Beachfront Land For Sale - The risks of concession land.

Beachfront Land For Sale - The risks of concession land.

Costa Rica Realtor Scott Cutter in Manuel Antonio

In regards to beachfront opportunities here on the Pacific coast of Costa Rica, there is both good and bad news.

The good news is that there are beachfront or walk-to-beach opportunities here that provide you with fantastic value propositions which are close enough to prime areas to have accessibility, but still far enough off the beaten track to be affordable and opportune investments.

Obviously most of the beach front options in more developed areas like Jaco or Manuel Antonio are going to be in either finished condominiums, luxury homes or lots at higher prices, but provide easier use, more solid rental potential, and easier liquidity in a short term cycle.

We often get inquiries on inexpensive beachfront properties which we represent which tend to fulfill the dream and vision that so many potential investors are looking for in a Costa Rican purchase. These opportunities do exist and can be fantastic, but like in any market, when you look at the market and see something that appears too good to be true, there is usually a catch and in many cases, concession or non concessioned beachfront properties here are a great example.

Lets start with some of the generals..

95% of the Costa Rica coastline is Maritime zone which means that it is government owned land, the first 50 meters of which is inalienable public domain. The next 150 meters is a lease land which can be used or held in concession, but requires many legal securities.

First you must have a duly approved regulatory plan, then subsequent concessions for individual property within each plan. As an experienced Realtor here on the Pacific coast, there are a handful of concession properties in Costa Rica which we have and continue to represent, but as a general rule I advise most of my North American clients who are not developers with deep pockets and where the risk vs. reward analysis can allow for some concession opportunities, to avoid concession properties here in Costa Rica.

With beachfront land, the owner only gets a possession right, never full ownership. The State, through the City, grants the possessor the right to be on the land, (concession) but this limited rights are subject to State supervision, control, and mainly, revocation at any time, (prior to revocation a full economic compensation must be paid to the individual).

We have clients who find inexpensive beachfront land who are willing to spend the time to understand the law, and also are OK with assuming the risk in exchange for having the beachfront location at what can be in some areas significantly reduced pricing. As a general rule, if there is not a well established and tested regulatory plan in place and an existing concession with a history that can be tracked and verified, the risks simply out weight the rewards.

Another beauty on another beautiful beach...

Another big difference between a normal real estate investment and a concession property is that normal real estate does not require the owner to be physically present on the land all the time. But since a concession property only gives you the right of possession and not full ownership, it requires physical possession of the land, at the very least by means of a third party, such as a guard.

This also makes concession properties an easy target for squatters, because if they can access a piece of land and sit on it, after a time it can be quite a legal battle to take them out.

As any attorney will tell you, after many billable hours, the Costa Rica maritime law which governs these concessions is constantly evolving and changing so what might provide you security today could change and be a significant risk tomorrow.

In the current market, with so many fantastic deals on titled options that are within walking distance to the beach or finished condos or homes that are on titled beachfront areas like Jaco, leads us to advise our clients not to assume the risk invovled with concession properties unless they are air-tight concessions (tough to find) and clients are dead set on only wanting property in those concession areas.

During Costa Rica's real estate gold rush, coastal properties were driving up values at an insane pace in areas accessible to, but just outside development hotspots... but since the beginning of the global financial crisis, selling property there has become nearly impossible because of the risk intrinsic to leased land combined with the death of that frenzied appreciation, especially when there are such great value propositions in established areas with much simpler legal status.

Keep Your Life Simple & Make Your Real Estate Investments More Profitable With Titled Beachfront Land

Written by Scott Cutter who lives with his wife and two daughters in Manuel Antonio, Costa Rica.

If you are in the market to buy real estate near the beach on the central Pacific coast and would like to discuss your real estate investment goals with one of our most experienced and most Recommended Costa Rica Realtors Scott Cutter in Manuel Antonio, please use the simple form below: