BIG Costa Rica Discovery... It Could Be Huge!

March 11, 2021

Transcript

SPEAKER_00 0:15

Welcome to your notes from the field. This is where I bring you my latest boots on the ground research, research that you can profit from. And I never thought I would again put new ground floor discovery and Costa Rica in the same sentence, but after the week I've just had here, it's it's right up there. I'm in San Jose, I'm in the Holiday Inn Express Airport. I'm looking out my window over a small nondescript car park. Just beyond that, there's some flowers and trees, and then the Hamptons, yeah, Hamptons Inn and Suite in a little commercial area just by San Jose Airport. Behind me, the highway, and then the runways. If you've been here, you'll know what a kind of a weird situation it is that you can be driving on the highway parallel to the runways, and from some angles it looks like the jets are driving on the highway. It's that close. But opportunity, ground floor, Costa Rica, all back in the same sentence after the after the the the week I've had here. Um so let me back up a minute, I guess 11 days or so ago, I left Lisbon, direct flight Lisbon to Cancun, and I spent four days on the ground, primarily in Toulume. Also spent uh a little bit of a little bit of time in in Playa del Carmen. And my my first observation, you know, which was very, very interesting. I stayed in the Mayacoba Resort, which is a big high-end resort. Um Fairmont was the kind of the first anchor hotel tenant. The Fairmont is being renovated now. Um the PGA tour is there next week, I think, for an event which was the which was the first PGA golf tour event outside of the the US and Canada. There's a banyan treat, big established high-end resort. But I stayed in a hotel called Andaz, and what was really, really interesting about this was it was like it was a big high-end resort setup, but in all their features, they were like mimicking this like back street art from Playa del Carmen and Tulum, the way the way they had these kind of hipster bikes lying around that had the feel of Tulum. It was just really, really interesting how that Tulum experience has gone so mainstream that they pulled it behind the gates of this big master planned resort, tried to mimic that experience in terms of little cafes experience in terms of artwork on the buildings. And um it was just so so interesting that that type of thing had gone so let's call it high-end mainstream, and um and that's where Tulum is going. And um, so you know what what I saw in Tulum again was just this this continuation of the trends that we've been talking about, and very much the the acceleration of that. So, you know, right now we're we're at a moment where Tulum has been bursting with this work from with the work from home set with younger younger vacationers. Now now the the now older people families are are starting to come back. There's the the chronic shortage of the right accommodation I've been been telling you, I've been telling you about. There's plans for for new high-end hotels coming in, you know, primarily in the kind of the the Tulum 101 and the Salbazama area, which is down the beach road where our opportunity is. And pretty much all of those are targeting the kind of 500 bucks a night and up market. So it's what what I saw in Andaz in Mayacoba is is now coming to Loom. And basically, it's the same market that that we have in Cabo, and it's the same kind of universe of brands and hotel names that exploded in Cabo from 2015. And how I described this market and these people in Cabo was like the ordinary rich. So Cabo had done a really good job at tapping into the tapping into the super rich. Now, with these high-end resorts, they were tapping into the the ordinary rich, um, the business class traveller rather than the private jet set. And Tulume is going that way now. It's moving, it's moving away from niche boutique to being regular rich mass market boutique. So with the time there, you know, it made me even more excited than ever about our about our samsara opportunity. Congratulations if if you got in. You know, certainly I think it's going to play out to be one of our best Tulum opportunities yet. You know, we're getting condos, we're we're we're getting like best in class two-bed, two-bath condos for like 70, 80, even 113 grand, less than what other other similar-size condos in the area sell for. But the key piece of this is that what we're getting has those extra benefits. It's got that rooftop terrace, which will make it so marketable for rental. It's got the the beach club membership. So, you know, to go to the beach, you won't have to navigate parking, you won't have to deal with getting a bed, you can pre-book all of that. You can you can you can just come downstairs, book with your concierge, come downstairs, get in, get in the shuttle, and you're there. And that is just so compelling. Um, it's so compelling for for for me as someone who knows Tulume and spends a lot of time there and knows how it works, but it's going to be even more compelling for someone who doesn't want to have to figure out all that stuff when when it comes time to time to rent. So you've got these distinguishing features that no other community in its class has. So not so it will stand head and shoulders above those other condos and those other communities where folks are paying you know 70, 80, and 110 grand more than we're paying. So it's almost like uh it's like cream on cream. We've got the cream of the the Rita member only pricing, all that amount less, and then we've the extra cream of the extra benefits of owning there, which which as time goes on, those will become will will become more and more valuable. But jumping to Costa Rica, um I I left Cancun, I flew on Valaris, direct Cancun to San