98 Building in Costa Rica, Process, Costs and Design

[Richard Bexon]

Good morning, Cristian, how are you doing?

[Christian Venegas]

Hey, Richard, I'm doing fine, thank you. What about you?

[Richard Bexon]

Yeah, good, good. I appreciate you taking the time out of what I know is a very, very busy schedule. I know that you're building multiple properties and developing multiple properties here in the southern area of Costa Rica but yeah, I really appreciate you taking the time to be on the podcast with us.

[Christian Venegas]

You're very welcome, let's have some fun here.

[Richard Bexon]

Definitely, definitely. Well, I mean Cristian, you've been in Costa Rica your whole life but I mean specifically, I mean the past six months, what surprised you and I mean, what trends are you seeing?

[Christian Venegas]

Yes, Richard, I can say I have been here in Costa Rica my entire life. I'm Costa Rican so yes, since I've been here. You don't need to tell us how old you are, don't worry.

Well, what has surprised me in the last six months and actually since the last year, I could say is the fact that despite the COVID-19 virus situation which affected in a big way the tourism here in the southern pacific sun as it did in the entire world but thinking about construction industry and even real estate as you may know, that have been totally different here. I can tell you we have several projects under construction right now, also a diversity of projects in our design table.

[Richard Bexon]

Explain that a little bit with regards to diversity. I mean, what stuff, I mean, from what extreme to the other? I mean, what do you mean by that?

[Christian Venegas]

But mainly beach houses in the area, luxury houses for second home for retired people or people that wants to invest in a project to generate some income with rentals but also small condominium projects, small boutique hotels, commercial things like that. So I think that all that is filled by people coming down to settle here. People looking to buy properties in green to build or to develop for business.

So construction is still strong here and growing, actually growing constantly. You can see all the contractors being really busy and design firms like ours also getting more and more work. That's not the same thing, an example in the Costa Rica Central Valley where construction industry as many others decrease it due to the pandemic shutdown.

My guess is maybe people being afraid about the virus and seeing the good handling the government did here, they decided to move to this area and invest. Also people started to get frustrated to be in closets or lock up for the quarantines and all that and together with the remote work with each being in trend right now. So we have nomad workers who also bet to come to Costa Rica and work from home in a little piece of paradise here.

Yes, that's only my assumption but together with another possible reasons, it has made our freedom and in general terms the construction business here in the area stronger and that is really good.

[Richard Bexon]

Cristian, are you seeing a certain type of trend in design of homes? I mean in the late 90s, 2000s it was very colonial. Are you seeing a move to more contemporary or contemporary colonial and also is there anything different being added to homes being requested now that wasn't before?

[Christian Venegas]

Yes, absolutely. There was a colonial style in trend back in the 90s beginning of 2000 until 2010, I could say. Right now, we mainly design second homes for people in the US, Canada and Europe for people who is coming for one or two months a year.

That means they're going to put their houses on a rental or property and property management program with local companies to rent them and generate income the rest part of the year. So due to that, the majority of clients are looking for what the actual market is asking for. That is modern contemporary architecture.

Houses with shed roofs or flood roofs, open layouts with large sliding glass doors and large windows to maximize the view. Three bedrooms, two or three and a half bedrooms, a plus sedan or four bedrooms to be used for a bunk bed distribution for large families or even friends groups. We're looking at these houses for sure for sure rentals on web platforms.

Pool is a must with shallower areas for sun baths where you can put inbuilt pool chairs. These houses will need to have an owner's close-up to them to leave their personal belongings locked up. Meanwhile, the property is on the rental program.

So yeah, it's contemporary modern. By the other hand, quite a lot of clients are expats or retired people, again from North America and Europe mainly, looking to live here in the beach jungle environment. In those cases, the designs are more open to the desires and dreams these persons want for the day-by-day living and some other spaces can be added to the house like gym, ranch, wet bar, saunas, yoga decks.

We have designed these like children's playgrounds in some houses for example internal ruffle walls to work up the climate and the list continues. There's a big variety of what we can design and do in these cases and in general terms the majority of people is also looking for green solutions like solar water heaters, pruvial water reutilization for gardening, toilets, tanks, for the laundry use. Also LP gas system for stock and dryers.

This reduces the electricity consumption which is expensive here. Other considerations, the crossing air ventilation to reduce the use of air conditioning units and also I would say solar backup systems for the main electrical circuits among others. So that's what is added.

[Richard Bexon]

Some interesting stuff that you said there, I mean reusing the gray water for irrigation in your garden I think is smart because I mean you don't understand how much water a washing machine uses until you actually start to collect that because I started collecting it recently, especially during the dry season here to water my garden. I'd use a biodegradable detergent and then with that then I'd collect the water from it and it was incredible the amount of water that I realized that a washing machine uses. So if you're able to produce a septic tank system or something that ables to capture some of the gray water coming off that and use it for irrigation, I think that's very very smart.

