Costa Rica Blog

With the colon's increase in value this year topping 11%, it was the second highest appreciating currency worldwide.  In a reaction by the central bank to control the astonomical increase in the value, the bank has announced plans to purchase up to $50 million dollars per month in foreign currency to curb the rise in value of the colon.  The rapid rise in value of the colon will make both tourism and exports more expensive.  The central bank has traditionally allowed the colon to float in a range between 500 and 640 colon to the dollar but this week the colon approached the upper ranges in value, at 504 colons to the dollar. 

By purchasing foreign currencies, the central bank hopes to decrease the value of the colon.  The higher value of the colon makes real estate and exports more costly to international investors.  This is a good thing for the many North Americans who have already purchased property there, as the value of thier property increases.  It does make real estate more expensive for new buyers unless the property is priced in dollars, not colon.  Fortunately our prices at Pacific Lots are priced in dollars but as the dollar continues to lose money worldwide, there is pressure to change our pricing system to colons.  For those who have purchased property using a self directed IRA, the gain they realize over time reflects the increase in the value of the colon as well as the increase in value of the property.  As the dollar continues to lose value, more Costa Rican real estate, home sites and lots will be priced in colons. 

With the move to open the telecommunications market to international competition, Costa Rica's monopolistic telecom company ICE is racing to get 3G towers and new cell phone and internet services throughout the market before the competitors start offering services.  Grupo ICE, which stands for Instituto Costarricense de Elictricidad, has had a monopoly on all electricity needs, telecom needs and internet.  Under the new CAFTA regulations, competition is now set to enter the market and start offering services in both telecommunications and internet.  New subscriber agreements with major telecom service companies in the US will soon be reality.  Now maybe our Verizon, AT&T and other phones will finally work in Costa Rica. 

Many of you may realize that last week International Living held an event at the San Jose Marriott "Live and Invest in Costa Rica".  As the sponsor for the event, we provided the entire conference with an opening cocktail reception with open bar and appetizers.  I also gave a presentation during the event about our project in Costa Rica and we had a booth in the exhibit room.  The Marriott is a beautiful hotel and the conference center is equally as nice.  The event was attended by over 200 people.

Here is an email I recently wrote to one of our clients that wanted a tour of a few hours with little notice.

Last Sunday the new toll road from San Jose to the west coast was closed shortly before noon due to a number of issues with rocks in the road from the heavy rains.  Although the company responsible for building the road, Autopista Del Sol, claims the road is fine, they have agreed to temporarily close one section of the road, between Orotina and Atenas, totaling about 12 miles.  The missing section means you have to use the old "aguacate" highway through a stretch through the mountains.  Though we have used this road for many years to reach our properties, our Discovery tour groups would prefer using the new highway rather than winding through the mountainous stretch we are again traveling, adding 45 minutes to our travel time.   

China and Costa Rica have strengthened trade relations after establishing diplomatic relations on June 1, 2007.  Prior to that date, Costa Rica had maintained a 60 year relationship with Taiwan, which ended with the establishment of new relations with China.  As a result of the new agreement, China donated and is building a huge new stadium in Sabana Park, within the city limits of San Jose.  The new stadium will hold 35,000 people, provide housing for up to 350 athletes, feature large screen monitors, a sports museum and hold offices for a number of sports associations.

The numbers are in and they look good.  The ministry of tourism, Carlos Ricardo Benavides recently announced that tourism was up 11.5% in the first quarter of 2010.  The numbers reflect a substantial increase in arrivals into Costa Rica.  American Airlines recently added direct flights from JFK airport in New York and a number of foreign carriers are also adding flights into the country.  According to the ministry of tourism, they expect the number of tourists visiting Costa Rica to swell to nearly 2.5 million per year in the next few years. 

The vast majority of investors opt to purchase property in Costa Rica through an Anonymous Corporation called a Sociedad Anonima (S.A.).   This protects you against loss in the case of being sued if someone hurts themselves on your property.  It also makes it easier to attain services like setting up a bank account, getting a phone line, etc.... Additionally, it makes it much easier and less expensive to sell your property if you choose to do so in the future.  In that case you are not subject to paying the transfer tax. The company shares are simply transferred. Costa Rican corporations also do not pay income tax. This is a major advantage if the corporation is going to retain profits (ie. rental income) for future investment. It can also make estate planning less complicated. You can transfer or will shares of your corporation to someone else.

 

The new immigration law (Ley de Migración y Extranjería) went into effect earlier this month. One of the changes is the requirement of foreign residents working in Costa Rica to contribute to the Caja Costarricense del Seguro Social (CCSS) - social security. Foreign residents who do not contribute will no longer be able to obtain free medical services.  Also, foreigners must pay approximately $25 annually that will result in 12 million dollars from 486,000 foreign residents each year to be earmarked for public services most used by immigrants, specifically the CCSS and the Ministry of Education.  The legislation also calls for a fine of $100 per month to any foreigner who overstays his or her "legal" visit; 90 days for North Americans and Europeans and 30 days for most other countries.

Costa Rica has ranked highest in the Americas and 3rd in the world with a score of 86.4 in the 2010 Environmental Performance Index (EPI). Second place goes to Switzerland with a score of 89.1 and the honor of first place goes to Iceland with a score of 93.5.
The Environmental Performance Index (EPI) ranks 163 countries on 25 performance indicators tracked across ten policy categories covering both environmental public health and ecosystem vitality. These indicators provide a gauge at a national government scale of how close countries are to established environmental policy goals.