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I’m curious about the current state of the real estate market in Costa Rica. I am planning on relocating to CR in a couple of years, first for a test year renting a residence, and later possibly building something on a view property in the central valley—maybe close to the new road to the beach from Santa Ana/Ciudad Colon.
I have received conflicting reports from friends currently residing in CR as to price trends/availability, any thoughts or observations on the subject will be appreciated.
Thanks in advance,
edHello. It is my understanding that many of the beach areas have priced themselves out of their mind and have now experienced a dramatic slowdown in sales. In the Central Valley, on the other hand, and particularly in Santa Ana/Ciudad Colon/Escazu, construction continues relentlessly and optimism is in the air. At our project, we have experienced no major slowdown in sales. In fact, out of the 115 residential units, we have sold approx. 65% in 6 months. We now have enough sales to build it out (once we get all of the remaining permits) and sell the rest at higher prices. In terms of rentals at our first project Residencias Los Jardines, we are experiencing very high demand in our area (many multinational corporations have moved here or are about to move their headquarters to our area thus bringing thousands of new employment opportunities to Santa Ana) and have noted that supply is too low. This in turn pushes rental rates upwards. This is why we are also optimistic about our new project Hacienda El Dorado and the prospect of rental income there. As Scott Oliver notes elsewhere on this website, people in the Central Valley are becoming tired of long commute rides and prefer looking for rental options close to their work. Let me know if this answers your question.
I have just added a new chart taken from the Cámara Costarricense de la Construcción (CCC) to the article [ https://www.welovecostarica.com/members/1869.cfm ] which shows construction growth for the first six months in Costa Rica
I am frankly SICK TO DEATH of the constant negative, sensational headlines that come out of all of the English language news sources here.
For the most part these articles are written by very young people who earn so little that they never have, and cannot now afford to buy any real estate so how ‘expert’ and ‘experienced’ can that opinion be? And if they have no experience then why are we even listening to them?
And if a Realtor has only focused on the US market, he/she is probably going a bit hungry right now – so what? If that person is stupid enough to focus on selling Costa Rica real estate to people that only come from one country then OBVIOUSLY he is going to suffer if that country goes through a tough time.
Make sure you get your news and construction data from reliable sources and as you can clearly see from the chart from the BEST source for construction data – the Costa Rica Chamber of Construction – although construction has slowed in Guanacaste & Puntarenas), with real estate construction up 42.3% in San Jose, up 31.1% in Alajuela and up 30.1% in Cartago for the fist six months of this year – construction in and near San Jose, Costa Rica is booming!
Scott Oliver – Founder
WeLoveCostaRica.comWe are located in the Orosi Valley, 15 miles SE of San Jose. We are very busy building 4 homes, 9 botanical gardens, starting 3 housing developments and selling real estate like hot cakes. The market is very strong. I believe North Americans are reinvesting their money in real estate in Costa Rica and not in the US stock market. There are some very good values in the Orosi area. Farms can be purchased for $1 to $10 per sq. meter.
I have been swapping emails with OrosiRiley and look forward to learning more about what he is doing next time he is in my area…
Will report back at that time.
Scott Oliver – Founder
WeLoveCostaRica.comNot trying to offend anybody, but you have to look at possible conflict of interest here. I personally don’t want to give my opinion whether its booming or not. You have three replies, two builders and one also involved with real estate. It would be like shooting yourself on the foot to tell potential customers that what they are buying might go down in value.
Personally, if you can’t determine the state of the real estate market yourself by doing your own personal research, observation, etc (once you are here of course). Then its a bit of a tough luck.
ibaron-
I agree–
with the understanding of this forum being real estate based, the answers were not unexpected—AAMOF, I also posted this question on two other CR forums. many replies on the other forums, the posts positive if written by those selling re, a bit more pessimistic to downright gloomy when written by those with no ties to development. balancing and judging responses, it would appear that caution is definately the order of the day. but then again, that is always called for in real estate
gracias,
edReal estate speculation is always a tricky endeavor and if you’re an investor trying to make a short term profit it can get even more difficult. This should be left to professionals or those with very deep pockets that can afford it if there timing is off. Buying for the long term and because you love what and where you’re buying usually works out. I have been in the Real estate biz for over 15 years and just like in stock market rallies and declines it is very difficult to gage where you’re at in the midst of it all. Sitting here now it seems like it was a no brain-er to short financials over the last two years…if I would have I would be living the pura vida life in CR right now! But again trying to figure it out day to day is a different story, hard enough for the pro’s let alone for us “amateurs”!
Short financials, it was clear as day to me, but the problem is, irrationality can go on much longer than you think. I was both short home builders in 2005 (MTH, DHI, TOL) and a few financials (DSL, FED), but it was too painful and can really break your portfolio unless you have deep pockets (meaning lots of cash in reserve, which also translate to money not being put into use). So you can see the dilemma here. I finally gave up, taking some loss but kept FED short and after more than 2 years, its a 87% gain for me. So my point is: even if it was a no-brainer its still takes tons of patients and lots of pain in between (enough to rock your conviction).
My only consolation is I stayed away from all financials, big or small banks, lenders, mortgage REITS, etc. Just like going long term, shorting is also a long term thing with an even more difficulty factor.
Again to put a broad statement and say buy RE long term would make you money is not exactly true. I say this because I always believe investment returns has to be benchmarked with every other possible investment option available to you. Would buying RE beat putting your money in the bank after 15 years, I’d say most likely. But put the money in the stock market (not just US but other global markets as well), then I tend to have my doubts. How about comparing it with putting your money in commodities or gold and other precious metals? In the last 4-5 years, an investment in precious metals would have easily beaten any real estate investment without the property tax, maintenance and other hassles. I’m not saying this with 100% certainty, just saying that we each have to scrutinize investments very carefully.
Again, just my 2 cents (which luckily is worth much more now in colones, exchange rate is 554 colones per dollar, yeah baby).
I guess what I was trying to say is buy a house for your enjoyment, especially a vacation home. When you compare owning your home with all the associated costs to maintain it including property taxes and mortgage debt it really doesn’t add up to such a great deal. I look at it as forced savings, you are compelled to keep chipping away at the mortgage debt and you hope for a little appreciation. But when you sell after 20 years and put your “gain” in the bank, you may be in for a surprise if you add up all the interest you paid alone to the bank, never mind taxes etc. And if you live in an area where you could rent a house for say half the cost of ownership(and no property taxes,up-keep, water bill etc), and were a disciplined investor/saver, of course you would be way ahead of the game. Unless you have paid cash for you house you don’t own it untill you pay off the bank anyway…
Yes, I totally agree with you there 100%. It definitely has lots of good things about it, most especially the one you mentioned which is forced savings. I am actually now looking at real estate as possible investment in the US. I just always look at the math and if the numbers shows good possibilities of returns, good margin of safety, etc then I’d buy. Right now, even with 30-40% drops in some areas, surprisingly it still does not translate to a value investment.
But I’m hoping. Anyway, thanks for your insights, they are very well spot on.
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