Costa Rica beach construction sags as crisis bites

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Thu Mar 19, 2009 12:12pm EDT


* Decline in tourism to Costa Rica's "Gold Coast"

* Most construction halted

By John McPhaul

TAMARINDO, Costa Rica, March 19 (Reuters) - Once-bustling construction sites on Costa Rica's Pacific coast are lying silent as a real estate boom fueled by tourists and U.S. expatriates slumps due to the global financial crisis.

At a dozen building sites around the picturesque Tamarindo resort town, where workers once crawled up and down hulking concrete structures, now only security guards stand vigil in the midday tropical sun.

The site is part of a series of beaches known as Costa Rica's "Gold Coast," which became one of Central America's hottest property spots when a local airport began handling international flights six years ago.

Now the beach, normally crowded at this time of year, Costa Rica's busiest tourist season, is half empty as cash-strapped travelers opt to stay at home.

Tourism is Costa Rica's No. 1 source of foreign exchange earnings, so any dip can have a major economic impact on the country, also known for its eco-lodges in tropical jungles.

"We didn't expect this to happen, no one saw the crisis coming," said developer Guillermo Cubas, whose six-unit Brisas del Monte condominium stands idle.

Cubas' bank cut off his credit line last year when Costa Rica's banking system suffered a liquidity shortfall amid the turmoil in global markets.

Guanacaste province, where Tamarindo is located, is reporting a drop of nearly a third in hotel occupancy rates for the first two months of 2009 compared to 2008, according to Pablo Solano, the head of the national hotel chamber.

RUMBLING TRUCKS, OVERFLOWING SEWAGE

Hotel owners are warily eyeing the beginning of the low season, which starts on May 1.

"The number of reservations is not encouraging," said Yahira Alvarez, a sales manager for the luxury Diria Hotel.

Century 21 representative Franck Viale said real estate business is off 90 percent from last year.

Construction is still visibly active on only one building in Tamarindo, a seven-floor commercial and residential project, with luxury condominium units worth $475,000 to $1.4 million.

The building's owner, New York developer John Rosen, is financing the project with his own money and hopes to tap the growing numbers of U.S. baby-boomers set to retire.

But the days when buyers would snap up units even before they are built are over. "No one is buying until it's done," he Rosen said.

Some think a lull in the pace of construction is a blessing in disguise.

Construction of new hotels and condos along the Gold Coast outpaced the capacity of Costa Rica's government to provide infrastructure, causing health problems related to the dumping of untreated sewage into the ocean.

Environmentalists worry that the development threatens the habitat of animals in the region like macaws, monkeys and the endangered leatherback turtle.

(Editing by Patricia Zengerle)




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