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Everything you need to know is included in our Costa Rica Property Pack
Are you considering buying real estate in the land of Pura Vida? Are you pondering if it's the right time to buy or if you should wait until next year?
Market timing is a subject where everyone has their own take. Your friend who is from San José might advise you to buy property now, whereas your relative who actually live in Costa Rica may suggest waiting for more favorable market conditions.
At TheLatinvestor, when we create articles or update our pack of documents related to the real estate market in Costa Rica, we base our analyses on factual data and statistics rather than opinions, minimizing biases and uncertainties.
After thoroughly analyzing official reports and statistics available on government websites, we have gathered solid information in a database. Here are our findings that can assist you in determining whether it's the right time to invest in real estate in Costa Rica.
Enjoy the article!
How is the property market in Costa Rica now?
Costa Rica remains, today, a very stable country
Positive
If you want to invest in real estate, prioritize stability as it fosters steady rental income and potential capital gains. It is an information you need as a foreigner looking to buy real estate in Costa Rica.
You most likely already know that Costa Rica is widely known for its remarkable stability. The last Fragile State Index reported for this country is 39.4, which is an impressive number.
Costa Rica remains a very stable country today largely due to its long-standing democratic tradition, having abolished its military in 1948 and redirected resources towards education, healthcare, and social programs, which have fostered a strong civil society and political stability. Additionally, its commitment to environmental sustainability and ecotourism has bolstered economic resilience and attracted international investment, further contributing to its stability.
Stability check done. Now, it's time to review the economic forecast.
Costa Rica is poised for strong growth
Positive
Before diving into real estate investment, the initial step is to assess the economic strength of the country.
As indicated by IMF projections, Costa Rica will, in 2024, grow by 4%, which is a strong number. Regarding 2025, the consensus estimate is 3.5%.
On the long term, the growth will persist since Costa Rica's economy is expected to increase by 15.9% during the next 5 years, resulting in an average GDP growth rate of 3.2%.
The expected sustainable growth rate in Costa Rica indicates a stable and expanding economy, which can lead to increased property values and rental demand over time. This makes investing in real estate there potentially more profitable and less risky for investors.
That said, GDP growth is just one piece of the puzzle!
Costa Rica's population is getting richer
Positive
Population growth and GDP per capita are crucial factors to think about when buying real estate because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Costa Rica, the average GDP per capita has changed by 7.2% over the last 5 years. It's a solid number.
This means that, if you purchase a tropical retreat in Manuel Antonio and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, the demand for rentals is likely to go up in Costa Rican cities, such as San José, Jacó, or Tamarindo in 2025.
Rental yields are really attractive in Costa Rica
Positive
If you want to know if a property investment can be a wise financial decision, look at the expected rental yields.
Rental yield is the amount of money you can make from renting out a property, relative to the property's value.
According to Numbeo, rental properties in Costa Rica offer gross rental yields ranging from 5.3% and 8.0%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Costa Rica.
Yields like these are rare to come by.
Everything you need to know is included in our Costa Rica Property Pack
In Costa Rica, inflation is expected to be minimal
Neutral
Inflation is the persistent devaluation of money.
It's when your favorite cup of Costa Rican coffee costs 2,500 Costa Rican colones instead of 2,000 Costa Rican colones a couple of years ago.
If you're considering investing in a property, high inflation can bring you several advantages:
- Property values tend to increase over time, leading to potential capital appreciation.
- Inflation can result in higher rental rates, thereby increasing the cash flow from the property.
- Inflation reduces the real value of debt, making mortgage payments more affordable.
- Real estate can act as a hedge against inflation, preserving the value of the investment.
- Diversifying into real estate provides stability during inflationary periods.
In line with IMF predictions, over the next 5 years, Costa Rica will have an inflation rate of 1.0%, which gives us an average yearly increase of 0.2%.
It means that Costa Rica will likely experience almost no inflation. If you buy a property now, you may experience lower appreciation potential and reduced returns on investment.
Is it a good time to buy real estate in Costa Rica then?
Time to conclude !
2025 is shaping up to be an excellent time to invest in property in Costa Rica, and there are several compelling reasons for this. First and foremost, Costa Rica is known for its political stability, which is a crucial factor for any real estate investment. A stable country provides a secure environment for property ownership, reducing the risks associated with political or economic upheaval. This stability is a strong foundation for long-term investment, making it an attractive option for those looking to buy property.
Looking ahead, Costa Rica's economy is projected to grow by 15.9% over the next five years, with an average GDP growth rate of 3.2%. This sustained economic growth is a positive indicator for the real estate market, as it suggests that the country's economy is on an upward trajectory. As the economy expands, property values are likely to increase, and rental demand is expected to rise. This means that investing in real estate in Costa Rica could become more profitable over time, offering both capital appreciation and rental income opportunities.
Another factor to consider is the increasing wealth of Costa Rica's population. As people become more affluent, there is a greater demand for quality housing, which can drive up property prices and rental rates. According to Numbeo, rental properties in Costa Rica currently offer gross rental yields ranging from 5.3% to 8.0%. These yields are quite attractive, indicating that rental properties can provide a solid return on investment. This growing affluence, combined with a stable economy, makes Costa Rica an appealing destination for real estate investors.
Finally, inflation in Costa Rica is expected to remain minimal, which is good news for property investors. Low inflation helps maintain the purchasing power of rental income and ensures that property values are not eroded over time. This economic environment, characterized by stability, growth, and low inflation, creates a favorable climate for real estate investment. So, if you're considering buying property in Costa Rica, 2025 could be the perfect time to make your move.
We genuinely hope this article has provided you with valuable insights and information.. If you need to know more, you can check our our pack of documents related to the real estate market in Costa Rica.
-Will real estate prices go up in Costa Rica?
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.