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Reinventing yourself is the key to success with real estate in Heredia in Costa Rica
This time, we spoke with Manuel Calvo, Founder and Real Estate Adviser of Nuevos Horizontes Propiedades SA about real estate in Heredia in Costa Rica.
Manuel Calvo is going to talk about the market in Costa Rica and how it has changed during the last 10 years, specifically in the city of Heredia, a Costa Rican city located about 10 km northwest of the capital.
Additionally, he will explain how a market change represents an opportunity for investors.
HalloCasa: “Good afternoon, Mr Calvo. First of all, let us welcome you and express our thanks for your participation.”
Manuel Calvo: “Good afternoon, it’s a pleasure.”
HalloCasa: “Please introduce yourself to our audience, tell us a little about yourself, how you got into the world of real estate business and how your business in Heredia started and what it is that you are offering and which areas of the country it covers.”
Manuel Calvo: “I’m Belgian, with a Belgian mother and a Spanish father. So, even though my name sounds very “tico” (that’s how the people of Costa Rica are called), I am not. I grew up in Belgium and moved to Costa Rica in 2001. Since 2008, I was interested in real estate and had been considering to invest small savings. Finally, I took the initiate and bought a house with the plan to remodel it and resell it, however, that was exactly at the moment when the financial crisis hit, so that I had to rent it out for the time being.
I waited until the end of the crisis and in 2011 I started working as a real estate agent by selling my own house. I was successful and little by little I was growing an agency with now about 15 agents.
Part of my success is based on my previous knowledge in the field of digital marketing and SEO (Search Engine Optimization). In my opinion, real estate agents who have not been able to adapt to the new channels are left behind and are being eliminated by the market. They are frankly having a hard time to sell.
Concerning my business: since its inception, the company Nuevos Horizontes Propiedades has been seeking to work in a distinct way versus how most agents in Costa Rica work: more professional, more formal, more comprehensive. 15 agents cover the entire metropolitan area along Cartago, San José, Heredia, and Alajuela.
HalloCasa: “Please tell our audience what your city, the Gran Heredia, also known as the City of Flowers is like.”
Manuel Calvo: “Heredia is a very dynamic area. It has grown a lot in the last 10-12 years. Around Heredia many international companies have opened their offices which are looking for employees with highly educated profiles, university students in administration, engineering, IT, etc. This evolution has attracted a lot of young people with good incomes and proper purchasing power. This boosts the economy remarkably, especially towards local shopping malls, restaurants, shops, and, of course, real estate.”
HalloCasa: “Which has been the most remarkable impact of that trend in Costa Rica and, more specifically, in the city of Heredia and its surroundings?”
Manuel Calvo: “Changes in Heredia are those seen throughout the entire country. There is a common trend towards real estate in Heredia in Costa Rica in condominiums due to safety and comfort. In Heredia, like other locations, there is an increasing concentration of international companies and there is more construction of condominiums taking place.
From my point of view, a reason for this change is also the fact that a huge percentage of the younger generations waits a little longer than previous generations until they start having children and therefore wait until they buy a house.”
HalloCasa:“What is the share of foreign investment in the Costa Rican real estate market?”Manuel Calvo: “Foreigners mainly invest in speculative condominium projects which are located either in the capital or at the beaches. During the last 3 years, I have seen more and more investment and dynamism on the beaches, while there have always been international investors in the capital.
The question is how much it contributes to a healthy and balanced real estate market. In my opinion, there is more construction and speculation than real demand. The construction and speculation outpaces, in my view, the rate of population growth.
This trend obviously makes the sector very vulnerable. Additionally, since Trump has entered the White House, we see a steady increase of the interest rates. This is forecasted to continue to grow during the next years. In conjunction with the tendency of the Ticos to spend more (with credit cards) than they earn, we potentially see a good recipe which could create a very delicate bubble. If the rates continue to grow, it could affect a lot of people who will not be able to pay off their mortgages. I am already seeing the first signs in this direction.”
HalloCasa: “On April 27 of 2017 the construction of the human playground Oxygen was started, located in San Francisco de Heredia, a central place within the Greater Metropolitan Area, which is rich both culturally and historically.
As an interesting figure for our readers: this project will consist of 200,000 square meters, whose 60,000 square meters will be leased, which are equivalent to 200 retail stores. Its development will be done along stages. The first stage consists of 130,000 square meters with its construction which began in January 2017. Cuestamoras Urbanismo, leader of the project, will invest more than $200 million USD, including infrastructure projects such as road improvements in Heredia. Please tell us a little about this mega project.”
