Real Estate Appreciation in Costa Rica

Investments are supposed to make money and not lose it, right? And that’s equally true with regard to investments in Costa Rica real estate.

There’s an old, and for some, not so funny, joke that goes like this: You know the best way to become a millionaire in Costa Rica?

Answer: Bring two with you!

Yes, you can lose money in Costa Rica. And that’s especially true with respect to bad real estate deals. It pays to do your homework. So, let’s do a little of that with this post.

What is the outlook for real estate appreciation in Costa Rica?

Well, of course that depends on you making a good deal to begin with. In that light it pays to have a knowledgeable and ethical real estate professional guiding you. If you have no knowledge of Costa Rica, then you need to spend some time on the ground gaining that knowledge. You might want to consider taking an expat tour from a reliable source for such tours.

But the answer to the question posed, in general, is that the outlook for real estate appreciation in Costa Rica is favorable.

Partly because Costa Rica does indeed have a stable and growing economy. In fact, Costa Rica has one of the strongest economies in Latin America. It has a long-standing democratic tradition, with peaceful presidential elections and transitions of power taking place every 4 years. Costa Rica is a vibrant social democracy. It has no military and thus is freed from that heavy drain on revenue to spend money on its people, especially in areas of infrastructure, healthcare and education. Costa Rica has made great strides in improving its infrastructure, especially its notoriously bad roads, over the past decade. For these reasons, Costa Rica is ranked annually as one of the world’s happiest countries.

But the area that’s perhaps most relevant to real estate appreciation is Costa Rica’s growth in the tourism sector. Costa Rica has become on of the world’s major tourism draws. In 2015, Costa Rica attracted a record-breaking 2.7 million tourists from around the word. That represented 9% growth over the previous year and outpaced national GDP growth of 2.8% threefold! According to figures from the Costa Rican Tourism Board (ICT), the tourism sector was responsible for more than $2.8 billion in revenue during 2015 and employs roughly 600,000 people through direct and indirect employment.

Costa Rica’s strong tourism growth comes for good reason, as the country contains some of the world’s most stunning landscapes and most intense levels of biodiversity in flora and fauna. Almost 25% of the entire land mass of Costa Rica is set aside and protected from development as either national park, or some form of reserve or wildlife refuge.

Many who visit as tourists, stay as expats. The cycle of a potential expat is almost always, first visit as a tourist, then come back as an investor, and perhaps buy and live as a long-term resident. And that has made Costa Rica one of the leaders in Latin America for foreign direct investment.

That investment has been a double-edged sword for the local people, the ticos. While it has become an important component of the economy, it has also driven up prices, both for day-to-day living and for real estate. That can obviously be bad for the locals, but good for the foreign investor, at least in terms of the outlook for real estate appreciation in Costa Rica.

And with the outlook for tourism growth looking very good, any real estate investment with strong touristic appeal should have favorable expectations for income generation as well.

Tourism is a major driver for the real estate market in Costa Rica and it appears to be driving it in the right direction.