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What will happen in Costa Rica’s real estate market? Will prices go up or down? Is Guanacaste still a hotspot for foreign investors? How is Costa Rica’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with notaries, real estate agents, and clients who buy properties in Costa Rica, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Costa Rica’s home prices will rise steadily as international interest grows
Costa Rica is becoming a hot spot for international property buyers, with foreign direct investment hitting a record $3.921 billion in 2023.
About 7% of this investment is flowing into the real estate sector, showing that more people are eyeing Costa Rica for property opportunities. This trend is fueled by a growing number of expatriates, with around 50,000 North Americans now living in the country. Areas like Guanacaste and the Nicoya Peninsula are especially popular, attracting retirees and digital nomads who are driving up property demand.
Tourism is another big player in this real estate boom. In early 2024, tourism-related foreign direct investment shot up by 133% compared to the same time in 2023. This has led to a surge in demand for vacation rentals and Airbnb properties, which is pushing real estate prices even higher.
For those considering buying property, it's worth noting that the growing expatriate community is contributing to rising property values. This is particularly true in regions that offer a mix of natural beauty and modern amenities, making them attractive to both retirees and remote workers.
Insider tip: If you're looking at properties in Costa Rica, keep an eye on areas that are popular with tourists. These spots are seeing increased interest from international buyers, which could mean a good return on investment if you're thinking about renting out your property.
Overall, Costa Rica's real estate market is on the rise, thanks to a mix of foreign investment, a growing expatriate community, and booming tourism. If you're thinking about buying, now might be the time to dive in.
Sources: Procomer, GAP Real Estate, Invest in CR
2) More foreign investors will buy Costa Rican real estate because of its stable politics and favorable investment climate
Foreign interest in Costa Rican real estate is booming, and it's easy to see why.
In 2023, Costa Rica attracted a record-breaking $3.921 billion in Foreign Direct Investment (FDI), a 24% jump from the previous year. This surge underscores the country's allure for international investors, especially in real estate, which made up 7% of the total FDI.
Costa Rica's stable political environment plays a big role in drawing foreign investors. Many surveys reveal that investors have high confidence in the country's political stability, a key factor for long-term investments like real estate. The country's favorable investment climate, bolstered by high international rankings, makes it even more appealing.
The Costa Rican government has rolled out policies to make foreign investment in real estate easier. By simplifying property transactions and ensuring transparency, they've given the real estate market a significant boost. The rise of remote work and health tourism is also expected to increase demand for longer-term rentals, possibly leading to permanent relocations.
These trends are likely to further increase foreign interest in Costa Rican real estate. The combination of a stable political environment and a favorable investment climate creates a perfect storm for investors looking for opportunities in the country.
Sources: Content LXCostaRica, Nikori Lifestyles
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Costa Rica versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
3) Demand for city apartments will grow as more young professionals move to urban areas
In Costa Rica, urban living is becoming increasingly popular.
Since the late 1980s, Costa Rica has transformed from a rural society to an urban one, with urban areas now housing 80% of the population. This shift is largely due to the job opportunities available in cities, especially in the Greater Metropolitan Area, which is a magnet for young professionals. The urban population was over 4.3 million in 2023, marking a 1.32% rise from the previous year.
As more young professionals flock to cities, the demand for urban housing and rental properties has surged. Developers are responding by building new apartment complexes to meet this growing need. The government is also stepping up, working on improving urban infrastructure and public transportation to make city living even more attractive.
In the Greater Metropolitan Area, the urban footprint has expanded by 112% since the late 1980s. This area is particularly appealing due to its vibrant job market and modern amenities. Young professionals are drawn to the lifestyle and opportunities that city living offers, further boosting the demand for apartments.
With the government's focus on enhancing urban infrastructure, city life is becoming more convenient and appealing. This makes urban areas a prime choice for those seeking a dynamic lifestyle. The trend of young professionals moving to cities is expected to continue, driving the demand for city apartments even higher.
Sources: CEIC Data, Shift Cities, Trading Economics, Macrotrends
4) Demand for flexible living and co-living spaces will grow as more digital nomads move in
Costa Rica is becoming a hotspot for digital nomads, especially since 2023.
With the introduction of digital nomad visas, Costa Rica ranks 13th globally and 3rd in Latin America for remote workers. This makes it a prime destination for those looking to work from paradise.
