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Costa Rica’s Economy: Is The Price of Paradise Worth Paying?

Costa Rica has been awarded once again, this time by tourism specialist Conde Nast Traveler Spain magazine naming Costa Rica the international tourist destination of 2018.  Voted by readers and followers of the site from among 25 destinations, Costa Rica was recognized for being a destination that is rich in biodiversity and tourist attractions, in addition to its solid reputation for sustainable tourism and constant innovation.

This award is being received as a validation of strategies employed by Costa Rica’s tourism ministry’s work of successfully promoting the nation to the European market, including a growth in direct flights from a variety of European ports.

Our office has seen a share of this growth from Europeans wanting to go beyond travel and make their stay in Costa Rica more permanent.  And because Europeans tend to be adventurous travelers, many of them find themselves in our more rugged and naturally abundant region of Costa Ballena in the Southern Zone of Costa Rica.

But how much will it cost me?

There is much heated debate to be found online about the cost of living in Costa Rica, since this is widely known to be one of the most expensive nations to live in Latin America.  But when you consider what it is you are paying a slightly higher price for: a peaceful and stable political system, far lower rates of poverty and crime, successive progressive governments working towards aspirational environmental goals, and excellent universal medical care.

Most people know that medical and dental services are less expensive in private clinics in Costa Rica than in most first world countries, with leading technologies and specialists available all over this developing nation.  Real estate is also less expensive than most other comparable locations in North America or Europe, and Costa Rican property investors enjoy very low property taxes (0.25% of your property’s valuation annually) and no capital gains taxes.

On the other hand, commodities such as clothes, cars and electronics face a considerable markup and red-light specials on isle 4 are not a common occurrence in Costa Rica.  This means that pre-packaged foods – less purchased by local consumers – tend to be much more expensive than in America, where you can buy 3-4 bags of Doritos on special for the same price as one bag in Costa Rica.  Your own, personal lifestyle will have the biggest influence in how much you spend on a monthly basis, which can range from $1000 on the lower end to $3000 on the higher end for all expenses, including rent.

Luckily, for those who can’t really live without, Amazon recently announced that it will allow clients in Costa Rica to receive their packages directly, rather than first receiving them at a U.S. shipping address and forwarding them to Costa Rica.  Products are also available for purchase through Amazon using the Costa Rican currency, the colon.  Various other shipping services exist, including DHL, FedEx and various small, local providers, and the speed and efficiency of Costa Rica’s postal service is growing every year.

Price comparisons

According to the online aggregate database Numeo, the cost of living in Costa Rica is 23.08% less than in the United States on average, not including rent, which is $55.24 lower on average than in the United States.  Using the example of the most expensive city in the US, you would need about $7500 USD to live the same lifestyle that you can for $1000 USD in San Jose, assuming you rent in both cities.

Since 2010, Costa Rica has enjoyed strong and stable economic growth, seeing a 4.3% rise in 2016 alone.  It has also attracted one of the highest levels of foreign direct investment per capita in Latin America.  According to Forbes magazine, foreign investors remain attracted by the country’s political stability and relatively high education levels, and incentives offered in the free-trade zones.  And so, even while goods are generally more expensive in Costa Rica, there are many places around the country in which appliances, imported foods, and alcohol (among other things) can be purchased duty-free, thanks to government incentives.

The Costa Rican economy

Still relying heavily on the export of bananas, coffee, sugar and beef, the Costa Rican economy is moving past commodities and adding the export of high value-added goods like medical devices.  And more impressively, the government-mandated push towards ecological protection and sustainable practices have made Costa Rica a key destination for ecotourism from around the world.

The Great Place to Work Institute of Central America and the Caribbean has found that 40 of the 154 best businesses to work in their region of analysis are in Costa Rica.  Two Costa Rican businesses have also been recognized in TripAdvisor’s second annual Traveler’s Choice awards for Rentals in the luxury category.

According to a recent TripAdvisor survey of their customers, 64% of Americans traveling in 2018 plan to stay in a vacation rental.  Savvy investors into Costa Rica are already looking at how to make their local property investments work for them while they are away, renting them through popular sites like VRBO and AirBnB.  Owning a vacation rental on your Costa Rica property is another great way of funding your stay, too, since it is legal to own a business as a foreigner in Costa Rica, with the same rights as nationals.

Use the contact us form below to get in touch with an agent from our team.  We will help you answer all of your questions about investing in Costa Rica and if it is a viable plan for you economically.  Our agents have expert knowledge, having helped hundreds of successful buyers who have remained friends and clients over the years.  Our goal is to help you succeed in this great country, and not to make a quick dollar by tricking people into buying. It’s easy to fall in love with Costa Rica’s beauty and ethics, but it’s important that it’s right for you – for the good of our community, too.