Costa Rica’s booming real estate industry has begun sagging now that the tourism low season is under way, and some insiders say the market could begin to slow, though many remain optimistic.
“There is a whole lot more demand than supply,” 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).
Nunez said that means high absorption rates and low inventory for brokers.
“The bigger and more established guys are pre-selling, and the projects are sold out before they hardly turn any dirt,” he said.
The breakneck growth driven by hot markets on the Guanacaste and central Pacific coasts, 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.
Other new bright spots are the budding Southern and Northern Zone markets, targeted by buyers looking for a more tropical feel in the south or who want to have a view of towering Arenal Volcano.
However, many express fears that problems with infrastructure and crime could be factors in slowing the market’s growth in the near future.
Pacific Coast
In the Guanacaste and Puntarenas provinces along the Pacific coast, the real estate market has been expanding for years.
Beach tourism development has brought with it a series of additional development, such as construction of banks, commercial centers and a series of luxury resorts along the beach, Nunez said.
“I would say Guanacaste has at least another five-year strong run at it,” he said, “Naysayers say they got no water and they hear about development problems in Tamarindo (on the northern Pacific coast). But the place has water.What it may not have is proper infrastructure.”
In Guanacaste, resort projects in the works promise to fuel the industry into the next few years, Nunez added. Five luxury resorts already line beaches on the Gulf of Papagayo, and Nunez said three more such projects and two marina projects are slated to start construction this year and beyond.
Daisy Mora of Pacific Coast Realty (654-5050, daisy@flamingobeach.com) said the market around Playa Flamingo, north of Tamarindo, is growing with commercial centers, houses and condo projects, but sales are beginning to drop. She attributes the slowing to a lack of infrastructure, including roads.
Even the optimistic Nunez admitted the market has slowed during the low season, though he said the slowing is just temporary.
Moving south along the Pacific coast, Coldwell Banker Vesta Group (787-0223, www.cb-costarica.com) is putting the finishing touches on its new Jacó offices, slated to open any day now.
“Land prices are going through the roof,” James Drews, vice-president of sales for Coldwell Banker Vesta Group, said of the Central Pacific’s Playa Jacó, where a construction boom has sprinkled the skyline with cranes and the beach with construction workers.
He said Jacó’s location as the closest beach to San José promises growth to come in that market. Indeed, he expects Costa Rica’s real estate market to stay healthy as the baby boomer generation in the United States ages and looks toward tropical retirement.
Drews said Playa Dominical, a popular surf destination on the southern Pacific coast, “is no longer the undiscovered gem of the South Pacific,” adding that development in Dominical, where construction began on many new projects this year, is more and more becoming a favorite with large-scale developers buying up swaths of land.
“Things are on the move,” he said of the Southern Zone, which tourism officials have said will be the next Guanacaste of the tourism industry.
Plans to build an international airport in Palmar Sur have also brought attention to the area. The lack of an airport, as well as ongoing repairs on the coastal highway that connects Quepos with Dominical, are the biggest setbacks for development in the region – but also the biggest hope, Drews said.
Central Valley
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 over to the eastern Central Valley, where wealth has traditionally concentrated because of the cooler climate and breathtaking views.
“In the Central Valley, the market is spreading to the east side – places you never used to see foreigners, like Curridabat,” said Nunez, who has an Escazú office.
Drews added that many of his beach buyers are looking to have second homes in the Central Valley.
“They are buying condos and homes in the Central Valley so they can have a city house,” he said. “Also, more businesses there need housing for their new employees.”
Up-and-Coming
The real estate market’s underdogs to look out for are the Northern Zone, where movement is happening around Arenal Volcano, and the Caribbean, where investors are wooed by world-class beaches.
Real estate broker Javier Fuentes, president of Terratica.com Real Estate (293-1515, www.terratica.com), said the company’s office near the northern town of La Fortuna has been serving a small but bustling market around Arenal Volcano.
“It’s moving a little bit faster than the Central Valley,” he said, adding that the Northern Zone market tends to attract people more familiar with Costa Rica who know what they’re looking for.
At Sunrise Coast Realty on the southern Caribbean coast (750-1902, www.sunrisecoastrealty.com), growth is popping up in the communities of Cahuita and Manzanillo, which are on some of Costa Rica’s most sought-after beaches. But the market is still small-scale, according to Sunrise broker Gregory Petin.
“We have little projects with residential house buyers. It’s mostly lots, farms and houses – few gated community projects like on the Pacific,” he said, adding that some gated community projects have sprouted up in the area, but the communities are more for securing homes instead of having one allinclusive apartment complex.
Petin said the quality of roads and ineffective police continue to hold back the market on the Caribbean.
“It’s thefts and petty crime like anywhere else, but when it affects tourism it’s bad because people go back home and give Costa Rica a bad recommendation; they go on the Internet and have blogs,” he said.
