2016 has been an interesting year in real estate. After two years of record highs in Costa Rica's real estate market, the start of this year was very quiet, like the calm after the storm. But as of July, inquiries at Osa Tropical Properties have tripled and sales are happening at record speed. As recent clients from the United Kingdom told us, they want to invest in the Southern Zone while the buying is good. Both tourism and foreign investment into real estate are up on last year in Costa Rica, so given the slow start to the year, now looks to be the best time in recent years to invest in property here.
Fallout from the 2008 global financial crisis is still lingering in economies throughout the world. In the United States, the total debt – private, public, financial and non-financial – is 350% of the GDP and rising by $40 billion each month. The Eurozone debt crisis of 2011 is still fresh on people’s minds, topped off with still looming worries about Brexit. China’s economy has been in deep turmoil this past year.
Given this history of financial uncertainty, many are wondering where to make their next investments. As many savvy investors have stated: don’t put all of your eggs in one basket – diversify! Investing in Costa Rica’s real estate market – a country that does not float its currency with the American dollar or Euro – is one way to protect your money from the instabilities of the U.S. and European markets. The Southern Zone has proven over time to be one of the most stable markets in the country.
Visit Costa Rica
As a general strategy, it is best to follow the trends before they hit big. And when investing in real estate, go where the people go.
Foreign investors thinking about purchasing real estate in Costa Rica are up by 4%, according to a 2016 Realtors® survey. This comes on the heels of last year, when Costa Rica had a record year for tourism, attracting 2.66 million visitors – more than half of the population of the country. This includes continued growth of tourism from the United States, and the United Kingdom and China have the two largest growing numbers of tourists visiting Costa Rica, both rising by nearly 30 percent in 2015.
According to the Costa Rican Tourism Board (ICT), 2015 revenue from the tourism sector totalled $2.8 billion, up by $246 million on the year before. The tourism sector is responsible for 600,000 jobs, both directly and indirectly. Visitors are said to like the Tico hospitality most about Costa Rica and it must be so, with 30% of tourists come back for at least a second visit.
The tourism market as a whole grew by 9% in 2015. The total contribution of travel and tourism to Costa Rica’s GDP in 2014 was 12.5% and this figure is expected to rise to 13.2% by 2025. These figures are still down on the record highs of 2005-2008, however according to the World Bank, numbers of tourists have been steadily increasing and Costa Rica is in fact up this year by roughly one million annual visitors from 2006 figures.
Less of the Costa Rican economy is made up of tourism dollars yet the amount of tourism revenue going into the coffers is increasing, meaning that Costa Rica’s economy is steadily growing and diversifying. Costa Rica is in fact the highest economic growth area in Central America.
Making the vacation permanent
Costa Rica is a growing economy with plenty of new investment and a young population. Europe and North America both have aging populations and soon-to-be overburdened retirement systems and people are looking for ways to stretch their savings while still maintaining their lifestyle.
As an investment, real estate has less inherent risks than stocks and bonds because the value of real estate will never reach zero. Hard assets like real estate are more resistant to market fluctuations because they have intrinsic value. The stability that it provides as a place of escape gives it more value than just a building or a piece of land.
You can expect good returns from your investment from capital appreciation, especially if buying in a growing market like the Southern Zone. Renting your property can also generate more revenue than stock dividends for the same value.
When planning your escape, the place that you move to should be far away and different enough to not attract what you are looking to escape. Places that are rife with overpopulation, poverty, pollution and close ties to your home country are typically good to avoid. And in this spell of economic uncertainty, those of us lucky enough to have invested ourselves in Costa Rica can be proud that the economy here is honest and hard-working – all while taking great pleasure in the glorious surroundings.
To those who want a secure investment with real, intrinsic value, get in touch with the team at Osa Tropical Properties who can help you answer how you can find yourself in the promised land, where economic burdens feel a little bit lighter.