Costa Rica Real Estate – Weathering The Storm
Posted by Victor Krumm | Costa Rica | Posted on December 19th, 2009
One of the smallest countries in the world, Costa Rica is known throughout the world 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 20% on earth are found in that Central American country. Tourists flock to it in droves annually making it one of the hottest tourist destinations in Latin America. The majority of tourists are from America and Canada, of course, but there are also thousands of travelers from South America, Europe, and the Far East. In order to cater to the booming eco tourism, medical tourism, and vacation industry, resorts and 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 decade or so since 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.
Most investors are concentrating their investments in areas that are attractions for tourists and, in particular, its magnificent Pacific coast. The large scale purchase of prime property along beach fronts (all of its beaches are public), mountain properties, farms (called fincas) and vacation rentals by expatriates have contributed to a steep hike in real estate prices in the most coveted areas.
For more and more Americans, Canadians, and Europeans, Costa Rica is seen as the perfect place to spend their retirement years. With lots of sunny and sandy beaches, nearly 800 miles of coastline and most beaches virtually deserted, beautiful mountains always close at hand, nice weather, a stable and democratic political system, low crime rates, excellent medical and dental providers and facilities, and high human development indices, it is a prime draw for retirees. An increasing number of investors have seen the potential of real estate development in Costa Rica and putting money into its real estate.
A number of years ago, the country realized the benefits of sustainable development and tourism. Unlike many other countries, Costa Rica has learned the lesson that unregulated exploitation of resources is ultimately detrimental. Wisely, in the face of sometimes intense pressure, it refuses to allow oil exploration off its coasts. Tropical forests, once cut or burned for little farms, are returning. As more and more of the international community is encouraged to visit, investors from around the globe have found that Costa Rica is a wonderful real estate market. And, indeed, over the last decade there has been a real boom in development along the Pacific coast.
How has the recent worldwide economic 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 discounts. These are properties that were by American and European land prices good buys when made. Now they have become extraordinary opportunities.
Every contraction sets the stage for recovery. Costa Rica is expected to boom again due to the continuing tourist influx into the country, the high returns that real estate investment yields here, and the increasing scarcity of land in some places. Over the last decade, many investors have seen the value of their investments soar, though there is in fact a pull-back today in some areas because of the worldwide recession. Even many small investments have proved to be lucrative. Tempering the future boom a bit, though, may be that the fact that property in highly desired areas is becoming increasingly scarce. On the other hand, this may lead to increased investment in prime real estate inland.
The largest rise in property prices and the biggest decline due to the U.S. and European recession have been along the Pacific coast. The Atlantic 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 Costa Ricans move to the urban areas.
Victor C. Krumm writes from tropical Costa Rica and has an informative websiteCosta Rica Vacations. Look at prettyCosta Rica Real Estate