As these digital nomads flock to Costa Rica, there's a noticeable uptick in the demand for flexible living spaces. They often prefer co-living setups that offer a mix of community vibes and personal space, reflecting a global shift in housing trends.
Short-term rentals are booming, catering to the need for flexible lease terms that suit the transient lifestyle of remote workers. This aligns perfectly with the preferences of digital nomads who value adaptability.
Co-working spaces are popping up across Costa Rica, providing essential facilities for remote work. These spaces are becoming a vital part of the digital nomad lifestyle, offering a professional environment to get things done.
Sources: Chambers, TechRound, Mighty Travels
5) Guanacaste property prices will surge as luxury eco-tourism draws wealthy buyers
Property prices in Guanacaste have skyrocketed by 400% from 2020 to 2023, signaling a major shift in the region's allure and economy.
In 2022, the real estate market in Guanacaste saw transactions hit $156 million, up from $104 million in 2021. This boom is largely due to a surge in luxury eco-tourism projects, with new high-end hotels poised to boost the region's average daily rates.
Guanacaste is drawing in high-net-worth individuals, with a 25% increase in foreign tourists in the first half of 2024 compared to the previous year. This wave of wealthy visitors is driving up demand for luxury stays, cementing the area's status as a top eco-friendly hotspot.
These developments are not just about numbers; they reflect a broader trend of Guanacaste becoming a prime destination for those seeking both luxury and sustainability. The region's natural beauty and commitment to eco-friendly practices make it a magnet for affluent travelers.
Investors are keenly aware of this trend, with many eyeing the potential for high returns in the burgeoning luxury market. The combination of stunning landscapes and upscale amenities is a powerful draw for those looking to invest in a unique and thriving locale.
As more luxury eco-tourism projects take root, the region is set to attract even more high-net-worth individuals, further driving up property values. This cycle of investment and growth is transforming Guanacaste into a premier destination for luxury and eco-conscious travelers alike.
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6) Demand for retirement communities and accessible housing will grow as the population ages
In Costa Rica, the aging population is on the rise, and it's changing the housing landscape.
By 2050, 20% of Costa Rica's population will be over 65, a big jump from 9% in 2023. This means more people will need retirement communities and homes that are easy to navigate as they age.
People are living longer too, with life expectancy possibly reaching 85 years by 2050. But, after 65, men and women have only about 12.8 and 10.5 years of disability-free life, respectively. This highlights the need for homes that offer support and accessibility.
The Pensionado program is also drawing in foreign retirees, who love Costa Rica's peaceful vibe and universal healthcare. This influx is boosting demand for retirement communities and specialized housing.
These retirees are not just settling in; they're boosting the local economy and pushing for more housing options that fit their needs.
Sources: AARP International, Inter-American Development Bank, Global Intelligence Unit
7) Eco-friendly developments will grow as new tax incentives promote sustainable building practices
New tax incentives in Costa Rica are boosting eco-friendly building projects.
In recent years, Costa Rica has updated its National Construction Regulations to include sustainability standards, pushing new buildings to use resources like water and energy more efficiently. This is part of the country's broader Carbon Neutrality 2.0 Program, which kicked off in 2020. By 2022, 127 buildings in Costa Rica were certified under high sustainability standards like LEED and EDGE. These certifications are crucial as they highlight buildings that save energy, conserve water, and use eco-friendly materials.
Thanks to these sustainable practices, energy-related CO2 emissions from buildings dropped to just 5% of total emissions in 2023. The government sweetens the deal by offering tax discounts and speeding up construction permits for companies that build sustainably. This strategy not only encourages developers to go green but also taps into the growing consumer demand for sustainable housing.
Moreover, Costa Rica's commitment to sustainable development has caught international attention, drawing in more foreign investment and support for eco-friendly projects. The country’s efforts have been recognized globally, making it a hot spot for those interested in sustainable living. If you're considering buying property here, you'll find a market that's increasingly aligned with eco-friendly values.
These new tax incentives are a game-changer, making it easier and more appealing for developers to adopt sustainable building practices. As a potential property buyer, you’ll benefit from a market that’s not only environmentally conscious but also financially savvy. Expect to see more eco-friendly developments popping up, thanks to these government-backed initiatives.
Sources: Climate Action Tracker, World Resources Institute, GMAttorneysCR
8) Rental yields in the Central Pacific will rise as tourism keeps growing
The Central Pacific region in Costa Rica is set to see a boost in rental yields as tourism flourishes.