Jose, um straight out straight out and into a car, and I was driven to um I was driven to a corner of of Costa Rica, which is a corner that I have flown over on a couple of occasions. I've flown over it when I've flown from Liberia um from Liberia's airport on a small little plane north to north to to to Nicaragua. Um I knew the coastline was beautiful, but I never had boots on the ground there, and I never knew what was there. Because, you know, if if I can if I if I can orient you, so Northern Costa Rica, if we kind of trace back the development of Costa Rica's tourism and second home market, um, you know, the surfers discovered northern Pacific, Costa Rica way back in the day, then the kind of the 80s and the 90s, some pioneers followed, second homeowners, expats. And then with the with with the addition of international routes to the Liberia airport, the place started to really, really take off in the 90s. So, first of all, there were road improvements that made that made Liberia accessible over the 80s or the 90s, but the big kicker, the big thing that kicked everything off is the hoteliers in the area club together, they put a fund together to encourage and incentivize and underwrite direct flights from from the US and Canada. So today you can fly um you can fly, I think it's about either about 12 or 18 international destinations um to Liberia. So there's direct flights from are there pre pre-COVID, there were direct flights from from Europe. Pre and up to now, there are flights from a very wide variety of of North American airports. But you know, it what it means in practice when you know when you've direct flights from Atlanta, you've direct flights from from LA, you've direct flights from the major hub cities, which basically means that that pretty much all of North America is within two hops of Liberia. But development from Liberia moved, it moved west and southwest. So what you had is you had the four seasons in Peninsula Papagayo, you had residential development on that peninsula, you had residential development on the more the more southerly peninsulas, and this became a big high-end hotel and um expat's second home market. And north of Liberia, there was there was a saying, you know, or it was it it was thought north of Liberia was considered Nicaragua. So north of Liberia was considered this lawless area that was almost this this frontier land, you know, this is where this was a strip of land where where the Cold War played out in real time, where the Contras were training, you know, the the this the CIA by supposedly were were very deeply rooted in terms of owning and controlling the land. Um former Nicaraguan dictator was another huge landowner there. So this was this was bandit country. This was an area that that no one went. And it was peaceful and it was quiet, and I guess the the divested interest just wanted it that way because it was it was uh it was a buffer between um between Sandinista Nicaragua in the north and US interests in in Costa Rica in the in the south. Um so while all this boom happened in you know 45 minutes west and southwest of Liberia, the north was was completely, completely overlooked. And all that area of Costa Rica is absolutely beautiful. And I for for me it's in particularly beautiful this time of year, because this time of year we're we're coming towards the tail end of rainy season. So we got some some showers and some some some showery days, but also lots of sunshine, and you know humidity isn't for me, but I felt it was okay here, you know, there was there was nice breezes, it was fresh, and the way the coast is is is is organized. The coast is like is this kind of complex network of of bays and points and you know with these beautiful sandy beaches and coves, quiet, these are quiet swimming beaches where you know where the the tropical vegetation comes right up to the sand, you know, Costa Rica, the first 50 meters back from back from the high water mark are always public, stay public. They can't even be be used as a as a concession for for a beach bar or something like that. So the vegetation there stays. So the beaches in Costa Rica are unlike you know the vast majority of places that that fringe has been has been protected. The hills are covered, the the land that was owned by the by Nicaragu's former dictator was was seized and made part of a national park. So this is a little pocket that's kind of that's fringed on one side by a kind of a complicated coastline. You've got the the major national park inland and and to the side, and it's just this this little island, and it's absolutely beautiful. So I was there, I was there to um to meet with a group, a group that has assembled what I can say now is one or maybe the most impressive land bank I've I've ever seen. So this is a group that's made up of Central America's most powerful families. Um these are big, big names. I mean, you've probably been on some of their airlines, or um, you've probably drunk some of their alcoholic and non-alcoholic drinks, you've probably stayed in some of their resorts, you may have been a consumer if you lived in the region, you may have used some of their hospitals. Um these are big names, big household names with deep, deep pockets and the long-term perspective that it takes to put all this together. And what they've put together is is is truly exceptional in that they've put together a mix of properties that in in total amounts to over 7,000 acres, I I believe, with a mix of of suitability for high-end resort and certain quiet coves to you know beautiful elevated land with just just stunning views where more mid-range price homes and amenities and and and maybe golf would come. So they've got the pieces for they've got the pieces for a whole complex and diversified network of