12 investments turned away because of cumbersome law and a tourist who walks slowly

With a resounding no Jose Wa Chong ruled that the tourist marina project to be conducted by a group of investors in Guanacaste Hojancha – called Marina Puerto Carrillo- will continue.

Bernal Turcios, society representative Guaitil Navy responded with a terse “I do not give information about it ” when asked if the proposal to build a marina in Orange Beach Paquera remained standing.

Like these two investment plans , 10 other projects that were registered to a process in the Interinstitutional Commission on Tourist Marinas and Docks ( Cimat ) suffered the same fate .

According to EF data file in January 2007 Cimat he studied for a total of 21 initiatives in different coastal areas of the country.

However, data provided last week by this organization, a decentralized body of the Costa Rican Tourism Institute (ICT ) – details that only nine remain , of which only three are in operation: The Dreams, and Marina Sailfish Marina Papagayo.

A process that scares

Chong Wa , a representative of the former Marina Puerto Carillo , said the decision to abandon the plan was based on two factors: the financial crisis last year that strongly affected the tourism industry and slow to obtain permits.

The list of procedures required by Law of marine and tourist docks spooked more than one. Was the case of Punta Marina Sol Marina Yacht Club and the Pacific.

Flamingo Marina also suspended proceedings , Puertocito , Pacific, Carara Bay , Punta Bocana , Punta Cacique , Central Marina , Punta Sol and Punta Piedra.

Some of them even had approved the construction plans or were awaiting the ruling of grant.

In the case of other proposals such as the Pacific Marine and Yacht Club , the main drawback was faced with the regulatory plan of the canton.

For 2007 , the expected Cimat Golfito Navy finalize administrative processes and initiate construction, but his agent , James Lynskey , suspended the construction phase .

And is that the desired acceleration of time and less paperwork does not seem to see light in the short term.

In early July , the Constitutional Court returned for the third time the project ( 14 836 ) Law to simplify procedures and incentives in berths and marinas . The judges found unconstitutional defects in one of the articles related to the query to be made to municipalities.

The errors must be corrected again by the deputies. They seek to incorporate new environmental controls , lower than 2 months to 45 days the period for the permits granted Cimat and 1 month to 22 days the time municipalities have to decide on the projects and convene the public hearing.

The third interruption legal reform reduces the competitiveness of Costa Rica in the tourist market of the sea , said Juan Carlos Ramos , president of the National Chamber of Tourism ( Canatur ).

For him, the changes will be beneficial because it simplifies procedures and provides greater legal certainty to investors.

“All the obstacles that arise along the way cause the effect of discouraging employers interested in projects of this magnitude , “said Ramos.

It was not possible to contact Minister of Tourism , Carlos Ricardo Benavides , and its position on this new delay to the bill .

However, in an earlier interview conducted Oscar Villalobos , director of the Cimat , it said that it can be shown that approximately three years it takes for a process (including consultation , draft concession and construction plans ) only 20 % of time is spent by the Cimat in its analysis and approval.

The rest , he added Villalobos, is in the hands of the developer undertaking studies, seeking funding and making decisions .

For those who faced the current procedures, the wait lasted years.

Such was the case of Los Sueños Marina Papagayo Marina Pez Vela. The latter operate the first stage.

Papagayo proceedings began in early 2004 . The director senior Papagayo Peninsula operations -owner of the marina , ” Manuel Ardon said that the route to streamline procedures should not lose sight of a basic pillar : environmental protection.

Nor can we ignore , he said, that in seeking to reduce response times of the entities involved , the important thing is to ensure administrative efficiency without sacrificing the performance of controls.

In the case of Marina Pez Vela , its construction began in 2007 and the first phase became operational in April.

Its chairman , Harold Lovelady , estimates that the project will be completely finished in about three years, at which will require at least 300 employees.

The strong growth of constructions in previous years already has a consequence in the real estate market: the oversupply of premises and offices.

Since March 2008, the sectors of office, commercial and industrial show an increasing trend in the percentage of available space, according to Colliers International.

Office buildings within the metropolitan area have increased from 7% of its area available to 11% in March.

One of the main reasons is that during the past year were ready several buildings whose construction began before the crisis.

However, with two quarters of unemployment above 10% and an increase of 2% in the number of buildings, new complexes failed to achieve in the market enough tenants to fill their apartments.

Additionally, with the reduction of staff that has made some companies, there is also now the possibility to reduce the space used for offices.

Antonio Pérez, general manager of Multifondos, who owns several buildings in their real estate investment funds, confirmed that the country has an oversupply.

For Pérez, this situation will last for several months, because the number of square meters available exceeds the demand.

Pressure on prices

One consequence of this property behavior, will be a pressure on prices, either to keep them unchanged or forcing a decline, said Pérez. According to the executive, offices are likely to have a greater decrease in the value of rents because their tenants have a lower cost if they decide to relocate.

Would be different for an industry as the move would mean the cost of mobilization of machinery and for a trade, the change of location could mean a drop in sales.

Armando Maroto, manager of real estate funds of Aldesa Group, agrees that rental prices will go down.

One possibility, he added, is that companies negotiate with owners of buildings temporary reductions in income, for example, for six months and then increased again. The measure would be to avoid the loss of tenants.

Maroto explained that the effect of prices would have two strands. The first for new buildings, which shall make their initial offers with the lowest levels for the market.

The second is for Oficentros already established, that could cause slight declines, or maintain rents unchanged in the coming years.
Carlos Phillips, manager of business Interbolsa, is more reserved.

He explained that a drop in prices would be flat and if the crisis hits more severely to the companies, what would happen is that these would be forced to migrate to a building with fewer amenities.

According to Phillips, in the Costa Rica Real Estate news investment funds, it is possible that prices do not have a strong downward pressure on the excess, if the respective fund has a sufficiently diversified portfolio.

This way, if the tenant asks for a lower price or leave the building, portfolio management could assess the weight that is within all property and if it is relatively small, would deny the option of lowering rents.

For now, investment funds look to slow down construction activity, but without a full stop, as would the risk of lack of supply when the economy revived.

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The Costa Rica real estate market is booming, especially in the Central Pacific area. Many foreign retirees are selecting Costa Rica as their retirement location, and a growing number of investors are searching for Costa Rica real estate deals. Costa Rica is becoming a favorite vacation destination for more and more tourists, with over two million travelers choosing to visit this tropical country in 2007. The large number of tourists has resulted in some real estate properties being even more attractive to investors and those interested in buying property with the intention of generating rental income.