Manuel Calvo: “The project is an example of good foreign investment. It is an innovative concept which will create many jobs. But as with many things, along the advantages there are also disadvantages:
Congestion, which today is one of the main reasons why people sell their real estate in Costa Rica to buy something closer to their job, will worsen even more and, regrettably, governments – whether on the national or local level – are falling far behind due to their very messy and slow procedures. In short, they do not contribute much.
The other effect is the strong growth on the price of the land in the neighborhoods around the project.”
HalloCasa: “It is documented that in 2016 vs 2014 85.387 square meters were added to the entire real estate inventory. What has been the strongest influence on the new construction projects which have taken place?”
Manuel Calvo: “I think this is a consequence of changes in the behavior of people, changes in their needs combined with speculation as indicated above. 12 years ago, there were very few vertical condominiums. Today, most of the investment in the residential sector in the metropolitan area lies in this type of housing.”
HalloCasa: “The real estate market in Costa Rica continues to grow. Why?”
Manuel Calvo: “In the period between 2011 and 2016, we have seen a strong economic growth. Various sectors underwent a strong expansion, such as the technology sector, technological services as well as tourism. The people are slightly optimistic. This again triggers the real estate demand.
At the same time, after the crisis, there were many banks with SUPERAVIT* (economic surplus) that offered real estate loans with quite a low interest rate supported by a low index interest rate which had projections towards a downward trend. For several months now, this trend has been slowing and slight signs towards an increase could be seen which would then gradually saturate the market.”
HalloCasa: “Regarding the offerings of commercial inventory by province, where are the most square meters located: Heredia, San José, Cartago, Escazú or Alajuela? If there is a skewed distribution, why? What is it that makes them more desirable over others?”
Manuel Calvo: “I do not have data about it. Apart from downtown San Jose, which loses investors´ interest due to their high level of congestion, there are certainly concentrations of office centers and free trade zones which are distributed in the following areas:
- The area Posos de Santa Ana
- Lagunilla and La Aurora de Heredia
- El Coyol of Alajuela
- Tres Ríos de Cartago
The success of those areas originates mainly from the geographical locations which are near populated areas and highways.”
HalloCasa: “Which of the following sectors has had the greatest growth so far in 2018: commercial real estate, industrial real estate, or office spacee? What do investors prefer: brand new or used square meters? Why do they have these preferences?”
Manuel Calvo: “I frankly have not seen much investment in office space during the last couple of years. It is a fairly saturated market and there are many buildings with several offices. It´s not that there is no demand, there is always demand, however, I have seen that the supply often does not coincide with the demand. One significant problem is definitely the lack of available parking space as well as as access to the respective offices because of the saturation of the national network.
In the industrial sector, there is definitely growth towards the West along Coyol de Alajuela, and the Autopista #27 towards the port of Caldera and the East along the industrial zone of Cartago. I do not have much knowledge about the commercial sector.”
HalloCasa: “Which differences exist within the real estate market between the Grand Heredia and the capital?”
Manuel Calvo: “San José has a commercial center fully dedicated to services. Close to this area, there are old residential neighborhoods, mainly of medium to medium-low socio-economic levels. This residential area has little to no demand, little dynamism. It has not been possible to attract investment in these areas to reactivate the local economy and the real estate sector. There is interest from small investors who buy properties with their savings to remodel them and create apartments to rent them out afterwards.
However, what is missing are investments with decent capital, companies that build condominiums.
In Heredia, the average age of homes is much younger.
In addition, it has had a lot of real estate growth, whether residential or commercial. The demographic profile is very different with younger people, more students, and also people with more purchasing power.
Apart from that, the cantons of Heredia have the best quality of life and the best municipal services in the country.”
HalloCasa: “The revaluation of properties represents a great opportunity for investors. Why and which investors will benefit the most? Nationals or internationals?”
Manuel Calvo: “I think there is no difference. The real estate sector is highly dollarized and returns are not affected by where the investment originates from.”
HalloCasa: “Mr. Calvo, we know that your time is limited. We would like to thank you for this informative and in-depth interview. Would it be possible for interested readers to get in touch with you if they have any follow-up questions? Thank you very much for the interview. “
Manuel Calvo: “Yes, of course. Investors can write me a personal message via my profile on HalloCasa. Thank you.”
HalloCasa: “Thank you very much for being with us. Always welcome to HalloCasa.”
Manuel Calvo: “Thank you very much.”
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