An Introduction to Real Estate in Costa Rica
Note: Any book of this type would be incomplete without a discussion of
real estate. The section that follows is a detailed introduction to the subject
and has been used for reference by many publications. Nevertheless in order
to cover this topic thoroughly this guide would have had to be about 400
to 500 pages longer. But at 1000 pages it would have been too bulky and
impractical for a travel guidebook of this genre.
So what I did was publish a separate 550- page real estate guide that
amply covers the subject. The result is Christopher Howard’s Guide to Real
Estate in Costa Rica: a primer for investing profitably and safely in real
estate in Costa Rica. People need to understand all aspects of life before
moving here or making a real estate purchase. Too many people have not
done their homework or have bought strictly on emotion. People need to
have the facts before they buy and know how to find value.
Please see www.officialguidetocostaricanrealestate.com for a free
preview of this comprehensive book.
Events in the United States and the rest of the world have affected the
Costa Rican economy and real estate market. However, there have never been
sub-prime loans here nor did the government or banks invest in the U.S.
stock market. The economy here has slowed down, but when compared to
the larger economies like the U.S., the effect has been minimal. Costa Rica
continues to be one of the most popular travel destinations in the world, the
premier country in Latin America and the #1 retirement haven south of the
border. All of this will combine to fuel the real estate market now and in the
future. Costa Rica is a brand name and that will never change.
Why Costa Rica real estate?
In 2006 the first Baby Boomers turned 60 and every 90 seconds
another Baby Boomer reaches retirement age Behind this first wave is a
virtual tsunami of graying, affluent soon-to-be-retirees desperately seeking
some affordable sunshine. And they’re not only Americans. Swedes,
Germans, Japanese, Brits, Canadians, and others are all looking to escape
cold weather, dark skies and their dreary, over-regulated, under-performing
high-priced economies. Costa Rica boasts an international market of people
seeking their piece of the” Latin American Dream.” Even the Chinese
want in on the action. Not only are they interested in trade but tourism
and investment as well.
So where are you (and your global counterparts) going to land? Do
you want to risk building your dream home on the Gulf Coast only to have
it flattened by Hurricane Katrina’s uglier, meaner sister? How long will it
take to restore the equity which has been lost, if that’s even possible?
Look around the rest of the investment landscape and you can be just
as depressed. Even Wall Street’s deep thinkers will tell you that we’re most
likely in for decades of tepid, single-digit returns in stocks. Don’t even think
about living off your fixed-income investments either.
A savvy, soon to retire investor with a few bucks tucked away might
look at it this way:
The dollar is weak and will continue to fall; the current world financial
mess, wars, record deficits and more will keep the pressure on.
Can you rely on a money market account? With certain continued
deflation of the value of the dollar, high rates of taxation, soon to be high
inflation; the value of your savings will continue to erode at a record pace.
The U.S. government will be staring at a colossal tax increase in just
a few years to fund social security, universal health coverage and Medicaid
benefits for the flood of retirees. Some say that under Obama’s plan, federal
income taxes will increase dramatically possibly give the United States one
of the highest tax rates among developed countries.
Where is the end of the huge financial burden the government is placing
on every taxpayer?
Diversifying out of a falling currency and into hard assets outside the
U.S. just might be the only way to protect your hard-earned wealth—while
enjoying and preserving your lifestyle.
Many people who have had their new worth and retirement drastically
reduced can now salvage what they have left and their lifestyles by moving
and investing abroad.
The super rich have been doing this for years to protect their wealth and
reduce liability. They safeguard their money and diversify their investment
portfolio by investing in international assets. Now the average Joe can protect
what he has left from the world economic fallout by using the same strategy.
Is there a way to profit from this mess?
Consider your options, run the numbers, and think about everything you’ll
need: an ideal climate, accessibility, advanced infrastructure, excellent health
care, and so on. Over and over again—Costa Rica is the brightest blip on
Getting in before the crowd has always been the secret to making a
lot of money with real estate investments. People who took a chance and
invested in real estate in beach property in California, Hawaii and some parts
of Florida were ahead of their time. They saw opportunity where others saw
nothing. They took well-planned risks and were paid handsomely for their
investments and created better lives for themselves and their families. What
really gets people excited about Costa Rica is that it offers some of the most
undervalued prime beach and Central Valley real estate in the world. As the
rest of the world finds out about Costa Rica, prices will only go up.
Let us look at why this real estate boom is happening. The simple
fact that almost every bit of coastline worldwide is becoming overcrowded,
overpriced and scarcer contributes to a high level of interest Costa Rica’s
beach areas. The U.S. National Association of Realtors says Americans are
buying second homes in record numbers, thus driving up the cost of vacation
homes everywhere in the country. A recent newspaper article stated one
in every seven people in the United States now lives in areas bordering the
coast. This trend is driving the great baby-boomer migration. As a result,
land in prime sunbelt areas of the United States has, become prohibitively
expensive and hard to find. This is not the case in Costa Rica.
