With an array of mega-projects, marinas and luxury resorts in the pipeline, Costa Rica’s booming real estate market will continue to ride out the wave that took it to new levels in 2006, industry leaders say.
“Out here, the market’s just hotter than ever,” said Les Nunez, broker and owner of First Realty Pacific Beach Properties in Playa Hermosa, in the northwestern province of Guanacaste (672-1181, www.firstrealtycr.com).
The breakneck growth driven by hot markets along the beaches in Guanacaste and on the central Pacific coast, as well as parts of the Central Valley, promises to continue in light of investment that keeps flowing into Costa Rica’s tourism and other sectors, industry insiders say. However, others think the industry’s growth could slow.
In the Pacific provinces of Guanacaste and Puntarenas, the real estate market has been expanding for years, which this year translated into staggering 64% growth in construction in 2006 (see separate story).
Beach tourism development has brought along with it a series of additional development, such as construction of banks, commercial centers, storage rooms and other services, said Miguel Tapia, finance director of the Costa Rican Construction Chamber. The construction industry has been struggling to find enough labor to keep up with growth, Tapia said.
“Many Nicaraguans have gone back to Nicaragua because now there is a growing construction industry there,” said Tapia, adding that worker salaries jumped 30% this year as a result of increased demand for labor in Costa Rica (see separate story).
The lack of labor, water and infrastructure and an excess of bureaucratic red tape will slow down the $1.8 billion construction industry next year, Tapia predicted, but growth will still be healthy.
Though the construction chamber keeps stats on the industry, the real estate industry has problems keeping tabs on itself.
“It’s impossible to know how much the industry grew,” said Emilia Piza, president of the Costa Rican Chamber of Real Estate Agents. She said a good number of deals go unreported to the National Registry, and many that are being reported aren’t accurate.
One thing Piza said needs to happen in 2007 is that the industry needs to be regulated, which means certification for real estate brokers. She said there are now more than 300 certified brokers with the chamber, including some 80 new ones that joined this year.
She expects there will be yet more agents entering the market next year, as the industry continues to grow, and notes that dropping interest rates discourage consumers from keeping money in the bank and encourages them to invest in real estate.
Also, foreign investment continues to increase, she said, assuring future growth.
Hot on the Pacific
In Guanacaste, three luxury resort projects are in the works, promising to fuel the industry into the next few years, Nunez said.
In the Gulf of Papagayo, five luxury resorts already line Guanacaste’s pristine beaches. Nunez said three more such projects and two marina projects are slated to start construction in 2007 and beyond.
“This is high-end real estate,” he said.
Iris Mailloux, broker and owner of RE/MAX Resorts Properties Papagayo in Playas del Coco, on the northern Pacific coast (670-1129, www.costa-rica-real-estate1.com), said that after “phenomenal growth in Guanacaste, the industry will now have to find financing for potential buyers.”
“The growth is phenomenal, but now you’re going to have a lot of product going on the market, probably more so than you’re going to have people able to afford it,” she said.
The solution is to streamline the process of getting financing for buyers. One way to do that, she said, is to bring in private foreign financers who can give loans to buyers in the market with less hassle.
Besides Guanacaste, Jacó on the central Pacific coast saw an explosion of development in 2006. All year, cranes jutted up out of the surf town’s beachfront, where there was never a lack of construction workers spangling the beach’s dark sands.
“Jacó is getting slammed right now with development. It’s actually quite astonishing,” said Sean McGraw, head of Coldwell Banker Vesta Group Costa Rica (288-2268, www.cbvesta.com).
Coldwell Banker started up operations in Playa Dominical on the southern Pacific coast, where McGraw said years of a bustling real estate market are finally coming to fruition as developers begin to break ground on residential projects.
He expects that the Southern Zone, which has a more tropical, jungle feel than Guanacaste, will see growth to come. However, he said those in the real estate market are still waiting for the government to complete promised improvements to the coastal highway that connects the southern beaches with Quepos to the north.
“The road to Quepos is well under way,” McGraw said. “We’re hoping by 2008 we can get it paved. There are hundreds of pieces of equipment on the road widening it already … It makes us much more accessible.”
Nunez said he also expects to see the budding market in the Southern Zone town of Golfito explode as a massive marina project gets under way (TT, Sept. 29, 2006).
West to East
In the Central Valley, brokers say growth in western San José – Escazú, Santa Ana and Ciudad Colón – will continue into next year.
However, several brokers are predicting that growth will shift back to the eastern Central Valley, where wealth has traditionally concentrated because of a cooler climate and breathtaking views.
“I think activity is picking back up, and we’re getting some good listings over there as well,” McGraw said, “like in Curridabat and that area.”
Piza agreed the east side will be a reemerging hot spot for real estate in 2007.
Though there is much less open space on the already developed east side of the valley – where old Costa Rican wealth concentrated years ago – demand is still growing in places such as San Ramón de Tres Ríos, “because Costa Ricans like to live there; the climate is cooler,” she said, adding that there is an increase in demand among Europeans seeking property in the eastern Central Valley market.