Costa Rica, known as one of the best agriculture hot spots in the western hemisphere, is now growing oil fields for the Biofuel markets.
One program in particular has been capturing the attention of investors, is called Multi Purpose Real Estate.
Multi Purpose Real Estate (MPRE) combines capital appreciation strategy with one of the fastest moving growth sectors since the PC revolution – Biofuels.
For the savvy new ‘green investor’ real estate always looks good, especially real estate in the tropics, in the 10 year path to development, and now more than ever in such a soft market.
Central America has been a rising star in terms of emerging markets, and especially land banking, so the combination of Biofuels, bear real estate prices, low labor costs and the ability to grow high yield oil fields throughout the region, provides a double edged sword for opportunity.
United Biofuels of America (UBA™) is one company taking full advantage of this opportunity. UBA is a biofuel development and advisory organization working at the intersection of emerging Biofuels knowledge and the market demand.
Based in Costa Rica, UBA is the first regional biofuel consultancy & development firm established in Central America.
When asked to summarize Multi Purpose Real Estate and the Costa Rica National Biofuel Program, Michael Klein, the Chief Development Officer for United Biofuels of America said. “The National Biofuel Program for Costa Rica is a broad platform to help achieve Costa Rica’s 2012 biofuel blend target of 10% biofuel as well as the long term goal of being the first country to become carbon neutral by 2021.”
Continuing, “Multi Purpose Real Estate is one of newest and most promising programs that we have launched in this initiative. Essentially we offer investors that are already in or will be entering land banking market in Central America, the ability to turn land that would be otherwise sitting unused into a Bio-oil Field that generates income while their land continues appreciating.”
Further adding, “We are seeing a resurgence of investors looking for these types of emerging opportunities… and what we are providing is win-Win- WIN set of circumstances… a product, in a market that has a demand that is so large it hard to comprehend.”
When asked, how can the micro-investor take advantage of this new market, Mr. Klein said, “It’s been difficult for the micro “green” or biofuel investor… remember the green revolution is still in its infancy, and with that comes big opportunity and a degree of risk. It seems currently you have to have a few million to invest or you can’t break into the market, except at the penny stock level. And if you put a little money into a penny green stock… it’s essentially a hands off or no-control investment. If you have $50,000 to $100,000 to invest and you are looking at the green market, you are looking for as much security as possible. Real estate guarantees this, purchasing a lot or two, and being able to grow biofuel on this property while on a ten year land bank, or build plan, just makes sense… that’s what Multi Purpose Real Estate is.”
What does UBA do with the oil?
“We have guaranteed end buyers for every gallon of bio-oil we can grow. We grow different feedstocks, generally in combination, to produce crude oils, which is converted to Biodiesel.
“We are working with the Costa Rican government (MAG), RECOPE, and ICE. The government has recently moved to the private sector to take the lead in its biodiesel development; signed and approved legislatively. Costa Rica has a 10% biodiesel blend mandate by 2012 and carbon neutrality for the entire country by 2021. This opens the door for multiple opportunities for micro investors, land owners, and of course for mid market and larger investors as well to enter a guaranteed market, in one of the few industries that actually significantly grew through the economic downturn, and continues to grow. The Global Market Study, initially in 2007, estimated $4.2 trillion worth of investment by 2030 would be needed to meet demand; they have recently admitted they underestimated and now say $10.5 trillion will be needed to meet demand.
“And here is my favorite quote, by Goldman Sachs, – Investing in biofuel is akin to going back in time to 1990 and investing in the PC revolution.”
Continuing, “Look, here are some hard and interesting facts that every potential investor should keep in mind… the aviation industry consumes some 54 million gallons per years, and Jatropha has been chosen as the feedstock of choice for a drop replacement. We are working on only one aviation project that requires 1,000,000 per day, just for continuous flow testing. That’s just one project and only for testing! Further, Ford, GM and Chrysler have announced that their 2011 mid size SUV are compliant for B20, this B20 blend has been mandated in the US mandated… but if you are a refinery in the US, you are operating at 10% capacity for biofuels or you are already out of business…. refineries right now in the USA or going for pennies on the dollar.
“And are you going to grow biofuel in the USA? What?… corn, soy… we all know the problems around these feedstocks… first they are food crops, the net energy of these crops are barely worth it, and the cost of growing this in the US makes them a constant margin battle. And if you are not operating at large economy of scale, you can’t break in. So where do you go to grow? Because that’s where we are on value chain…. growing feedstock… not sitting on an empty refinery, waiting for feed stock, or in a market bid-battle for a scarce commodity. Are you going to go to Africa or India to grow? I would take a real hard look at the issue those companies that have gone that route have had to deal with, and they are still trying to work out these issues… at the expense of watching their break even horizon disappearing from sight. They have been overcome with issues, from labor to improper strain selection, with 80% less yields than expected… the list goes on and on.
“The answer at least for the individual American investor or investment company, in terms of growing feedstock, is to look in their own back yard… Central America. We have governmental support, the labor is not expensive, land opportunities are everywhere, logistical costs are less, and if you really want to improve ROI you would not try to extract the value by shipping the oil out of the region, but go from seed-to-pump regionally… grow it here and sell it right here in Central America. The demand here is as high as anywhere, if not higher, with 80% of the vehicles in Central America running on diesel… bio-diesel here makes sense from investing to growing to consumption.”
TCRN, any final words?
“Money does grow on trees! Biofuels are renewable, good for the environment and good for the investor. To find out more on Multi Purpose Real Estate or commercial development opportunities in Central America contact us at [email protected]”