The province of Guanacaste is Costa Rica’s hottest spot for tourism development–and the airport itself is credited with sparking the boom.

Ninety percent of the service to the Liberia airport is currently provided by US carriers, including Continental Airlines, which operates nearly 20 flights a week, American Airlines, Delta, Northwest, US Airways and United. A number of Canadian airlines also serve the airport, largely on a seasonal basis, along with domestic and Central American flights operated by Nature Air, Grupo Taca and Mexicana.

Costa Rica relies heavily on US tourism and investment–a fact that’s not likely to change any time soon–but as the Minister of Tourism, Carlos Ricardo Benavides, told La Nación, the nation’s leaders are also aware of the value of diversifying its markets.

First Choice Airways is the only European airline currently flying into Liberia, with a weekly flight to and from London. The ICT is presently negotiating with charter operators in the leading European markets in hopes of increasing European traffic to Guanacaste by late 2008 or early 2009. The head of the Guanacaste Chamber of Tourism noted that there is also interest in exploring the possibility of regularly scheduled commercial flights to the province from European destinations, particularly in England and France.

There has been talk of privatization for years; I once worked for a company that was hoping to become an ISP once the market opened up. That was over ten years ago. A privatization initiative in 2000 was tabled after being challenged in court and meeting with the disapproval of many private citizens.

Both the US-Central American Free Trade Agreement (CAFTA), and the telecom privatization it calls for, remain controversial topics but it seems clear that, this time, things are in fact going to move forward.

Of course plenty of steps remain to be taken between yesterday’s vote and the actual appearance of third-party Internet and cellular service providers, but those of us here in Costa Rica are already wondering how soon the effects will become visible to the end user.

My experience with Costa Rica’s telecommunications services has been very good. Phone service–what’s more, reliable phone service–does extend even to the remotest towns, and high-speed Internet is increasingly available as well. One of the goals of privatization is that competition in the marketplace will result in a greater range of services and options for the end user, and maybe even lower prices.

This blogger is looking forward to seeing how it all plays out.

(This Reuters article on Costa Rica’s telecom changes, dated April 3, provides some additional information on the issue.)

Costa Rica has benefited from being the most stable and democratic government in Central America. Its government has been democratic since it’s independence in 1948. Costa Rica has no army and its citizens enjoy one of the highest life expectancy levels in the Western hemisphere. The combination of perfect climate and political stability has contributed greatly to Costa Rica’s success with real estate investors.

Other incentives have helped Costa Rica’s popularity, including no income taxes on foreign income earned and no capital gains tax. Of course, Costa Rica has always been able to boast about its scenery, including beaches, volcanoes and tropical rainforests. It also offers the best medical facilities in Central America.

Despite these benefits, sales have already seen a slowdown from 2007 numbers. Luis Mesalles Jorba, an economist with the financial consultant organization Ecoanálisis, is an expert that believes these effects will be limited. “Most of the investment in Costa Rica is of the prime market, not the sub-prime market,” he explained. “There will be some effect on the Costa Rican economy, but the investors here are more the prime market people who don’t have to ask for credit.”

Many Costa Rican developers and real estate agents aren’t taking chances. Marketing efforts have been expanded and shifted to cater to the European and Canadian populations, who have benefited from the increased global purchasing power of their currencies.

Although the rate of US investors has been dropping recently  this does not mean that all opportunities in Costa Rica real estate are tapped out.

North shore realtor Becky Crowler corroborates that the surf tourist regions of Tamarindo and Flamingo are tapped out for real estate bargains. Some development opportunities still remain for small business and larger holdings, but new investors who want to maximize their capital money are better served in the less populated areas. Neighboring areas in the west coast regions, like Playa Conchal and Playa Potrero, still offer some good deals.

It’s certainly not hard to find ultra-luxury condos in Costa Rica for $2,000 per square meter (roughly $200 per square foot), but you can also easily find a San Jose home near the cultural center and the capital of Costa Rica for US$1,000 – $1,500 per square meter.

The Guanacaste region is currently undergoing significant development and offers some interesting prospects for investment properties. It was only nine months ago that the first large grocery store, complete with air conditioning, grocery carts, and computer check out, opened its doors in El Llano 20 minutes outside of Playa Tamarindo. The grocery stores are just the beginning of what may come along Guanacaste’s “gold coast”, as it is often called. There are two major commercial centers sprouting up on the Huacas/Conchal intersections that are slated to open next month and next year respectively, totalling over eighty units.

Business opportunities and commercial real estate properties still offer much in the way of development throughout the country. Internet cafes, restaurants, hotels, and casinos have only begun to become a more established part of the investment real estate market. American food franchises such as Subway, TCBY and McDonalds are moving into Costa Rica at an ever increasing speed.

Transportation is key in finding areas of the most growth. The Costa Rican government has made massive investments in road infastructure. Recently, President Oscar Arias met with developers in Playa Langosta to improve the roads in Langosta/Tamarindo and other southern areas (Paraiso-27 de Abril route). Since April 2007, there has been a complete repaving of the road which leads from Villareal (just outside of Tamarindo) to Belen (the main route to the Liberia Airport).

Costa Rica still offers good investment opportunities in what is arguably the safest region of Central America for foreign investors. The key is knowing where to look. If you purchase in highly developed areas you will pay a premium and look to compete against the growing number of luxury hotels. However, there are still areas like Limon and Puerto Viejo on the East Coast that are increasingly drawing tourists and thus attention from investors interested in emerging investments properties.