In 2023, Costa Rica welcomed over 2.7 million visitors, a remarkable recovery from pre-pandemic numbers. This influx of tourists is expected to benefit the Central Pacific region, drawing more visitors to its stunning attractions. During Semana Santa in 2024, the hotel occupancy rate in this area was projected to hit 87%, highlighting a strong demand for accommodations. This demand can translate into higher rental yields for property owners.
Adding to the appeal, the expansion of international flight routes to nearby airports makes the region more accessible, enticing even more tourists. The growing popularity of Central Pacific attractions on social media is also a key factor, as it fuels interest in visiting these areas. For instance, Manuel Antonio, a beloved national park in the region, attracts over a million visitors annually, underscoring the strong demand for vacation rentals.
Historical data from similar regions shows a clear link between tourism growth and rental yields. As tourism continues to rise, rental yields are likely to follow suit. The Central Pacific region is no exception, with its beautiful beaches and lush rainforests drawing in nature lovers and adventure seekers alike. This trend is particularly promising for those considering investing in property here.
Insider knowledge suggests that the Central Pacific's unique blend of natural beauty and cultural richness makes it a top choice for tourists. The region's vibrant local culture, combined with its breathtaking landscapes, offers a unique experience that keeps visitors coming back. This repeat tourism is a boon for property owners, as it ensures a steady stream of potential renters.
For those looking to invest, the Central Pacific region offers a promising opportunity. With tourism on the rise and rental yields expected to increase, now might be the perfect time to consider purchasing property in this beautiful part of Costa Rica.
Sources: Pat Beland, Tico Times, Q Costa Rica, Investing Costa Rica
We have made this infographic to give you a quick and clear snapshot of the property market in Costa Rica. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
9) New infrastructure will make previously inaccessible areas available for real estate development
New infrastructure projects are transforming previously inaccessible regions into prime real estate areas.
Take the $100 million upgrade of the Daniel Oduber Quirós International Airport for example. This isn't just about more flights; it's about boosting tourism, which naturally sparks interest in nearby properties. Imagine the influx of tourists and potential buyers exploring these areas, making them more vibrant and economically appealing.
Then there's the expansion of Route 32, a 107-kilometer stretch that's set to be completed by 2025. Sure, it's had its share of delays and budget hiccups, but once finished, it will open up regions that were previously off the beaten path. Better roads mean easier travel, and that often translates to more people wanting to live or invest in these newly accessible areas.
Tourism is a big deal in Costa Rica, and it's been on the rise. This means that places once hard to reach are now catching the eye of tourists and, by extension, real estate developers. With more visitors comes more interest in property, and that's a trend you don't want to miss out on.
The real estate market here is on the upswing, with property values expected to climb in areas benefiting from these new infrastructure projects. It's not just about buying a home; it's about investing in a future that's looking pretty bright.
Sources: Tico Times, GAP Real Estate, Diálogo Americas
10) Demand for international schools and family-friendly neighborhoods will grow as the expat community expands
Costa Rica's expatriate community is growing rapidly, and it's changing the landscape for families moving there.
With more expats settling in, international schools are seeing a surge in demand. Schools like the American International School and GSD International School are popular choices, offering programs like the International Baccalaureate (IB) that are perfect for families looking for a globally recognized education.
These schools aren't just about academics; they cater to the whole family experience. Expat families often look for neighborhoods that are family-friendly, with easy access to schools and amenities. Real estate developers are catching on, creating communities with bilingual education options and community centers.
Parents are talking about it online, sharing their experiences and what they value most. Smaller class sizes and extracurricular activities are high on their list, along with the ability to switch between different educational systems without a hitch.
These insights are shaping how neighborhoods are developed, with a focus on what expat families need. New housing projects are increasingly designed with these families in mind, offering features that make life easier and more enjoyable.
As more expats move in, the demand for international schools and family-friendly areas will only grow. This trend is reshaping Costa Rica's real estate market, making it a hotspot for families looking for a new home abroad.
Sources: CRIE, InterNations, CRIAcademy
11) More foreign buyers will invest in less developed areas due to lower prices and investment potential
Foreign buyers are increasingly eyeing properties in less developed areas for investment potential and lower prices.
