1) Short-term Contraction of the Real Estate Sector
In recent years, residential property prices in Costa Rica have dipped due to an oversupply. However, this situation presents a unique opportunity as the market starts to absorb the excess, particularly with increasing demand from foreign investors. Johannes Mayr of Costa Rica MLS highlights that the booming U.S. real estate market has positively influenced demand for Costa Rica's luxury segments. In an April 2019 interview, he noted that the U.S. economy has significantly boosted real estate prices in popular foreign buyer areas like Dominical, Tamarindo, Conchal, Flamingo, and Potrero. He emphasized that these regions are shifting towards a seller's market, especially for beachfront or ocean-view properties close to amenities. Additionally, globalpropertyguide.com reports an influx of buyers from Canada, France, Germany, and Belgium, with rental yields ranging from 5.6% to 8.6%, suggesting a strong investment potential.
2) Robust Growth Among Foreign Visitors and Expatriates
The surge in tourism and expatriate numbers in Costa Rica contributes to a rising demand for property. The Costa Rican Tourism Board reported over 3 million tourist arrivals in 2018, a 13.4% increase since 2015, with a significant portion from the U.S. This growth in visitors and residents is likely to push property values up over time, making current prices an attractive entry point for investors.
3) Anticipation Related to Development of New Marinas and Port
The development of a new marina in Flamingo Beach, Guanacaste, is set to transform the local real estate market. This marina, along with expansions at Marina Pez Vela in Quepos, Golfito, and Peninsula Papagayo, where the Four Seasons is located, are expected to increase property values, particularly in areas already facing inventory shortages.
4) Economic Expansion Led by Investment in the Export Sector
Economic growth in Costa Rica is being driven by significant investments in export industries. The new container port in Moin and Coca-Cola's new plant in Liberia are examples of how the country's economic landscape is expanding. These developments signal a robust future for the economy, potentially affecting real estate prices positively.
5) Impact of the Upcoming Capital Gains Tax
Costa Rica is set to introduce a capital gains tax on real estate, which has historically been tax-free, attracting foreign investment. This change gives current buyers leverage for better deals since sellers might lower their prices to adjust for the upcoming tax. However, a one-time tax exemption for properties owned before the law's implementation could mitigate the impact for existing property owners.
Conclusion:
With signs of market recovery, infrastructural developments, economic growth, and changes in taxation, the current climate might be the most opportune time to invest in Costa Rican real estate before prices rise due to these factors.
