Mostly Foreigners Buying Costa Rica Real Estate

Investing in Costa Rica today is probably safer than it was investing in California thirty years ago.

Its natural attractions, political and social stability, numerous direct international flights, and its proximity to the United States has makes the present value of properties at a similar point to which California was at before the North American coast boom.

In fact, Costa Rica has positioned itself as an international real estate market, directed at the retired or vacation market associated with tourism.

This condition places us in a profitable situation, with regard to our neighbors, since Costa Rica is a preferred location for many Baby Boomer (North American born between 1946 and 1964) demand, to massively invest in Second Homes or vacation houses.

Several studies, from The Urban Land Institute, determine that one of the emergent tendencies with greater world wide impact in the real estate economy is the “Second Home” market due to the long term demographic circumstances.

Foreign Investors Buying Real Estate in Costa Rica:

Until a couple of years ago, Baby Boomers were only buying second homes in Florida or California, but with a rapidly growing population, increased cost of real estate prices in those areas, people are looking towards Central and Latin America for more affordable destinations like Mexico, Costa Rica and Panama where developer’s projects are competing to attract this generation.

Enrique Egloff, executive vice-president of the Consejo de Desarrollo Inmobiliario de Costa Rica (Real Estate Development Council), indicates that besides Baby Boomers, the country is also of interest to Canadian and European investors although in smaller numbers.

Approximately, 60% are North American investors and they are coming to look for second homes or condos, to stay part of the year or vacation, says Egloff.

The majority of foreigner don’t want their investments to cost them a lot of money. That’s why they try to have their real estate assets work for them by occasionally renting them out.

According to Edwin Sanchez, Operations Manager at Century 21, properties of tropical recreation areas located at beaches, mountains or farms are most popular to foreigners.

In some cases the properties can be 70% cheaper than in other similar places in the world, say Sanchez.

For Orlando Lopez, General Manager of Stewart Title – Costa Rica’s name is already very much on the radar, competing with other traditional destinations from around the world.

The results in several surveys have been consistent, he adds, the natural environment has become the main attraction, as well as other factors like the country’s stability, proximity to the United States, the lower cost of comparative terms and a similar risk of investment, although things like infrastructure and especially the road codnitions are a negative factor for most visitors.

According to the last reviewed statistical information, the investor profile is actually quite young – between 45 years and 55 years of age, with high educational levels (university) and about 60% have incomes over US$150K per annum.

Although for Egloff, the Ticos (the Costa Rican people) are very conservative, have greater financial restrictions, and smaller buying capacity, Sanchez admits that Costa Ricans are starting to invest more in recreational properties( beaches, mountain, farms), however as long term investments in a smaller scale.

In our case, we have run into Ticos, who buy houses to rent or even buy a second residence as a investment, but its necessary to clarify that usually within a residential category and in a smaller percentage, admits Perez.

For Manager of Stewart Title, there are two ways to visualize local investors.

1. The developers: Nowadays, many experience developmental companies, have established first level developments (houses, malls, hotels), aim mostly for North American and Canadian investors.
2. Buyer of a finished Project: Costa Rica Participation is a limited in this sector, because the purchasing power isn’t enough in relation to the prices in the coastal areas.

Costa Rica Real Estate Bought by the Baby Boomers:

The buyers of Costa Rica real estate fall into three main categories:

1. The majority of buyers are looking for second homes to use in certain times of the year and the remaining time incorporate them in a temporarily rental program. This should generate an income throughout this investment.
2. The one who seek a retirement home to spend a significant part of the year in the country during the winter season in the north hemisphere and rely on the part time program to profit from their investment.
3. The so-called ‘flippers’ that buy with the only purpose to resell in a short time with an important profit.

Source: Orlando Lopez, general manager of Stewart Title

Market Tendencies…

1. The growth of the Great Metropolitan Area (GAM) leads itself by the cost of the land.
2. A doughnut type growth is observed around San Jose. The same as a growth in more accessible, cheaper and more extended lands like Heredia, La Garita, Cartago, etc.
3. Within the GAM there is a growth in two opposite poles, around the center: Escazu,-Curriabat, which has attracted residential and commerce foreign investments.
4. In the rest of the country that growth is associated with tourism with two main areas: Coast area Liberia-Carillo-SantaCruz and Coast area Garabito-Parrita-Aguirre.
5. Other possible poles that have an interesting development for foreign investment are Arenal and the Nicoya Peninsula by Tambor and Malpais Beaches.
6. In the last few months there has been a peak in rural areas like Atenas, Grecia, etc, where the development of projects not necessarily for a beach concept are being designed. These projects look for retirement places that are more rural and quite near basic services and urban- like infrastructure.

Source: Enrique Egloff, vice-president of CODI and Orlando Lopez, general manager of Stewart Title.

Our thanks to Gloriana Gómez and our friends at La Nación – Costa Rica’s largest Spanish circulation newspaper for their permission use this article.

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Andrew Makarik

to@welovecostarica.com

Andrew Makarik is the main editor of WeLoveCostaRica, a fan of this sunny country. He is also a loving husband and a has a lovely daughter. By being a devoted family man and the biggest Costa Rica fan, he wants to make more people feel at home there. WeLoveCostaRica unites people and helps them find new home or a new travel destination. This website is a friendly community where everyone can find not only information, but also new friends and travel pals. Andrew is also passionate about IT and programming, so he himself maintains a friendly atmosphere in this cozy environment of WeLoveCostaRica.com.