Real Estate

Costa Rica Real Estate – Weathering The Storm

Costa Rica is a major tourist attraction for people from around the world but, primarily, the U.S. and Canada. Indeed, tourism accounts for nearly eight percent of its gross domestic product. This tiny country, only about the size of West Virginia, is world-famous for its warm, sun drenched beaches and beautiful tropical mountains and landscape. Though it encompasses only one tenth of one percent of the planet, it is home to an incredible diversity of plants and animals. In fact, nearly one of every five species of plants and animals on the globe is found here. There are more kinds of butterflies in this little place than on the entire African continent and nearly the same number of species of birds as in the continental United States. It is no wonder, then, that Costa Rica draws tourists like a magnet. This country, which has been a democracy since it cast off its Spanish conquerors, has acquired the status of a tourist hot spot in Central America. The boom in the tourism industry has contributed positively to the growth of Costa Rica real estate over the past decade.

The Pacific coastline, in particular, with great weather and numerous amenities, has been the most popular area for travelers for a number of years. The need for developed property serving the desires of the growing number of visitors has led to a sharp rise in prices of real estate there. Hotels, resorts, restaurants, bars, and places for daytime and nighttime fun have sprung up dramatically. This has led to an acute shortage of land in some places that has brought increased upward pressure on land prices.

Additionally, the massive influx of retirees and folks who have elected to live in a tropical paradise and leave behind the pressures of day-to-day life has also contributed to the increase in property prices in some coastal areas. Plenty of investment has been coming into real estate from outside the country. The U.S. has led the way, certainly, but there are lots of investors from Canada and Western Europe. China has been increasing its presence in Costa Rica dramatically over the last few years, too and today there are thousands of Chinese who live there. In addition to beach-front property, the main areas of investment are farms, called fincas, which are being developed into subdivisions, mountain properties, and vacation rentals. Real estate prices have soared along the Pacific coast and some other parts of the country because expatriates and people wanting second homes have realized just how cheap, relative to the U.S. and Europe, land is.

Costa Rica real estate has been, and continues to be, a good investment because the country has a very stable political system and a growing economy. Unlike Mexico, foreigners can own free title to land. The crime rate in Costa Rica remains low, though increasing, and human development indices are very high compared to other Central American countries. The tourist influx has also seen the country evolve to accommodate the international community. More and more international investors have come to the conclusion that Costa Rica is a great place to invest in real estate and their returns on investment have borne out that faith.

How has the financial downturn in the States and Europe affected Costa Rica? Not surprisingly, subdivision and condominium development have dramatically slowed or even been put on hold, and in some parts along the Pacific coast American second-home buyers, now cash-strapped, have been selling beautiful properties at large price reductions. These are properties that were by American and European land prices good buys when made. Now they have become extraordinary opportunities.

Despite today’s uncertain economic climate in the States and Europe, the general perception is that there will be a large rebound in Costa Rica real estate. Why? One reason is the incessant flow of investments based upon the lucrative returns to be had from property development. Another is that, in comparison to the Unites States and Europe, real estate prices, particularly on sunny, tropical coastlines remain incredibly reasonable. Land prices along the coasts are still just a fraction of the cost elsewhere. Further, real estate investors have found extraordinary returns on their investments over the last decade.

The beach properties along the Pacific coast have seen, and will probably see, the largest increase in prices over time. The Caribbean coast remains relatively undeveloped. Certainly prices there, like all of Costa Rica, are rising but not nearly as much as on the other coast (which, of course, means that stress on prices have been less lately than on the Pacific side). And, as more and more Ticos move from the country into the big urban area around San Jose, available prime property has become increasingly scarce. Demand remains strong in the urban areas and, for more and more expats who live in Costa Rica, the amenities and climate around San Jose are proving irresistible.

Victor C. Krumm writes from sunny Costa Rica and has a popular websiteCosta Rica Vacations. Check out the prettyCosta Rica Real Estate

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