments and participate in the show’s “Tell Me A Story” about Costa Rica segment and win a free dinner for two at popular restaurants.

If you’re outside of the Phoenix or San Francisco listening area you can audio stream live at www.kknt960.com on the world wide web. Just make the adjustment for your time zone.

Costa Rica was recognized as one of the world’s best vacation sites at the International Tourism Trade Fair held recently in Spain. The award was presented to Tourism Minister Carlos Benavides. Mr. Benavides noted that the award is recognition of the effort the country has made to position itself as one of the best destinations within the international tourism markets.

“We are very proud of having been recognized in this category, primarily because the selection was made by prestigious members of the international tourist industry which recognizes the quality of the Costa Rica tourist product and our commitment to continue to improve in the future”, Mr. Benavides said.

The award is based on input provided by the 180,000 readers of Travel Weekly magazine, a trade publication read by travel agents, hotel owners, tour operators, suppliers and travel industry professionals.

This year represents the first year Costa Rica was the top selection. The country received runner-up honors in 2004, 2006 and 2007.

The Costa Rica Power Team believes that this award confirms what we’ve been saying since we became involved in the country in 2005. Costa Rica has it all!

Costa Rica ranks first in the Americas and fifth worldwide for its environmental concerns according to World Economic Forum’s Environmental Action Index for 2008. The index was assembled by a noted tem of environmentalists from Yale and Columbia Universities.

The Index based its ranking criteria on 25 indicators according to six standards such as environmental health, air pollution, water resources, habitat and biodiversity, natural resource products and climate change.

The designation of Costa Rica as the best in the Americas stems from its clear policies with respect to environmental conservation, according to President Oscar Arias.

“We are one of the few countries, by way of development, that have recovered forest area in the last twenty years, to the point that more than half of our territory is woodland”, he added.

Arias also highlighted the push toward sustainable tourism, eco-friendly production, and incentives for socially and environmentally companies. “All this because, as I’ve said many times, the future of Costa Rica will be green”.

The Costa Rica Power Team will once again be hosting a Costa Rica Informational Presentation about the beautiful country of Costa Rica and our fantastic property offering at the Hills of Miramar. The date we’ve selected is Saturday, July 12, 2008. The place is the conference room of State Mortgage/Hacienda Builders at the Southwest corner of the Loop 101 and Via de Ventura in Scottsdale. Registration is at 9:00AM and we will start promptly at 9:30AM. The seminar we had earlier this month was a tremendous success! We had more than 90 people in attendance and reserved more than 30 Hills of Miramar custom home sites.

If you’re thinking of buying your dream, ocean or mountain view custom home site at the Hills of Miramar don’t wait until July 12, however. Call us now as our pre-sales are rapidly approaching 50 and there are only 118 custom home sites in the first part of Phase One. Lot reservations are being taken on a first come-first served basis. Jason, Tim and I have all been on the land. We can help you pick your lot and reserve it for you.

Please call me at 480-246-3699, Jason at 602-369-4663 or Tim in Costa Rica at 949-340-2647 for more information and to reserve your custom home site. Pura Vida!

The Costa Rica Power Team is pleased to announce that we have teamed up with Entrust Financial Services to allow our Hills of Miramar buyers to purchase their custom home site using tax deferred retirement plan money. With a Self-Directed IRA administered by Entrust you have complete control over your investments even allowing for the purchase of residential real estate and land. Our Entrust representative is Kaaren Hall. She can be reached at 949-788-2970. Please give her a call to discuss all the details. Entrust’s website is www.theentrustgroup.com. “Pura Vida”