by Victor Krumm
One of the tiniest countries in the world, Costa Rica is famous for its sandy beaches, picturesque coastal landscape, and its incredible diversity of plants and animals. In fact, though it is only about the size of West Virginia, nearly one of every five plant and animal species on the face of the globe are found in Costa Rica. Tourists flock to this little country in droves each year making it one of the hottest tourist destinations in Central America. Most visitors are from America and Canada, of course, but there are also thousands of European travelers. In order to cater to the booming tourism industry, hotels, restaurants, pubs, shopping malls, and other tourist attractions have popped up alongside beaches and other hot spots. This in turn has caused a sharp rise in Costa Rica real estate value over the last ten years owing to the fact that land is one commodity that is not plentiful in Costa Rica, a country with just one tenth of one percent of the world’s land mass.
The north and central Pacific coast, in particular, with its great weather and many attractions, has been the most popular area for tourists for a number of years. The need for developed property catering to the needs of the growing number of visitors has seen 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.
The demand for real estate is concentrated mostly in areas where the tourist influx is large. This has been largely the north and central Pacific coast. The purchase of vacation property and real estate for relocation by expatriates are two main reasons why the property prices have gone up. In addition to the coasts, money is flowing into investments on farms (called fincas), mountain properties, and vacation rentals. Increasingly, Costa Rica is also being seen as a retirement destination by many retirees hailing from cold countries in Europe as well as America and Canada. The highly stable democratic political system and the beauty of this country attract real estate purchasers from around the world who want to have a piece of paradise to themselves. Costa Rica is one of only two countries in the world without an army, the other being Switzerland, and is extremely forward looking. The government is committed to sustainability and in a few years, Costa Rica will be the first country on the planet to have a zero carbon footprint. No wonder so many people fall in love with this place.
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.
The severe economic downturn in the States and Europe has impacted Costa Rica as well. Condo and subdivision development have slowed dramatically and in some parts along the Pacific coast, American second-home buyers, now strapped for funds, are selling properties at very large discounts. One person’s challenge is another person’s opportunity.
However, many experts predict that the boom will resume in the coming years. Costa Rica will continue to draw tourists and retirees from America, Canada, and Europe. Savvy investors often pool their money to form real estate ventures with, up to now, assured returns. Indeed, many folks who invested in Costa Rica real estate a decade ago have seen their investment soar. To be sure, the economic woes in the States and Europe are felt here now but the price stagnation or decline is temporary and will form the basis of a great recovery.
The steepest rise in property prices and the steepest decline (due to the U.S. and European recession) have been along the Pacific coast. The beautiful Caribbean coast remains largely undeveloped so the run-up in prices was slower. And real estate prices in the Central Valley containing the largest city, San Jose, and some 40% of the country’s population have not been significantly affected because of the acute shortage of available land and continuing demand as more and more Ticos move to the urban areas.
