The e-mail copied below is representative of several such that we have recently received asking about the condition of the Costa Rica real estate market. This one was sent to me, Ben, and I decided to write my own answers to Deb’s questions, I have asked Rod to do the same, without discussing it between us, to see what we came up with from our own respective points of view.
State of the Market June 09
Hi Ben and Rod!!
Summer has arrived in the northlands, vacations are beginning. Would love to hear from you with impressions on the season past and the coming summer–generally your impressions of the market in Costa Rica and what activity levels you might be anticipating for the summer season and following high season. (Besides I am dying to get something other than spam at this email address!!)
Thanks, in advance, for taking the time to fill me in on your thoughts.
Deb A
Summer has arrived in the northlands, vacations are beginning. Would love to hear from you with impressions on the season past and the coming summer–generally your impressions of the market in Costa Rica and what activity levels you might be anticipating for the summer season and following high season. (Besides I am dying to get something other than spam at this email address!!)
Thanks, in advance, for taking the time to fill me in on your thoughts.
Deb A
It is time for another episode of the Guys In the Zone Costa Rica Real Estate “State of the Market” report.
Impressions on the past season?
Rod Says: Initially, I wanted to write, “the past season has been slow.” However, this is only true with regard to the number of buyers, offers, and deals closed. Those numbers have been down; however, due to the economy, there have been a record number of sellers who have approached us to list their property. I estimate prices have come down between 25-50% across the board and generally speaking only those properties that are priced to sell (i.e.- “firesale” meaning 40% decrease or more) have been moving. Unless they need the money, I would encourage most sellers to hold their property for at least a year…. even if sellers have a rare and unique piece of property (a nice ocean view or creek nearby doesn’t qualify as unique).
Ben Says: I’d characterize the past season as being busy with sellers – working more cooperatively with other real estate agencies – and a smattering of buyers coming through. The buyers were of a slightly different flavor than in years past. I had a couple of inquiries from folks looking for a large property that they could put a small town on, or a community. We had a couple come in from Spain that purchased two lots in the San Buenas Golf Resort. They are moving to the area and wanted the investment of early buy-in to the resort, as well the man is a builder and so is going to build the homes on the lots. So he’s setting up a business of sorts. We talked a lot with relocators about how to support themselves here in Costa Rica. Business was down, but we were busy nonetheless.
Ben Says: I’d characterize the past season as being busy with sellers – working more cooperatively with other real estate agencies – and a smattering of buyers coming through. The buyers were of a slightly different flavor than in years past. I had a couple of inquiries from folks looking for a large property that they could put a small town on, or a community. We had a couple come in from Spain that purchased two lots in the San Buenas Golf Resort. They are moving to the area and wanted the investment of early buy-in to the resort, as well the man is a builder and so is going to build the homes on the lots. So he’s setting up a business of sorts. We talked a lot with relocators about how to support themselves here in Costa Rica. Business was down, but we were busy nonetheless.
The coming summer?
Rod Says: Most likely, the coming summer will remain slow. We already have a high percentage of the quality listings in the zone. July and August typically see a slight bump, but I don’t expect the market to make a significant upturn in activity until November.
Ben Says: Deb, I’m going to assume that you are referring to summer in the States, which is rainy season here. Rod and I have a client here working on acquiring a $400k range property, and using a self directed IRA to do it. This client is savvy about economics and feels its a good move, not only in the life-style sense (she and her husband love Costa Rica and want to live here at least part of the year), but in the investment sense. Additionally I’ve got a few slots in my calendar in the upcoming weeks with buyers coming in looking to buy for similar reasons. A few real estate agencies have recently gone the way of the dodo, and those of us left standing are asking for, and getting, lowered office rents. “Hunkered down” might be a good way to describe the present rainy season in Costa Rica. I think that it is a good time to buy.
Ben Says: Deb, I’m going to assume that you are referring to summer in the States, which is rainy season here. Rod and I have a client here working on acquiring a $400k range property, and using a self directed IRA to do it. This client is savvy about economics and feels its a good move, not only in the life-style sense (she and her husband love Costa Rica and want to live here at least part of the year), but in the investment sense. Additionally I’ve got a few slots in my calendar in the upcoming weeks with buyers coming in looking to buy for similar reasons. A few real estate agencies have recently gone the way of the dodo, and those of us left standing are asking for, and getting, lowered office rents. “Hunkered down” might be a good way to describe the present rainy season in Costa Rica. I think that it is a good time to buy.
Generally, impressions of the market in Costa Rica?
Rod Says: My general impression is that the market is slow and will continue to be, at least relative to the high levels of appreciation and activity in recent years. That being said, I think we (those who invest and/or live in Costa Rica) are in a good position. The road will be paved from Quepos to Dominical, hopefully in a year or so, and I think MANY people will bypass the Quepos area for our flavor of paradise, not to mention the investment opportunity. Everything is moving south, and the plans to put the next International Airport in Palmar reflects this. Manuel Antonio is lovely, although (at least for me) a bit built and definitely overcrowded in the high seasons.