[Christian Venegas]

Yes, we can have two solutions. I mean we can collect the water from the roof, the rain waters, put them into a tank. Either we use gravity distribution to irrigate the lower gardens or use a small pump actually with a solar system to feed that water pump up to another areas on the ground or to use it for the laundry areas, for the toilets and we're going to save on potable water because we are utilizing, we're using this water in there.

As you recall, there is a lot of water using the washer machines but also there is another kind of solutions that takes the gray waters actually getting into the septic tank. We can build two phases tanks. One being the septic, the normal septic tank and the other one is a kind of anaerobic filter that's going to trade the water and it's going to deliver 95% pure water to the environment.

So we can reuse that also for irrigation.

[Richard Bexon]

I mean yeah, I mean I think once you start getting into it, I mean there's many many things that you can do just because again, you know, I mean Costa Rica has a lot of water, it does, but there are times a year where it has an abundance, there are times a year where you know it's kind of dry here. So I mean I think factoring those things into your home, number one, it helps the environment but also number two, it saves you money and then thirdly is, you know, it's just there's a sense of pride from it as well of doing it and it's not, it doesn't need to be that costly. It doesn't need to be cost prohibitive.

It's going to cost you tens, hundreds and thousands of dollars to do it.

[Christian Venegas]

No, absolutely. I mean in this is just very, it's cheaper, it's cheap to just get a tank to be a polyethylene kind of plastic tank and bore it down on the ground so you don't want to see it. It's just a matter to have that installed, collect from the pipelines, from the downspouts directly to the town, make a small treatment to the water and that's it.

It's not going to cost you thousands of dollars. It's something very simple.

[Richard Bexon]

Definitely. I mean a lot of people ask me about the cost per square foot or cost per square meter to build here in Costa Rica. I mean it's difficult because again, it's what type of home, you know, do you want but could you give us an idea of what like something that like is a standard like comfortable home up to a luxury home would cost per square foot, give or take?

[Christian Venegas]

Right. Well, Richard, that depends. Yeah, as you say, several items.

One is the project complexity. The land topography has a lot to see on that. The soil bearing capacity which affects the foundation's design and the quality of the finishes.

[Richard Bexon]

But just give us an idea, I mean, of just like average and then what's high end. Right.

[Christian Venegas]

Nevertheless, I can say in the actual market in a relatively flat lot with good soil capacity and good quality finishes, the price range per square meter could go from I would say $1,200 to $1,500 per square meter. Prices higher than that can be found in top, very top luxury projects too. But that's the standards.

I would say $1,200. I mean, taking account, yeah.

[Richard Bexon]

No, I was just going to say, I mean, just converting that into square feet, I mean, you're probably talking what $135 to $160 per square foot for kind of a standard and then you'd probably be looking what closer up to the $200, $180, $200, $220 to square foot for the high end luxury stuff. Right. Exactly.

Okay. Okay. I mean, just to give us an idea, because a lot of people, Cristian, have this dream of building a home or maybe they have land in here in Costa Rica.

What is kind of just the brief process that you go to, you know, from someone wanting to build a home from the idea all the way through the end? I mean, just give me the kind of the rough steps on that.

[Christian Venegas]

Okay. Okay. Yeah.

Well, let me see if the follows. First, number one is the first meeting with the clients to understand the needs they want to fulfill with the future building. To have an idea about the project size, that's very important, and the budget they have.

In this first meeting, we define number of rooms the house will have, type of architecture, special requests to taking account, et cetera. That's the very first step. Number two, I will say, with a list of wishes our clients want, we make a site visit to the place.

This step is very important because here is where we walk the property to understand all the aspects of it, like accesses, terrain, shape, topography, orientation, sun path study to understand the sun rays and shadows and all that, the breeze flow, and most important, the views. Views are all here in this area, so ocean views are the most wanted properties on our main field too. We designed to maximize the view.

Okay. Number three, with all this information gathered, we make the first program proposal for review. Several meetings after, we will have a final program, totally customized and unique.

I can say every project we design is different. We don't make a copy-pasting. All of them are designed from zero, so this is very important for us.

After that, number four, after the program, we are ready to proceed with 3D model and volumetric, where we define aspects like roof lines, shadows, heights, double heights, walls, and things like that. Once we have this defined with the client, we continue to photorealistic renders with the 3D model producing these renders, so we will be able to choose and apply the different finishes and materials on the virtual project, such as tiles, cabinetry, paint, railings, bed sinks, everything. In this stage, the client will see the built project virtually.

They will see the built project without even having installed a nail. We can take decisions on that here. Number five, we will develop the construction drawings after that, containing all the technical specifications and designs.

I mean architectural, structural, mechanical, and electrical set of plans. This set is the one we will use to submit for construction permit before officials. So we are in the process to get a permit here, but number six, meanwhile, we collect all the requirements needed to start the permit permitting process.

We can bring the plans in parallel to contractors or to construction companies, most of them recommended by us or recommended by their parties. This is a total transparent process, so there is no problem with that, to help the client to make the quoting process and be able to choose the right and more competitive option. In some cases, Richard, the price is not the only factor for a decision to take, so we can evaluate together with them the different variables.

