Residential Projects May Saturate Market

THE increasing number of new residentialdevelopment projects in theCentral Valley, experts warn, could soonsaturate the country’s real estate market.In recent years, an increasing numberof Colombian and Venezuelan citizenshave invested in Costa Rican residentialprojects, the daily La República reported.The investors say they chose Costa Ricabecause it offers more stability than theirhome countries, and chose real estatedevelopment projects because of the lackof options offered by the country’s financialsystem, according to the report.These projects have had a largeimpact on the country’s real estate market.Traditionally, Costa Rican developershave acted conservatively, developingsmall projects. The new investors havebeen more ambitious, constructing largegated communities and high-rise apartmentcomplexes in the western San Josésuburbs of Escazú and Santa Ana.The increasing number of residentialprojects has resulted in a drop in the priceof residential real estate. Prices at somecomplexes in the western suburbs havedropped 25-30% during the past year.To counter the risk, developers havebegun pre-selling a portion of the homesbefore beginning construction of projects.In recent years, new financing optionshave become available as a result ofincreased competition between banks anda significant drop in home mortgage rates.However, these residential projects remainoff limits to Costa Ricans who earn lessthan $30,000 a year.Only 5% of Costa Rica’s populationcan afford to buy into these complexes,according to estimates. Houses and apartmentsin these communities sell for$75,000-135,000. In addition, owners arerequired to pay maintenance fees, whichcan be as high as $1,000 a month.