Ben Says: At the risk of being redundant, I think that it is a good time to buy land in Costa Rica. Prices have come down, reportedly more on the Pacific coast than elsewhere in Costa Rica. The “R” word (recovery) started being used a some time ago in the U. S. media. There are people with money who have now had time to adjust emotionally to the new world conditions, and Costa Rica remains a desirable permanent or second home destination. Here are a couple of current market analysis from other sources, and there are many more where these came from:
- Weaker US Dollar Creates Buying Opportunity in Costa Rica
- Costa Rica Real Estate – More And More Sought After
What activity levels you might be anticipating for the summer season and following high season?
Rod Says: Even if the global economy improves only slightly, I believe this high season (beginning in November) will be busier than last year. When people do come down, I believe they will be favorably impressed, as we have excellent properties with ample headroom for appreciation. The buyers that do take the time to explore the southern Pacific zone will have a chance to win big.
Ben Says: I am irrationally optimistic about the coming high season. I say “irrational” because I think that the problems afflicting the U. S. economy run deep. I think that Costa Rica land is as desirable as ever. I don’t see land prices going much lower here. The dollar is strong against the colon (Costa Rica currency). All that and I just kinda feel like that is what is going to happen. Rod and I feel like whoever is left standing around here after this initial hit from the last 6 months is going to enjoy a brisk business in the coming season. Did I mention that I think that now is a good time to buy land in Costa Rica?
Ben Says: I am irrationally optimistic about the coming high season. I say “irrational” because I think that the problems afflicting the U. S. economy run deep. I think that Costa Rica land is as desirable as ever. I don’t see land prices going much lower here. The dollar is strong against the colon (Costa Rica currency). All that and I just kinda feel like that is what is going to happen. Rod and I feel like whoever is left standing around here after this initial hit from the last 6 months is going to enjoy a brisk business in the coming season. Did I mention that I think that now is a good time to buy land in Costa Rica?
Hi Ben and Rob
I enjoyed your optimistic appraisal of the general conditions in the area. Personally I agree that it is the right time to buy. I think from a builders stand point it is a time to focus on “more for less”. What I am really saying is that, realistically the building industry can offer better solutions than ever before because of the leveling off of astronomically high prices for products that have a very positive effect our environment such as solar power and a host of others. We are planning to incorporate some of these solutions and capitalize on the new realities that surround us in a world market. More for less. All the best……..
Hi Mike, thanks for jumping in. Construction is the hot topic around here these days. Please let me know when you get your program together and I'll post it here. I've got quite a number of folks looking to build now and knowing what options are available is helpful. Solar is good, but I understand that the Costa Rica government is a little behind on making the incentives for using solar compelling. Is it really cost effective to use battery storage? Isn't the best way to use solar to tie into the grid and get a credit off of your electric bill? ICE (the Costa Rican utilities company) doesn't have it together yet with this sort of program, but I understand that they are working on it.
Ben
Lake Arenal and Fortuna are ghost towns.
I know some 20 year old hotels calling it quits and the developers/realtors are leaving abandoned projects.
Good time to buy !
I understand that 150 hotels have closed in Costa Rica in the last 6 months.
Ah it's great to know we bought at the peek, but considering that money came from stocks I guess it is a wash. At least my lot won't go bankrupt 🙂
I don't feel that pessimistic about real estate in Costa Rica although I agree that values are down everywhere in the world for the most part, and 40% decreases in value are the norm in my area, Lansing, MI USA. I purchased 126 acres in the NW Pacific area of Costa Rica in Guanacaste about 7 miles from Playa del Coco and Playa Hermosa and 15 minutes from the Liberia airport (see http://www.colinasdelsolcr.com). I have completed the infrastructure and all lots are segregated and registered and clear titled. I have been unable to start the clubhouse and landscaping, but understand what I'm up against and have resigned myself to holding on till the world economy improves again. I am still convinced that Costa Rica is the place to be, and am confident that the government realizes that the crime problems have to be addressed as does the maze of paperwork involved in getting anything done in Costa Rica. It's still a beautiful country and most of the residents are very nice people.
Hey Ben and Rod – Great article guys! I'm with you 100% Ben on your optimism that people with money to spend are now in a better position emotionally to re-examine purchasing land in the southern zone of Costa Rica. This was a volitale 6 months, and alot of these potential buyers had employment worries or significant financial losses on paper that, while not comprising their financial ability to invest in real estate, put a big enough scare in them not too, thus forcing them to sit tight. Things have stabilized now, and with prices properly adjusted and a saturation of good opportunities on the market, savvy investors who believe in Costa Rica and believe in the Southern Zone WILL start buying.
We're starting to get some of these types of buyers re-interested in Sierpe del Pacifico…and I strongly feel that the same sort of thing will start to happen throughout the Southern Zone.
Costa Rica is a beautiful place and the value of property will go back up. It always does. I am wondering what the market for solar screens might be in Costa Ria. Are there many awning companies and such there? The most energy efficient solar screens can be found at the reference in this text. Costa Rica is coming back! The ecological aspect of tourists visiting will continue.