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2019 Market Report for South Pacific Region of Costa Rica Real Estate

OTP-MARKET-REPORT-2019

Costa Rica real estate hit the big time with investors in 2018, growing significantly over previous years.  And our South Pacific region of Costa Rica is likely to be even bigger in 2019 that this year just coming to a close. For long, the Central Valley area in Costa Rica that includes the capital, San Jose, has been at the top of expat lists as the best place to live in Costa Rica. Many people enjoy the climate at these higher elevations as well as the proximity to metropolitan amenities. But Foreign Direct Investment (FDI) tides appear to be shifting in Costa Rica and around the world towards a future with a waterfront view.

Knight Frank Global Waterfront Report estimates that in 2018, prime waterfront properties sold for an average of 40% more than comparable inland properties. And this shift has become quite evident for Osa Tropical Properties, located near Ojochal in the Southern Zone of Costa Rica.

The independent team of realtors at Osa Tropical Properties closed on 40 properties in 2018 with 8 more under contract as of the end of year, which is more than double the 23 properties sold in 2017 between the same three agents. Our sales figures have also doubled over 2017, which was already a bigger year than 2016. And the way that this high season has kicked off, we can feel that 2019 will be our busiest year yet.

Although Costa Rica’s Southern Zone does not have “waterfront properties” for sale, we do have ocean view properties.  And from what our clients are telling us, many of them want a spectacular ocean view or waterfront feature.

Globally, harbour-side addresses command the highest premium at 59.1% followed by beachfront homes (58.5%), river (36.8%) and lakeside (32.7%) homes. Liam Bailey, global head of research at Knight Frank said, “The waterfront market is amongst the most liquid. Even in a depressed market, due to their position and scarcity, a frontline waterfront property will face strong demand with prospective buyers aware that their future exit strategy will also be assured.”

In The Global Ultra-Prime Report 2019 on second home markets performance, market analysts at Frank Knight write that most second home markets have seen an uptick in sales volumes over the past three years. Waterfront homes are most popular amongst British buyers followed by the US, Canada and Germany.

Most foreign buyers in Costa Rica are from the United States, Canada and Britain. But there has recently been a new wave of buyers from wealthy parts of Latin America, Asia, and the Middle East. Investors from around the world who are on the hunt for rental properties typically come from Panama, Mexico, the United States, Canada and Asian nations.

Tourism grows significantly in 2018

The ICT report, released this week, tallied 333,475 international arrivals to Costa Rica in September and October of this year. That’s up more than 3,300 people from the 330,158 people who visited during those months in 2017. These number increased despite the feared impacts resulting from the public-sector strike that began Sept. 10, which led the United States Embassy to publish an alert telling tourists to exercise caution in the country.

“We continue working to strengthen the national tourism industry, which generates 8.2% of the Gross Domestic Product,” said Maria Amalia Revelo, Minister of Tourism. According to data from the Costa Rican Tourism Board (ICT), more people visited the country in September and October 2018 than over the same period in 2017.

The Juan Santamaria Airport expects close to 2.5 million travelers during this high season. Thirteen airlines have increased their frequencies during these months to both the Juan Santamaria Airport and the Liberia Airport in Guanacaste, among them, Air Canada, Air France, Alaska Airlines, Delta, JetBlue, British Airways, Southwest, United Airlines and American Airlines. The airport expects to close this year with the total traffic of 5 million people.

The importance of community in Costa Rica’s global image

The abundance of online about, and offline communities in, Costa Rica have created international interest in the pura vida vibes of this nation.  According to an international survey by Cohn & Wolfe in 2017, the creation of online and offline communities adds an experience of authenticity/integrity to a brand – something that 9 out of 10 global consumers are willing to reward a brand for. 

Although Costa Rica is not necessarily a brand, it does have an image that travelers and real estate investors are interested in. Consumers today are generally looking for something more intangible: a sense of identification with the brand (in this case it’s a country; Costa Rica). There are countless online communities about all things Costa Rica on every social media platform. On Reddit, for example, there are communities around investing in Costa Rica, traveling in Costa Rica, finding out what that bug or plant is, being a digital nomad in Costa Rica, and so much more.

International promotion of Costa Rica to investors

The Costa Rican Investment Promotion Agency (CINDE) is a private, non-profit and apolitical organization that provides investment services. During its 35 years, CINDE has attracted more than 280 high-tech companies to Costa Rica, including worldwide leaders such as: Intel, Procter and Gamble, ICU Medical, Baxter, St. Jude Medical, Western Union and many others. On their website, CINDE states that “Costa Rica offers a sustainable and profitable investment destination to achieve that triple bottom line: profit, planet and people.

The prestigious international magazine The European chose CINDE as Latin America’s top “Investment Promotion Agency of the Year” in the recent ranking Global Banking & Finance Awards 2018. This is the second consecutive year that CINDE receives this award. CINDE also obtained first place as Business Innovation Hub-Latin America, thanks to the FDI’s dynamism during this year.

“We are very proud to obtain these awards from The European as 2018’s Best Investment Promotion Agency in Latin America and to choose Costa Rica as the best Business Innovation Hub. This challenges our agency to keep working with the highest quality standards to offer better and more working opportunities to our country through FDI,” said Jorge Sequeira Picado, Managing Director at CINDE.

The European chose CINDE as Latin America’s FDI Promotion Agency of the Year because Costa Rica has consolidated its position as a global site for FDI leveraging the following key assets:

  • Experience, innovation and a commitment to sustainable growth under one of the safest, most stable democracies.
  • Qualified and highly talented workforce for multinational companies to execute high value-added functions.
  • Premium location to access global markets.
  • A diversified portfolio of export products and services actively participating in global value chains.
  • A competitive tax incentives package offering as low as 0% income tax to reach true ROI.

Costa Rica recognized internationally

Most recently, Travel+Leisure Magazine https://www.travelandleisure.com/trip-ideas/best-places-to-travel-in-2019 has voted Guanacaste Provide as one of the 50 Best Places to Travel in 2019. This region was selected for its recent multimillion-dollar Liberia airport expansion, as well as it’s luxury Peninsula Papagayo resort. Miami-based company, Gencom, has also invested many millions recently in upgrading the Four Seasons and Andaz resorts, as well as bringing new dining opportunities and an electric bike-share program to the waterfront areas.

For anyone who has visited both Guanacaste and Puntarenas provinces, our Southern Zone region is far more spectacular in biodiversity and pristine landscapes, and we do not have water shortages here.  Resort tourists may love the Guanacaste region for its first world amenities, but anyone really looking to invest in and live a simpler, less-stressful and more joyful lifestyle, the South Pacific is the place to be in 2019. We may never be like Guanacaste, with its boardwalks and restaurants on the beach. But we can guarantee that every year, more and more travelers are finding us off the beaten path, and this area will surely find its place on the global map soon.

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