Costa Rica has one of the most appealing investment environments in the
world. One of the reasons is that its tax system is much less complicated than
those in the United States, Canada and Europe, offering great tax incentives
for foreign investors, including tax free transactions. Such conditions, definitely
contribute to Costa Rica’s real estate market boom.
Where else can you get in on the ground floor of the new Latin America
Riviera? Where else can one successfully shelter investments and profits?
Where else can one keep a fair amount of profits? Where else are property
taxes on valuable properties paid in hundreds, not tens of thousands of
dollars per year?
Where else in the world can you purchase a fully titled luxury beach
front condominium for under $350,000 or luxury ocean view home for
A local real estate expert shares his perspective on the future of Costa
Rican Real estate: “ One has only to look here in Costa Rica, and see what
has happened in the last five years. Now the baby boomers are coming and
the market should continue to improve.”
Easy to live and work in paradise
Another reason people consider Costa Rica today is how easy it is to live and
work here. The next wave is for retiring boomers and younger entrepreneurs
to move “South” for at least part of the year. Telecom is much more prevalent
than people realize. With a laptop, cell phone, VPN (virtual private network)
and the latest VOIP (voice-over Internet protocol) phone services, you can
stay in touch more cheaply than ever. Costa Rica is easily reachable from major
U.S. airports. Health care is superior. The people are friendly and welcoming.
English is widely spoken. The Costa Rican government has made a major
commitment to protecting and enhancing its spectacular natural environment.
Can this be done in other countries?
Forget Europe it is too expensive. Asia is too far and there are terrorism
issues. Even traditional retirement havens as Thailand and the Philippines
have their problems.
In this part of the world Nicaragua is just too poor, underdeveloped and
plagued by political instability with no end in sight. Several countries have
canceled much-needed aid because the lack of true democracy institutions
in the country.
Panama is too warm. Air conditioning bills in Panama City can run into
the hundreds of dollars per month. There is talk of some benefits being cut
for retirees and crime is growing. The latter is under reported so as not to
scare away tourists.
Mexico used to be the number one retirement spot south of the border
but people are starting to get turned off to the place. The country is currently
being torn apart by a war between the government and the powerful drug
cartels. Kidnappings have increased manifold. It is only a matter of time before
foreign investors and retirees will become targets for this growing trade.
South America is just too far away and not ready yet. International
retirement publications hype Medellín and Cali Colombia, Ecuador and
Uruguay. Someone in Ecuador has even copied Costa Rica’s national motto,
Pura Vida, in an effort to promote the county. Ecuador’s slogan is “Life in
its pure state.”
Most of these publications or web sites are selling real estate in those
places knowing that the quality of life can’t come close to Costa Rica’s. None
of the countries mentioned has an Association of Residents as Costa does to
look out for the interests of expatriates. Nor do they have as much experience
providing the quality of health care that foreigners demand.
The Central and South Pacific Coasts are perfectly situated in the path of growth
As explain in great detail in Chapter 2, Costa Rica’s Central and South
Pacific Coasts are pristine and unspoiled. Along Costa Rica’s Central and
South Pacific Coasts, you will find the most spectacular scenery, endless empty
wide white-and dark-sand beaches, rocky outcrops and clear water set against
a tropical backdrop of primary rain forest, as much privacy as you want and
the best surfing and superb sport fishing. The beaches are reminiscent of
those in California and Hawaii, but you can buy here for a fraction of the cost.
For a very reasonable price, you may purchase a couple of acres of land with
an ocean view. You can have a spectacular home perched on a hill, complete
with custom tiles and finished in mahogany, teak and precious woods you
never knew existed. The geography looks like California or Hawaii years ago.
According to an article in the country’s financial daily, La República,
property in the Central and South Pacific regions has risen 250 percent in
value over the last six years. Although there has been some correction in
prices due to the world downturn, long-term investment is still a good bet.
Even better, it’s getting easier and easier to reach this slice of heaven. Two
new highways are reducing the driving time by half between the country’s
capital, San José and the nearest beach resorts. The first stage of the new
highway will link Ciudad Colón in the Central Valley to the town of Orotina
near the Central Pacific Coast. The other section of new highway will link
the towns of Quepos and Dominical to the south. Furthermore, there is a
new marina in Quepos, a water park with artificial waves between Quepos
and Dominical and a new international airport near the town of Palmar
Norte. All of this will combine to make real estate values increase. Without
question, over the next five years the Central and Southern Pacific Coasts
of Costa Rica will be the sweet spot for investors.
