Costa Rica Real Estate – Will It Continue To Be A Popular Investment?

December 20, 2009 by Victor Krumm
Filed under Vacation

One of the smallest countries in the world, Costa Rica is known throughout the world for its sandy beaches, spectacular coastal landscape, and its incredible diversity of fauna and flora. In fact, though it is only about the size of West Virginia, nearly one of every five plant and animal species on the face of the globe are found in that Central American country. Tourists flock to this little country 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 tourism industry, hotels, resorts, golf courses, restaurants, pubs, shopping malls, and other tourist attractions have popped up alongside beaches and other hot spots. This resulted in a sharp rise in Costa Rica real estate value over the last ten years owing to the fact that 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 real estate investors and second home buyers prefer 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.

The demand for condos and homes is centered mostly in areas where the tourist influx is large particularly along the Pacific coast. The purchase of vacation property and real estate for relocation by expatriates are two main reasons why the property prices have gone up. In addition to the coasts, money is flowing into investments on farms (called fincas), mountain properties, and vacation rentals. Increasingly, Costa Rica is also being seen as a retirement destination by many retirees hailing from cold countries in Europe as well as America and Canada. The highly stable democratic political system and the beauty of this country attract real estate purchasers from around the world who want to have a piece of paradise to themselves. Costa Rica is one of only two countries in the world without an army, the other being Switzerland, and is extremely forward looking. The government is committed to sustainability and in a few years, Costa Rica will be the first country on the planet to have a zero carbon footprint. No wonder so many people fall in love with this place.

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.

The severe economic downturn in the States and Europe has impacted Costa Rica as well. Condo and subdivision development have slowed dramatically and in some parts along the Pacific coast, American second-home buyers, strapped for funds, are selling properties at very large discounts. One person\’s challenge is another person\’s opportunity.

However, many experts predict that the boom will resume in the coming years. Costa Rica will continue to draw tourists and retirees from America, Canada, and Europe. Savvy investors often pool their money to form real estate ventures with, up to now, assured returns. Indeed, many folks who invested in Costa Rica real estate a decade ago have seen their investment soar. To be sure, the economic woes in the States and Europe are felt here now but the price stagnation or decline is temporary and will form the basis of a great recovery.

The steepest rise in property prices and the steepest decline due to the U.S. and European recession have been along the Pacific coast. The beautiful Caribbean coast remains largely undeveloped so the run-up in prices was slower. And home 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 Ticos move to the urban areas.

The author, Victor Krumm, writes about tropical Costa Rica and has an informative websiteCosta Rica Vacations. Check out the prettyCosta Rica Real Estate