Meanwhile, we collect all the requirements needed to start the permitting process, as I said before. But in our case, all is on our side, so the client won't have to worry about this process at all. All the process is digital now, so we make all the procedures before engineering boarding, for the approval stamps, health ministry, environmental studies for the ability, insurance, and finally, the municipality construction permit.

All is on our side, so that is hassle-free, or it's going to be entirely on our side of the line, and don't have to worry about anything of this.

[Richard Bexon]

And I mean, how long does a home, again, depends on the size of the home, I mean, how long does it take to build a home, would you say? I mean, between x and y months, you know, sometimes I hear nine months, sometimes I hear 14 months, sometimes I hear 16 months. I mean, what would you typically say the average is to build a home in Costa Rica?

[Christian Venegas]

It depends also on the size, but for a medium-sized home, I would say for 300 square meters home is going to be, in our case, around 10 months, just one single story. Could be a little more if we have two or three stories, but average 10 months.

[Richard Bexon]

Okay, okay, that's good to hear. I mean, is there anything that you see, Cristian, with regards to a gap or opportunity in the market for someone looking to develop a home, you know, to rent or sell here in Costa Rica? I mean, where do you think there's opportunity?

[Christian Venegas]

Yes, nowadays, I think it's easier than ever. I mean, we have expats living here in the area for over 30 years ago, and more in some cases. So, those pioneers probably came here just to live in the middle of the jungle and, you know, relax.

Nobody at that time imagined what the internet could do with platforms to rent to people in all around the world, literally at a cliff of distance. That opened a large market and an opportunity to generate income with your property here that we haven't before. Beside that, we have another incentive here.

There are not major hotel chains or big lodging facilities in the area. Majorly, we have boutique hotels and then just villas everywhere. So, I think there is a market in attendance, and the houses for short-term rentals are taking this market so far.

Also, I have seen digital nomads, for example, expat families too, or couples looking in Facebook groups for long-term rentals, and the host there are published every day. I can see you every day. There is also an interesting market here to attend for those people looking for long-term rentals.

By the other hand, we also serve several small developers in the area who buy property. They buy properties just to build and sell. There is a good profit margin here if you move your cards correctly.

I mean, choosing the right place, that's very important, choosing the right place and developing a really nice design which will make somebody fall in love with it. So, I will see these three major gaps or opportunities. As you can see, there are four different types of businesses and markets in the area.

Okay, great.

[Richard Bexon]

Yeah, I mean, I agree. I mean, especially, you're in the southern Pacific area, you know, Uvita, Dominicao, Hachao, even further south, Torres Rios, Osa. I know you live down there in the Parma Sur, right?

Parma Sur, right. Yeah, so you're down there in the Parma Sur, that's your area. I mean, that area is just seeing...

Okay, your office is in Hachao.

[Christian Venegas]

Right, I travel there, but it's just 25 minutes travel from the Sur to here in Hachao. Very near.

[Richard Bexon]

Yeah, I mean, it's incredible the amount of people looking to kind of move to those areas and there is a huge lack. I was with some clients yesterday who were renting until November and then they're like, I'm not too sure what I'm going to rent after that. And just a lot of clients that we have looking to relocate to that area, you know, it's very difficult to find long-term rentals.

So I think that there's a huge opportunity there for long-term rentals if you can find them. But my last question for you, Christian, if you inherited $500,000 and had to invest it into a business or real estate in Costa Rica, what would you invest it in?

[Christian Venegas]

Okay, that's a really easy question, Richard. I mean, probably if you ask an economist, he will tell you he's going to invest in the stock market or things like that. But me, being a construction engineer and project manager for so many years, absolutely, I will look to buy property and invest in that.

For example, with this parameter of the 500 grand, I would look for a $150,000 green property to build and then I will build a nice 350 grand house, $350,000 house. And with that investment, I could sell it in the market, in the actual market for around, let's say, $800,000 or so. That represents more or less 50 to 60% of return of investment or more depending on the view.

If you had a really nice view, you can sell it even more. I have seen houses selling here in $1 million, nice properties. So there's this opportunity to invest your money and get a good profit at least.

Other opportunity I see having even more money to invest would be probably vertical apartments, buildings. These vertical apartments, buildings, there's nothing like that here. Well, we have just several of them, so small power projects of that kind of condominiums here.

We have almost nothing like that here. And that could be a good prospect for the near future too.

[Richard Bexon]

Definitely. Well, Cristian, this has been great. I mean, great info for anybody listening in here.

Someone that's so ingrained in the market and giving your opinion on that and also building here in Costa Rica as well. So Cristian, really appreciate your time. Anyone that wants to reach out to Cristian, I'll put all of his contact details in as well as his web address as well as you can come and take a look at some of the projects he's worked on.

And I just want to really appreciate, well, thank you very much for your time, Cristian.

[Christian Venegas]

You're very welcome, Richard. I'm glad to be of help of this conversation with you. It has been very, very nice.

[Richard Bexon]

Fantastic. Thanks, Cristian.

[Christian Venegas]

Buena Vida. See you.