Costa Rica News

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Financial crisis washes up in Costa Rica

Suzanne Wilton, Calgary Herald
Published: Saturday, November 29, 2008
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Suzanne Wilton and her family moved to Costa rica four months ago to escape Calgary's boom, its hectic pace and all the trappings that go along with life in a wealthy metropolis that has grown at breakneck speed.

Their yearlong search for perspective is being published on the last saturday of every month in the Calgary Herald and can also be followed online at Canadians incostarica. wordpress.com

When the world last suffered a major economic crisis, former Calgarian Gary Rogers was working at the downtown Playboy Club in the seedy capital of Costa Rica, a city of some five million in the mountains of the Central American country teetering on the edge of being termed a developed nation.

Nearly three decades later, Rogers is still here, having weathered that financial storm and successfully carving a niche in the cutthroat vacation rental business in this growing tropical tourist destination.

But another similar global financial crisis is reverberating like the tremors of an earthquake across Costa Rica, where Canadians, and particularly Calgarians, have increasingly sought refuge from the snow.

For Rogers, who abandoned Calgary when he was 25, times are tough once more, the global meltdown cutting into this year's business at Condotel Las Cascadas, near Quepos, one of Costa Rica's top three tourist destinations.

Reservations for the upcoming Christmas season, a time that sustains many tourist operations through the quiet, rainy months, are down at Rogers' business by 30 per cent compared with last year. The situation is worse at other popular destinations, with hotel operators near Lake Arenal, where foreigners are drawn to its active lava-spewing volcano, reporting a 50 per cent decline.

When the bottom fell out of the stock market several weeks ago, my family was splashing in the waves on the beach at San Juan del Sur, Nicaragua, blissfully unaware that the world's economies were drowning.

We returned to our rented home in Costa Rica's central valley to discover the Canadian dollar had sunk.

Like everyone else, we watched helplessly as our retirement savings funds dwindled and wondered whether our escape from Calgary's boom was a bust.

Costa Rica's economy, like others, is based on the value of the U. S. dollar. And with the loonie way down, so is our purchasing power.

But where there are losses, there are also gains.

Like Calgary, Costa Rica has in recent years undergone a construction boom and real estate prices soared along with inflation. Construction projects have now similarly halted in the wake of the meltdown and prices on everything from gas to housing are falling.

A beach house that last year would have rented for $1,500 per month is now going for $900 and owners of luxury vacation homes are offering deep discounts to get bodies in the beds.

"For Sale" signs dot the lush landscape and some property developers are so stretched they are unable to finance the completion of their projects.

The downturn is benefiting deep-pocketed, self-financing developers like Robert Irvin, who counts Canadians among half the buyers in a condo project on Costa Rica's northern coast.

While some developers are suffering a serious sales slip because buyers can't get financing, Irvin is able to offer options for those still wanting to snap up a piece of paradise despite the uncertainty of the markets.

"The lack of construction financing means that a lot of the projects that were advertised are now stopped, so the options for the buyer have narrowed dramatically. . . . That has turned out be to very good for us," says Irvin, whose company has two other projects about to begin.

"One day when I was going into the Calgary Tower, a bum came up to me on the street and said, 'Hey buddy, you got a toonie?' "

"What happened to a quarter?

"People have lost touch with the value of a dollar."