resort and residential communities. And um they're they're they're they're they're looking to us to bring our group buying power to to to kick start it because the the scale of this is it's is so huge. You know, first of all, they need to kind of drill down and decide where to start, and there's some obvious places to start, and then they they need they they need a group like ours that can can bring our group buying to the power to the table where we'll come, we'll get an amazing deal, and in return, this developer will get their project kickstarted. So, what I love about this now, just let me be really clear on one thing. If I I if I had a dime for anyone who's pitched me big land banks and what they're what they're gonna do, I mean the immediate reaction is to run. I mean, these big scale things almost never get pulled off. They only get pulled off by by groups like like this. So, you know, first of all, not only has has this group bought all the land outright, you know, other groups would come put together a network of options, and then they're kind of hustling to get sales or to get money, and they've got all these balls in the air. But this group went out there, they bought the land, they have put um between some hotel properties all already on there, they've plus infrastructure, they built 16 miles of road, and they built water infrastructure, they built fiber optic, you know, they're already into the area for 200, 200 million dollars, and they're taking their time to do it right. So, the as a general observation, you know, when you hear people hustling with big land deals, there is just, you know, there are just so few groups that could pull it off. And even this group realized that they can only make it work with another group with muscle like us. Um, but this place is is beautiful, and I'm extremely excited about working on working on the plans and working on the deal and what this could mean for us in terms of a very unique and special ground floor in the ground floor ground floor inventory. But outside of outside of these this resort, there's one I mean there's one idea that you know you could act on now, and for the right type of person, it's something that you should look at exploring right now. And so above in this area, so this is this is the kind of the armpit of of of Northern Costa Rica. So you you're looking across at, you're looking across at Nicaragua, and in many ways, this place to me captures the essence of what's the best about Nicaragua and what's the best about about Costa Rica. And by that I mean it's like it's got all the the natural beauty of Nicaragua, it's got all the quiet, beautiful people, the lovely pace of life, but it's just neater and tidier, and it's just that little bit more developed than than Nicaragua is. And then on the Costa Rica side, it's got that pristine Costa Rica nature, but it's without that kind of overpriced, over-extracted, oversold tourism product that you know I think you'll see in in many parts of Costa Rica, you know, the kind of the the the Costa Rica experience, in my opinion, or the the the the the Costa Rica brand experience is now in limited supply in in Costa Rica because it's become pretty Developed, it's become pretty mainstream. But you can still get it in pockets. You know, the southern zone still has that quintessential um Costa Rica experience and vibe, and this pocket up north has it too, and these views from the hills are absolutely stunning. So there's a there's a town, okay? And the some of the the the people I've been talking to, um some of the the investors in the group behind it have been describing the town to me, and you know, it just it didn't make any sense to me. So I I I couldn't really picture or understand how impressive what they're talking about is. So what I'm gonna do is I'm gonna put um put a slideshow of photos underneath this, which you know maybe you can you can click on as as as I talk or else come back to and and click on later. But there's this town, this town called La Cruz, and it sits on the edge of a cliff or a ridge. Okay, it's like a it's a Tico uh Costa Rica market town. It's you know really very pleasant, it's got lots of stuff, not a tourist town at all. It's more like a uh a town for the surrounding farmer, farming hinterland, and it's a big enough town, and all the houses and all the property looks into the town, and it's they're backing out onto just these most amazing views of of a flat plain below rolling hills, and then to the beat to the bay and to the to the seas. And I'm gonna share some some photos and video I took while at my lunch spot up there, which was called um the Mirador. And this again was a I saw no tourists there, it was a regular Tico place, and just these views are amazing. And there are houses, very ordinary houses, just normal houses, some of them even abandoned, in town that have these just panoramic views. So if you know, if you're an adventurer who wants to get in on the ground floor of something big that's going to happen, and you know, you don't want to wait for the the the residential for the the resort and residential to play out, or else maybe you want to do both. I would get on a flight and get to La Cruz and start knocking on people's doors and trying to buy these houses that go that go along the ridge. Because believe me, there are big plans for what's going to happen right along that ridge as as as as as you leave town. And um stunningly, stunningly beautiful um those those houses in town. You've got infrastructure right there. They're they're very much overlooked now because the views have no value to the locals. You have people from San Jose and the cities come up there for for weekends, um, but they're not interested in staying in kind of in the local the local town. So