Major Projects In Costa
Rica Put On Hold As
Credit Crunch Bites
The global credit crunch
is affecting the
emerging property market
in Costa Rica with a
number of development
projects being put on
hold. Many large hotel
projects in Costa Rica
are financed by US
banks.
These include the
Mandarin Oriental,
Hyatt, Saint Regis,
Regent and Punta
Cacique. All of their
construction currently
hangs in the balance,
depending on market
recuperation and bank
stability.
Construction on the high
profile us$800 million
Cacique development on
the northern Pacific
Coast spearheaded by AOL
founder Steve Case was
due to start next year.
But the project, which
includes two boutique
hotels, a spa, an array
of high-end home sites
and a tennis facility
designed by Andre Agassi
and Steffi Graf, is
unlikely to start until
2010 at the earliest.
It is also a blow for
Agassi and Graf whose
forays into real estate
are now floundering.
Earlier this year they
pulled out of a luxury
hotel resort in Idaho
which is experiencing
financial difficulties.
'In the current
environment, we do not
consider it prudent to
start construction,'
said Jorge Cornick,
spokesman for the
Cacique project. 'But as
soon as the market goes
back to normal, the
project will proceed, as
planned,' he added.
A St Regis Hotel planned
for the central coast
and a Regent Hotel
development in
Guanacaste, not far from
Cacique, are also in
limbo due to financing
concerns.
'We are pausing for the
moment, giving us a
chance to investigate
further how the
situation with the
capital markets might
play out,' said Regent
hotel developer Blaine
Kirchert.
The St Regis project was
being financed by
collapsed US bank Lehman
Brothers. 'The decision
to put the St. Regis
project on hold is due
to two main reasons, the
increase in construction
costs and the
uncertainty of the
international real
estate market,' said
Grupo Genesis marketing
manager, Gabriela
Tijerino.
Another Lehman
Group-financed hotel
project, Manzanillo's
Mandarin Oriental Hotel
Group, also finds itself
on shaky ground, since
its sponsor bank
recently filed for
bankruptcy. Because of
financial worries and
instability, the entire
project may be postponed
or even cancelled.
There are also concerns
about who will use these
projects when they are
finished. Americans make
up the largest groups of
holiday visitors to the
country and there are
fears they will not book
as many trips due to the
credit crisis.
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