As an example of this boom, the Marriott Corporation built its crown
jewel of Central America, “Los Sueños Resort” and pre-sold 50 condominium
units of 2,000 square feet each for $250,000. The next year they sold another
50 at $350,000 and this year’s upper-end units sold between $600,000 to
over $1,000,000 million.. And there is a waiting list!
Seven years ago Los Suenos was selling its condos at a price of $150/ sq. ft.
The price today is$750/sq.ft. Next door, the new St. Regis project is asking $1,200/sq.ft.!
Why? Because the market is changing, to a more mature, demanding and
affluent “resort type” buyer. These people want luxury and are willing to
pay for it. They want—make that demand—first class amenities, not a funky
and fun “experience.” An investor friend saw lots for $50,000 when Los
Sueños first opened over ten years ago and thought they were over priced.
Now he kicks himself in the butt because the same lots are worth more than
$1,000,000 million. (Part of this section is Courtesy of Martin Strudwich)
Add to this the fact that, “They aren’t making more of this real estate.”
Costa Rica is a small nation and the amount of prime property here will
eventually become limited. Given the fact that Costa Rica is a warm-weather
destination like Hawaii it will always be popular and its land in high demand.
Baby Boomers, tourists, those disenchanted with politics and other factors in
their homeland and savvy investors and developers will continue to flock here
to buy property. Thus your investment here can only appreciate in the future.
The Central Valley is a good bet.
Although there has been an real estate boom in Guanacaste and the Central
and South Pacific are coming into their own, the Central Valley is still a
As I mention in detail in Chapter 2, the Central Valley is the heart of the
country’s activities. It has the best infrastructure, ideal spring-like climate,
good Internet connections (very important) the best hospitals, incredible
shopping, unending activities to stay busy and happy and unparalleled growth.
The Central Valley has had the greatest amount of construction and
number of building permits issued in recent years. High-rise construction
has already begun around the Sabana Park and Rohrmoser and is now
extending along Paseo Colón. The Heredia area leads the pack with many
new housing projects and gated communities. Santa Ana, Atenas, Alajuela,
Ciudad Colón and even outlying areas like Grecia, Atenas, Naranjo, San
Ramón and Puriscal are all following suit by experiencing growth.. With the
new highway to the beach the Orotina area is going to experience a boom.
The new road will bring everything closer.
There is more property in all price ranges in the Central Valley. Buyers have
their choice of different microclimates, city or rural locations, a full range of
prices from affordable to high end and virtually something for every lifestyle
and taste. This area really can’t be beat when you consider all of the options.
Guanacaste an initial explosion
Until the economic crisis of 2009, Guanacaste experienced a boom in tourism
in the real estate market due to several important factors. Rumor has it the
politicians and wealthy chose to develop this area rather than the Southern Zone
because of their vested interests. Therefore they pushed for the construction
of the Liberia International Airport. The result was a huge influx of tourists
from all over the world and a subsequent real estate boom as more and more
people visited the formerly undeveloped and inaccessible area of Costa Rica.
Condos under construction in Guanacaste
An initial building boom ensued and the land rush was on. Huge projects
like the five-star Four Seasons Resort in the Gulf of Papagayo mushroomed
as the developers moved in.
Realtors were popping out of the woodwork. Some of them were tourists
and working illegally. Fortunately immigration cracked down on many of
these carpetbaggers with fly-by-night operations.
The word spread and the rich and famous and Hollywood crowd arrived
to bask in the sun on the province’s string of beautiful beaches.
Unfortunately development happened so fast that infrastructure lagged
behind. There are still many unpaved roads in the area. Because the region
is very dry there have been problems with the water supply. Couple this
with the economic downturn of 2009 and construction in many places has
ground to a halt.
Things should get back on track as the world gets its economic house
in order and consumer confidence increases. Also don’t forget Costa Rica
is such a unique place with such magnetic appeal and has so much to offer,
investors will not stay away for long. The baby boomers are still pouring in.
The big developer’s projects like Marrriott, Hyatt Regency, Ritz Carlton
continue full steam ahead. The mammoth Solarium Project, directly in front
of the Daniel Oduber Quirós International Airport, will spread out over 104
hectares (257 acres), and will include warehouses, a hospital, a gas station, 800
condominiums, and Guanacaste’s very own zona franca, or free-trade zone.
The project is being developed to help bring business and health services to
a region whose tourism industry will soon demand these amenities.
The Solarium Project will be developed over seven or eight years, in six
different phases, each catering to a different niche. In addition, Solarium’s
director believes that the project will bring about 15,000 permanent, stable
jobs to the market, stimulating a micro-economy that currently waxes and
wanes with the demand of the area’s tourists.
In addition, Solarium is working to preserve nature and help maintain
Costa Rica’s image of green living: 50% of the project’s 104 hectares will be
devoted to landscaping, keeping the lands fertile and beautiful.