The Property Investment Market in Costa Rica

Past, Present & Future

Costa Rica has placed itself in a unique position amongst its Central American neighbouring countries in regards to its political environment. Long established as a democratic nation, the army was demolished and the country began to undergo reforms.

The country’s economy has been slow to take off, mainly relying upon exports of coffee, sugar, banana and pineapples rather than mineral wealth. The tourism industry showed great potential, especially with the development of infrastructure and services for the mass market.

Increased access of direct flights from the US over recent years started to fuel the property investment market, especially amongst US buyers. Viewed as an ideal destination for retirement, the real estate market began its boom.

As the property industry started to create interest, new areas of the country began to emerge as ideal investment locations. Previously remote sections of the country started to receive funding to create idyllic, well connected destinations with top class amenities.

The sudden growth of the real estate market emerged from cash purchases, as the mortgage market did not develop until 2006. Huge demands for property assisted with the development of property loan availability, with interest in the market ceasing to slow down since the introduction of financing.

Since the introduction of financing for property purchasing, prices have risen steadily by as much as 25% in sought after areas. Coastal locations that have developed as luxury markets for the foreign markets are continuing to present good capital returns, while the local non-foreign market is still yet to experience similar growth.

The future of Costa Rican real estate is expected to continue growth as a luxury market. Greatly assisted by the introduction of the mortgage market and the expansion of the tourism market, investment properties are now available to a wider variety of the foreign public. Considered to be a seller’s market as the demand is outstripping the supply, upon maturity it is expected that reforms should take place in the rental market, create fantastic new buy-to-let options.

The economy of the country is growing steadily and is currently in better shape than previous decades, despite the slowdown in the global economy. As Costa Rica is not as heavily reliant upon income generated through foreign investment as other emerging markets, the economy is in a better position for continuous growth.

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