Costa Rica Real Estate – Is Your Property Losing Value?

Factors that influence your future real estate investment.

If you own, or consider owning Costa Rica real estate in the near future – before you make the final buying decision, you have to consider some vital factors so that your investment increases in value rather than losing value.

If you have already decided to buy, real estate experts recommend to carefully evaluate the location of the property. Real estate broker Mr. Diego Quesada, says it is of the utmost importance to assure the existence of a regulatory plan for the zone.

“This document helps the buyer to verify if there are any future changes, which could even block the use of the property in the formerly intended sense”, Mr. Quesada explains.

Other external factors also could devalue a property, such as proximity to cemeteries, garbage dumps, dangerous rivers or ravines, high-risk zones (landslides), discotheques, airports, or similar aspects.

Real estate broker, Ms. Marlene Echeverría, points out that it is important to analyze if the area is maintaining its identity as a “residential area”. This in view of former residential zones, which now have turned into properties with a great industrial or commercial interest.

“An example of this is El Prado, nearby ‘Pops’ in Curridabat. This zone has decreased in residential value, but greatly gained in commercial attraction, due to changes in the last years”.

The former, said Ms. Echeverría, made many owners sell their residential property, due to the high noise and traffic levels. For Mr. Quesada, this phenomenon is due to the normal growth of a city, and should not be seen as a negative part.

Mr. Quesada added, “the transition from a residential area into a commercial zone is an inherent part of the development of a city. After 5 or 10 years it is normal for the commerce to grow within a residential nucleus, and this would add value to the properties nearby”.

Ms. Echeverría insists that the lack of planning in certain areas, has forced developers to build condos and residential areas where stable conditions are guaranteed to maintain a residential character. Examples are the condominiums Alta Monte and Colinas de Montealegre in Curridabat.

Supply And Demand: In some cases, it is simply a case of more supply in properties than demand. This clearly diminishes the value.

Ms. Emilia Piza, president of the Costarrican Chamber of Real Estate Brokers (CCCBR) says that there also situation where these situations are only of a temporary nature, and that properties could recuperate their value in time.

“In places like Escazú and Curridabat properties are more expensive, and in other areas of San Jos
é, where there is a increased supply, demand still exists and therefore the prices remain stable”, says Mr. Quesada.

How can you make sure, then, to make a secure investment in the area you are looking for? The local municipality first values a property approximately, which is only a tax value, then a professional appraises it according to its location and characteristics.

On top of these there is also the value according to the quality of the construction, and finally the true market value. All the aspects have to be taken into consideration.

And the house? If you own a house, take into consideration that in time it loses value if it is not maintained properly, or houses of lesser worth, or lesser aesthetical value are built besides it.

“The life expectancy of a normal house is between 50 and 60 years, if it is built out of wood then only 40 years, but everything depends greatly on the maintenance”, said Ms. Piza.

According to Ms. Echeverría it could also be that you buy a house for US$75,000 (¢33.600.000) and then are able to resell it for a greater price. “This could be due to remodeling and modernizing the premises, increased maintenance, or simply because the area increased in value.”

Negative aspects:

1. Lack of maintenance
2. Deficient or dangerous structures
3. Lack of public services
4. Houses of lesser value nearby
5. Proximity to high-risk zones
6. Proximity to commerce poorly managed

Our thanks to our friends at La Nacion – Costa Rica’s largest Spanish circulation newspaper for their permission to use their article in English.

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Andrew Makarik

to@welovecostarica.com

Andrew Makarik is the main editor of WeLoveCostaRica, a fan of this sunny country. He is also a loving husband and a has a lovely daughter. By being a devoted family man and the biggest Costa Rica fan, he wants to make more people feel at home there. WeLoveCostaRica unites people and helps them find new home or a new travel destination. This website is a friendly community where everyone can find not only information, but also new friends and travel pals. Andrew is also passionate about IT and programming, so he himself maintains a friendly atmosphere in this cozy environment of WeLoveCostaRica.com.