remember, San Jose is is a good close on five-hour drive, four and a half hour drive to to to La Cruz. So you're a long way from from Costa Rica, big towns and big cities. But the key to this is the Liberia Airport, because Liberia Airport is only 45 minutes away. And remember, pretty much everywhere in North America connects with either one or two hops to to Liberia. So this is a place that's that's set to explode um timelines. Who knows with these things, but I expect it's going to happen fast because Costa Rica is crying out for the next place, the next thing. Um this group have have all their ducks in a row, or their ducks largely in a row in terms of the big permitting considerations. They they've spent millions and millions and millions on on getting in a spot that that they can they can get permits, you know, 17 kilometers, 16 or 17 either kilometers or miles of of of road, an aqueduct to to bring water. They've they've built uh this is how far ahead of things is. They built a bilingual high school and they donated it to the local community. So it's public, free to everyone, and it's fully bilingual because they know they're gonna need an army of English-speaking locals to be able to cater to what they're what they're creating. So um, so La Cruz, um, as I said, I never imagined before I'd be saying um I'd be putting you know ground floor opportunity and Costa Rica and ahead of the path of progress in the same sentence to this extent ever again. I thought it was played out, you know, we've had very strong opportunity in the in the southern zone in recent years, but prices there have spiked, which is great news if for Rita members who've who've got in, you know, some of our ocean view lots that that Rita members could buy three years ago are valued at 250% now of what Rita members paid. Um but this is this could be the final frontier of the final frontier of of Costa Rica opportunity. And again, you know, the fact that it's just so so virgin and just so unburdened by past failed development, which can be the case in in some of these areas, it's a blank canvas to be done right. And with the with the people who are honing in on this area, you know, I'm as sure as one can be about this these things that it that it will be done right. So then moving on from that corner, my route back to my route back to San Jose brought me back to Liberia and then headed west to hit the coast, then back into the the areas where it developed in that kind of first or that that big boom of Costa Rica development. So I'm this is the area that just took off and exploded in the in the early and mid-2000s before before the great crash of 2008 and 2009. And again, this this terrain is is largely similar similar bays and points and beautiful sandy beach, nice sandy beaches, although some of them are kind of black, some of them aren't aren't you know stereotypically beautiful sand, some of them are black sand that can be a bit muddy, but some of the beaches are a mix of black and black and white sand, but again, just with the jungle coming right down to the sand, beautiful bays, just that that quintessential Costa Rica experience. And there I was looking at um some fire sale projects. So one of one of Costa Rica's biggest construction companies um post the last crisis, the 2008 and 2009 crisis, went in and bought up a load, a bunch of these failed or failing communities or portions of communities where there was development land. So the way this crisis played out, you know, sales at the of that the high-end stuff there fell off a cliff in 2008. You know, in the years running up to that, developers were developed, you know, what what happens in a hot market is you know, new groups start getting attracted, getting sucked in, and these new groups are overpaying for land and they don't know what they're doing, and then when the music stops, they find themselves in in big trouble. So this happened, and a group that we're connected with here out of San Jose went in and just just bought them and primarily just sat on them. And this is a group that is building basically their their core business is building multinational facilities. So all around me here in San Jose, well I dropped dropped dropped the car rental to a neighborhood called Belen, which is just I guess yesterday afternoon it was maybe a 15-minute drive in Sunday traffic, no traffic, it's probably a seven or eight-minute drive. And in this neighborhood, you know, you see Intel, Experian, you see all many, many big pharma, big tech companies have these multinational presences. And their building is building these facilities tailored to multinational specs. So they've had just an incredible run-up in their business because um Costa Rica and San Jose has done extremely well in terms of attracting those foreign multinationals. And it was even interesting, you know, as I brought back the car rental, the the people in the car rental place didn't even speak English, which is quite extraordinary for a tourism-facing business in a country that mostly targets English-speaking tourists. But that's a reflection on how strong the job market is for people with English, English skills. They can be working for Intel or they can be working for um for Pfizer. So um so this group has done extremely well, and now they're looking to start releasing the value in their portfolios. So I visited a condo project, which was the other side of the bay, but just looking over towards the four seasons in Peninsula Papagayo. Their condos were built pre-Crisis, 12, 13 years ago. They're delivered, they're beautiful, they have space for another 60 or 80 condos. Um it again is an opportunity for us to bring our group buying power to the table to kickstart that. Because what we're doing now is we're we're at the top table