Costa Rica has been the forerunner in Central American real estate for many years. This has investors wondering if there is still room for growth and opportunity in Costa Rica.
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.
