Tourism Boom Ups Real Estate Return in Costa Rica

Bridge in Rainforest Costa Rica Monteverde
Bridge in Rainforest – Costa Rica – Monteverde

Picturesque landscape, affable locals, and the depth of varied attractions make Costa Rica a perfect tourist destination. In 2018, over 3 million foreign tourists landed in the country to experience its exotic and sustainable eco-tourism. The first-half of 2019 saw more than 2 million foreigners flocking to unrivaled beaches and scenic hinterland of this Central American paradise, which continues to see an increasing arrival of tourists every year.

About 40% of all Americans going on holiday select Costa Rica. The tourism boom has its effects on the real estate in Costa Rica. With many flocking to the country to spend time amid natural, tranquil surroundings and take benefit of low-cost medical treatments, there has been a surge in demand for housing, rentals, hotels, and even apartments. Further, many won over by the charming ambiance and eco-friendly practices have chosen the country to settle or spend their post-retirement life. All these aided by the administration’s efforts to create a competitive and sustainable cluster of communities has helped Costa Rica’s real estate sector to post an impressive growth.

Tourism Offers an Assurance of Higher Returns

In the past decade, Costa Rica has emerged as a top destination for foreign tourists. There is a surge in the demand for rentals with growing tourist footfalls. The country has also become an attractive destination for medical tourism, where foreigners visiting the country for cosmetic, rejuvenation, dental, and surgical care. This has led to the growth of hospitals, clinics, health centers, restaurants, housing, and hotel to cater to the needs of tourists, all pushing the real estate development in Costa Rica.

It has also transformed cities and towns in Costa Rica. Capital San Jose, which hosts a large number of expats, has become the most attractive real estate investment destination in the Central Americas. With the listing of per square meter average prices of US $1,110 and $1,710 for houses and condos respectively and an above 4% annualized growth, the city’s real estate offers amazing returns on the investment.

In San Jose, rentals offer an average return of 8.6% while apartments can give you 7.5% every year. This also extends to other areas of Costa Rica. Notwithstanding a dip in housing prices in certain areas, returns on rental properties continue to be impressive thanks to a staggering number of foreign tourists making a beeline for the global poster boy of ecotourism.

Foreigners Driving Real Estate Market

Costa Rica has emerged as the second most-preferred destination for medical tourism in the Americas. Over 70,000 tourists visit the country seeking medical procedures every year. As they look for long-term holiday stays, the rentals are in much demand. Similarly, pensioners and expats ensnared by Costa Rica’s peaceful and natural ambiance bought houses in the country giving a fillip to the real estate market.

While a million US residents visit Costa Rica every year, they account for a major chunk of the expat community in the country. About 100,000 US citizens have made the country their home. It also hosts a big number of Canadian and European expats.

Foreigners mainly target beachfront or oceanfront properties, luxury estate, and other high-end properties. As compared to the prices in their home countries, foreigners see the median prices in the country as a bargain. Especially US citizens, used to the high real estate prices in their states, are impressed by how profitable the market here is. Foreigners feel it prudent to buy property in the country, as they are granted ownership rights that locals have and more likely to get higher returns.

Good Return Across The Country

Even after paying taxes, the gross return on average rental yields across the country remains above 7%. This has led to an increase in real estate transactions that have registered double-digit growth since 2013. Tourist arrivals have pushed prices in many parts of the country. In Guanacaste, while houses prices dipped by a mere 3%, condo prices have gone up by 40%. In Limon, Alajuela, Cartago, Heredia, and Puntarenas, the trend of an annual increase in the real estate prices continues.

Get in touch with us to know more about Costa Rica and real estate investment opportunities in the country.

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