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Real Estate Prices Rise

THE country is in the midst of a real estate boom and experiencing the effects of a maturing influx of construction projects and foreign investment. Though real figures are hard to come by in each region, a spot check with realtors revealed prices have risen around the country over the past year by as much as 20% or more, and buying trends are shifting to previously less sought-after regions, both because of a simple lack of availability in some areas and as a reaction to soaring prices.GuanacasteThere is a movement away from the beachfront in the northwestern province of Guanacaste because most of the land has been bought and is not for sale. What is available is astronomically priced compared to nearby lots several street blocks from the beach.Ron Douglas, owner of Surfside Properties (, 654-5567) near Playa Flamingo, on the northern Pacific coast, estimated the average price for a lot at $100 per square meter.“There’s a major difference between title property and concession property,” Douglas said. “Your average lot value is $550,000 (for 1,000 square meters) if you can find one that’s titled.”Property titles and concessions are among the greatest issues plaguing real estate purchases, especially in the rural and coastal areas away from the seat of national government. Zoning plans have not been made for much of the country, and the strip of coastal land 50-200 meters inland from the high-tide mark cannot be owned; it must be “borrowed,” in a sense, through a concession. Without zoning plans, however, neither titles nor concessions are granted.The titling and concession process is slow and bungled by bureaucracy and a lack of government funds, which sometimes leads prospective owners to pay for the zoning plans themselves.LOTS in Tamarindo, south of Flamingo, go for $950,000, Douglas said, “if you can find one.”That “if” is his caveat for most beachfront properties.“Flamingo has no beachfront lots available, just condos at the back end,” he said. This, combined with the scarcity in the midst of such high demand, has led to major subdivisions, such as hillside ocean view lots, springing up to fill the void.“It concerns me, the number of subdivisions coming in,” Douglas said. “That might undermine the value of the existing ocean-view lots. I would recommend not investing in an ocean-view lot,” unless the purchase is not an investment, but something for the buyer to enjoy, he added.Lately, he said, more buyers are in this category, meaning fewer buyers are speculators. He estimates the shift has been from 75% speculation a year and a half ago to 50% now. This clientele is bolstered by retiring U.S. citizens who shy away from high prices in Hawaii and hurricane danger in the Caribbean.“People are looking to invest now and relocate when they can sell out of where they are in North America,” he said. “There is a big demand for condos – there are zero available in Surfside, for example (because they are sold out).”Off-the-beach, two-bedroom condominiums cost about $175,00-250,000, and beachfront condos run from $475,000.Buyers are primarily from the United States, predominately from California and Florida, judging by who looks at Douglas’ offerings online. He estimates the demand is 85-90% North American, 5% European and the rest from everywhere else.CaribbeanPrices are spiking in the Caribbean region as well, according to Manuel Pinto, owner of Caribe Sur Real Estate (759-9138, in Puerto Viejo, on the southern Caribbean coast. “Like a lot of places, we’re seeing a boom,” he said.But a trend is hard to pinpoint. “It’s hard to say what kind of property people are looking for; some are looking to start a business, others are looking for a house, small plots to build on later or large plots for a ranch,” he said.“It’s evenly spread out, what people are looking for. No one kind of property is a favorite.”Most new buyers are moving south of Puerto Viejo along the coast, into rural jungle towns such as Cocles, Playa Chiquita and Punta Uva.“They’re less developed, more family oriented,” Pinto said. “Puerto Viejo is already well developed, and that’s what some people want, but others want more of the nature, the peace and the beaches south of there.”There are no longer any beachfront lots for $50,000, he said, which is what a lot of buyers come searching for. Now, most beachfront properties run $30-40 per square meter and cannot be smaller than 5,000 square meters by law, meaning they cost $150,000-200,000.MOST land in the area is protected as a mixed-use wildlife refuge. To minimize development, lots are sold at minimum sizes and maximum density.“In a way, thank God for that, because that’s what keeps our beaches beautiful,” Pinto said.“We have no condos and no condo projects,” he said, but “there is a lack of decent houses. If you want a decent house, at least in the next few years, you can build it yourself. I tell my clients, if they want to make a smart investment, buy a lot and put a house on it because of the shortage.”A “livable” house runs $100,000-150,000, and high-end, well-situated beachfront homes start at $1 million, he said.Property buyers in the Caribbean are getting younger, and the Caribbean attracts a unique mix of foreigners that is not as heavy on North Americans as other regions. Pinto estimates about 60% are North Americans, about a third of whom are Canadians. The rest are “lots of Russians, Italians, Argentineans, Dutch, Swiss and French.