Foreigner appreciate Costa Rica as one of the prime countries to invest in tropical timber such as teak plantations. Apart from the tropical climate and fertile soils which are suitable to trigger tree growth, the country has a solid track record of political stability and some of the most investor friendly laws in whole Latin America. Costa Rica is known as the Switzerland of Central America through its history of piece, being a democracy and attracting more than 2 million tourists per year.
In Costa Rica, the tropical timber industry is more mature than in Panama and several tree plantations are very close of completing the first harvest cycle, offering also excellent seedlings selected from only the very largest trees of the prior growth cycle. Teak wood is the most common tropical hardwood planted for timber investment purposes in Costa Rica. However, in general land prices and labor costs appear higher in Costa Rica than in neighboring countries such as Nicaragua and Panama. Thus the opportunity to invest in tropical timber in Costa Rica lies not necessarily in Greenfield projects but actually identifying existing and more mature tropical hardwood plantations which are for sale.
Transparency on Prices unveils attractive Timber Investments
The market for seasoned teak and other tropical tree farms for sale in Costa Rica offers some highly attractive buy opportunities. Some farm owners simply need to sell since they cannot afford to continue the required maintenance expenses. Without proper maintenance of the teak plantation, the value of the hardwood investment will dramatically drop while in contrast the value of a well managed teak plantation in year 25 can be roughly estimated at around USD 130,000 / hectare based on conservative assumptions. Currently the market is very attractive as there are plantations for sale of 8 – 12 year old teak trees asking to pay USD 20,000 – USD 30,000 per hectare (Source: http://www.investingalternatively.com). Thus buying into such a plantation can allow to triple the investment during the remaining years till harvest while also benefiting from reduced maintenance and pruning costs than for younger plantations. Buying into existing tropical tree plantation avoids many of the pitfalls and risks than when starting a new plantation from scratch. Therefore the timber investment opportunity in Costa Rica lies in identifying existing teak plantations at attractive prices, which can reduce the investment horizon and benefit from one of the most stable investor friendly environments currently available in Latin America.
The Search for Seasoned Teak Plantations
Teakwood is a highly interesting timber investment which can yield between 10% – 12% annual compounded return during a 20 – 25 year investment horizon when properly done. Teak as the prime tropical hardwood is most interesting at mature ages of 20 – 25 years, since the quality of the hardwood is better than younger teak. The commercial value of one large, straight and old teak tree is considerably higher than the equivalent volume of several younger trees, as the share of commercial usable volume is higher. Thus from an investment point of view, it pays off showing patience to let the teak trees grow to maximize their commercial value. In reality, only very few investors have the capabilities to stay invested during such a long time horizon. Thus a way to effectively shorten the investment horizon is to buy into an existing teak farm which has been planted 8 – 12 years ago, therefore cutting the investment horizon by two.
In reality, buying an existing teak farm requires careful selection and due diligence. Especially it is crucial that the teak trees are straight, have been properly pruned and thinned, meaning there are no lateral branches at the lower end of the trunk as otherwise the trees loose their commercial value. In addition the density of the plantation needs to be such that the trees have enough space to grow in size horizontally. Thus the search for seasoned and well-maintained teak plantations is cumbersome and time-consuming. Interested buyers thus spend a lot of time searching for suitable hardwood plantations meeting their search preferences while avoiding to face deal killers such as the well-known example of unreasonable pricing expectations of the seller.
The exclusive partner network in Costa Rica allows http://www.investingalternatively.com to identify larger numbers of teak plantations for sale than any other broker. Timber investment opportunities can be listed easily and allow the small owner of tropical tree farms (5 – 50 hectares) as well as the large plantation owner (100 hectares plus) to post their farms for sale and receive the attention of sophisticated timber investors. Apart from teak plantations, the directory also includes other exquisite tropical tree species (e.g. Acacia or Melina) of interest to timber investors as they can offer advantages such as shorter harvest cycles. The directory is currently focused on Costa Rica and Central America but also welcomes teak farms, tropical tree farms, planted trees or other similar timber investment opportunities in other exotic countries which are otherwise hard to identify.
# # #
http://www.investingalternatively.com - Investing Alternatively is the pioneer internet platform specialized on teak and tropical tree farms for sale. The directory is the leader in enhancing transparency on prices for teak and other tropical timber investments by offering a directory to allow for quick comparisons and the identification of interesting tropical tree farms for sale. Interested buyers can store their search parameters and will receive immediate notification of any new timber opportunity matching their search criteria.