of the top tier of developers and investors and constructors who have everything except access to a group of buyers. So like this group up in the north, they've the money, they've the know-how, they've developed some of the most the the most amazingly delivered resort communities in in the region. Um they've the pockets, they've they've the know-how, but what they don't have is a plug-in with a with a group of buyers. And this group out of out of San Jose as well. They have everything. They've the land piece, they've the construction piece, they've the permitting piece. What they don't have is is access to a group of buyers. And when I can sit down with them and represent our group buying power, you know, it can just unlock incredible value because it makes it worth their while doing it. So it means that they they will be comfortable giving us inventory at our special Rita member only prices, and then selling the rest of the inventory through kind of unproven channels at much higher prices, but they're they're comfortable taking the leap if they know that they they have access to kickstart everything. And and that's where that's that's the value that we bring, and the value that we get in return, then, is those you know, the those prices that are so much less than than what other folks would would pay. So I'm I'm extremely excited about about this too. One was a was a piece of land, a huge piece of land that had a had a golf course on it at the time. Um it's all been it's it's all been left overgrown, but it's it's a beautiful piece of land. Some of it is Great Ocean Views, others flat and laid out as a golf course, which has become overrun, but it's a it's a big blank canvas. Again, all these that this group just bought this with cash because it because it was going cheap at the time. So, you know, there is there is no pressure to recoup interest, or there's there's just none of these kind of complications that I see in the spreadsheets and business models from from other developers, so they can offer inventory from a very, very low-cost base. So I'll be exploring that with them and their condos, these these were big condos, you know, in the region of kind of 1600 to 2500 square feet, which is beautiful views. Um, I'm negotiating with him on giving us access to a portion of the the 60 to 80 that they that they can develop on remaining the remaining plots. And um you know I hope to be to to to to be able to tell you about that in in in the near future. So I guess in terms of in terms of takeaways, first of all, congratulations if you got in on Samsara. Absolutely stellar, stellar deal. Um you know, just to be able to buy, to get so much more for less, to get to get those extra amenities, to get those extra benefits of ownership there, to buy in that that quiet cul-de-sac, to get all that and to pay like 100 grand less than what other folks pay for for similar condos, you know. I mean, that is that is sitting, that is sitting pretty. Um the area around La Cruz, up near the the Nick the Nicaragua border. If you're a pioneer, get on a plane today, just just check it out. If you're not a pioneer and want to vacation in a beautiful place, get on a plane and check it out. Just go, just go. And then south into these these areas that experience crisis. I mean, south of the the Nika border, but into these areas again that are 45 minutes west of Liberia. Um watch your Rita alerts about that too. I you know, I I think we we the the pieces are there for great opportunity in this corner. Um you know, unlikely any of these deals will will drop by the end of this year, but I'm hopeful into quarter one of next year we can we can be looking at some very, very exciting, exciting deals here. So that's all from me from the the glamorous um I've from the glamorous Holiday in Express. I have to look around me, that the name is so nondescript it, it it escapes me. Um I'm drinking weak coffee and I'm gonna jump in the weak Holiday in Express coffee and I'm going to jump in the shuttle now, go across to the airport, I'm flying to Mexico City via Guatemala, and then I'm overnight in Mexico City before flying to Cabo tomorrow morning. So it's not the end of the world to overnight in Mexico City because I have some meetings I I need to take there. But my logistics have been really, really complicated by the fact that I still cannot enter the the United States because of COVID regulations. So the the most direct route for me to come back would have been Liberia LA, LA Cabo. We're very, very smooth routes to get me to Cabo via via Liberia to the US and back down to Cabo. But because I've been in Europe just 11 days ago, I cannot enter, and and travel is still not permitted from Europe to the to the US. Um I could not enter the the US until 14 days have passed. So I had my choice to either either either hunker down and take a more direct route or just take the circuitous route and and get back a bit quicker. But thankfully, I think all that ends, I believe, on the 8th of this month, on the 8th of November, I think. But it's it's such a bizarre quirk that I haven't been able to fly throughout COVID from either Ireland or Portugal to the US. But I've been able, there's been no restriction on me flying from Mexico, which has had a much bigger incidence of COVID than those other places. But anyway, that's the that's the quirk. Um it doesn't, it's not a good look for the for for the US. It just doesn't seem to be, it's just interesting how it's played out that some of my meetings have been moved out of the US to places like Costa Rica and Panama and Mexico because of this issue. But anyway, we we move on and we um we play the cards we're dealt and um I'm looking forward to getting back to Cabo and um sharing more about what's been going on there.