“One major thing, demographically speaking, is it’s much more international here,” he said. “The minority group here is Tico. Most people speak English here because of the Caribbean culture, and the food’s better than anywhere else in the country.”Southern ZoneFor property owners, the Southern Zone is a whole different beast than most other parts of the country. The hitches that annoy buyers in the rest of the country are intensified in the Southern Zone: most of the property is untitled, most roads are unpaved, many areas have no road access at all and materials must be airlifted or boated in, and squatters are a consistent menace.The trade-off, however, is the virgin forest, the private, isolated beaches, the monkeys, macaws and other jungle creatures, and some of the world’s best fishing and surfing.Nichole Dupont has been the manager of a mom-and-pop ecolodge for more than 12 years in Drake Bay, on the Osa Peninsula ( She does not sell real estate, but is asked for help in making purchases, something she only gives after interviewing the prospective buyer.She said the title, for those few properties that have one, makes a big difference on the price tag. Some lots are titled, while others are in the process of getting titled. Lots in the area cannot be broken into anything smaller than one hectare.Because the area does not have a zoning plan, construction has occurred in supposedly restricted areas, as well as in the maritime zone, she said. Coastal construction is not allowed, except in rare circumstances, from the high-tide mark to 50 meters inland. The strip is considered public property for use by anyone, but there has been construction in that zone, and in the concessioned zone behind it, all around the country and even, Dupont said, around Drake. Local governments have cracked down in the past few years and ordered evictions from some of those properties, so investing in building there could be risky.“Only a handful of beachfront properties have concessions,” Dupont said, and “almost all beachfront property is held by non-national interests.”FOR price comparisons, a 100-squaremeter lot with an ocean view in the maritime zone (which can be used as a concession once the zoning plan is made), connected to the power grid, with water and road access, sold for $150,000.“I’m sure there is a lot of weird paperwork, like: ‘If and when the concession comes out, this property will be handed over to X person.’ This is really risky for investors,” Dupont said.Another example: Paradise Bay, a “beautiful” property in San Josecito de Rincón, near Drake, sold for more than $2 million, but it does not have road access, power, water, mobile phone service, a title or a concession. Hauling construction materials will have to be done by boat, Dupont said, a chore heavy on manpower. A one-hectare, completely isolated and disconnected lot can sell for $240,000, she added.In general, the cost of transporting construction materials to the zone ratchets up their price by a third, she said.“Most buyers are interested in the beachfront, but I imagine this will change. Beachfront parcels are mostly zoned for tourism, and they are for deep-pocketed companies looking to develop a project. For retirees, I can imagine the farm properties will start to move at fair prices,” she said. Central ValleyCircling back north to the Central Valley, Escazú, the posh western San José suburb, is peppered with luxury condominiums, while at the same time offering economical condos in the $200,000 range.Barry Ashworth of Coronado Realty (, 223-4618), said land and house prices are rising, and that there is a glut of high-priced condos in the $500,000-600,000 range.In spite of the maturation of Escazú’s realty market, Ashworth said there is still a big demand. Low-end houses and apartments start at $150,000-250,000, and luxury apartments range from $250,000-400,000. Regardless of the price, the British expatriate said a property in Escazú is still “a tenth” of what it would be in Europe. “Mainly retirees are buying,” mostly from the United States, he said. He estimates that 50% of new buyers are North Americans and 20% are Europeans, and most are not speculators.Lots in gated communities start at $150 per square meter.“But it’s getting very hard to find land you can build on for condos; there are a lot more restrictions that people don’t know about,” he said. Among these are limitations in height and number of houses per property.“They will have to drop prices considerably in those areas. Zoning is a lot stricter in Escazú in general, so people have to check – it can be very surprising.”However, he said, “I think prices will go up more, especially for single-family homes, because very few people are building homes (on speculation). So anything around now (that is not a condo) will be more expensive. Mainly the garden, or as (North Americans) know it, the backyard, is the important thing.”ALEXANDRA Lancaster (, 228-2623) specializes in selling properties around the Central Valley, though she offers some on the coast. She calls Escazú the most expensive and upscale place in the valley, and said it is becoming “way overbuilt.”“The upward trend of prices in Escazú has caused a paralysis in sales to some extent,” she said. “Because prices went so high, the pressure has caused people to go out of the area.”Lancaster says she has seen demand rise in Heredia, north of San José, and some of the mountain coffee towns. Anew, custom-built, 1,200-square-foot home in Heredia costs about $75,000. Few condos are built there – most properties are houses on larger plots of land, she said, adding that luxury homes might cost about 30% less than they do in Escazú.“I feel there is a whole other group of people who do not want beach properties when they come (to Costa Rica),” she said.“A lot of people retiring here want the cool mountains. It’s a healthier environment. There’s less crime in the countryside than on the beach. It’s more peaceful and agricultural. It’s a rural life.”


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