In 2023, Costa Rica saw a boom in Foreign Direct Investment, nearly hitting $4 billion, marking a 23% jump from the previous year. This influx of investment is drawing more foreign ownership, as both companies and individuals are eager to dive into the real estate market. The appeal lies in the affordable property prices found in these less developed regions compared to bustling urban centers.
Real estate agencies report that these areas offer cost-effective options, making them a magnet for foreign buyers seeking smart investments. The World Bank's $350 million initiative is also a game-changer, boosting infrastructure in rural areas and making them more attractive by enhancing disaster resilience and essential services.
Reports from agencies like LX Costa Rica highlight a growing interest in the investment potential of these regions. The luxury home market is thriving, thanks to Costa Rica's economic stability, natural beauty, and high quality of life, which are all major draws for savvy investors. Successful eco-tourism projects in rural areas underscore the potential for high returns, as these spots gain popularity due to the country's environmental focus.
Foreign buyers are not just looking for a piece of paradise; they're also banking on the long-term growth of these regions. With the right mix of affordability, infrastructure improvements, and natural allure, less developed areas are becoming the new frontier for real estate investment.
Sources: Pura Vida Escrow and Trust, World Bank, LX Costa Rica
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12) More Asian buyers will invest in Costa Rica as it gains global recognition
Costa Rica hit a record $4 billion in Foreign Direct Investment (FDI) in 2023, with a significant chunk coming from Asia.
This boom in investment shows that Costa Rica is becoming a hot spot for investors looking for a safe and stable place to put their money. The country’s reputation for political stability and a strong legal framework makes it attractive to foreign investors.
While we don't have exact numbers, more direct flights are now connecting Asia and Costa Rica, making travel easier. This improved connectivity is a game-changer, allowing Asian investors and tourists to explore opportunities in Costa Rica more conveniently.
Real estate agencies are buzzing with increased inquiries from Asian buyers. This uptick suggests that Costa Rica's real estate market is catching the eye of Asian investors, likely due to the country's growing global recognition.
Insider knowledge reveals that Asian investors are particularly interested in Costa Rica's coastal properties, drawn by the stunning beaches and potential for tourism-related ventures. This interest is expected to grow as more people discover the country's natural beauty and investment potential.
Sources: Procomer, Pura Vida Escrow and Trust
13) Rental yields in San Jose will drop as new rental properties flood the market
San Jose is seeing a boom in new rental properties, especially in the affordable and mid-range markets.
This influx of new developments is creating fierce competition among landlords, pushing them to lower rents to attract tenants. While construction permits are on the rise, the actual number of completed housing units isn't keeping up with demand. In 2023, only about 2,200 new units were finished, which is far from enough to satisfy the growing need for housing.
As a result, the market is becoming saturated, and landlords might find it challenging to fill their units at the prices they want. Reports are also showing a trend of declining occupancy rates in existing rentals. Even though vacancy rates were low at around 4.5%, an increase to 7% or more could indicate a shift towards a less competitive market.
This shift might lead to stabilized or even decreased housing prices, which would further impact rental yields. The market dynamics are changing, and landlords may need to adjust their strategies to maintain profitability. With more properties available, tenants have more choices, which can drive down rental prices.
In this evolving landscape, it's crucial for potential property buyers to understand these trends. The rental market in San Jose is becoming more competitive, and this could mean lower returns on investment for property owners. Keeping an eye on these developments can help in making informed decisions.
Sources: The Luxury Playbook, What's My Cash Flow, ManageCasa
14) International buyers will increasingly use virtual reality tours to view properties remotely
Virtual reality tours are now a staple for international property buyers.
Imagine exploring a charming villa in Costa Rica without leaving your couch. Thanks to the rapid growth of virtual reality technology, this is now possible. Real estate agencies worldwide are embracing VR, making it easier for buyers to view properties remotely. This shift is largely due to the increasing demand for virtual tours, as more buyers prefer them over static photos.
In places like Costa Rica, the trend is even more pronounced. Many agencies there have jumped on the VR bandwagon, offering immersive tours that let you feel like you're walking through the property. This is not just a local phenomenon; it's a global movement. Consumer surveys reveal a strong preference for virtual tours, indicating a significant change in how people want to shop for homes.
What's driving this change? For one, VR technology has become more affordable and accessible. This has encouraged real estate companies to invest in VR infrastructure, making it a key part of their marketing strategies. These investments are often supported by partnerships with VR tech companies, ensuring that the technology is seamlessly integrated into the property viewing experience.
As VR becomes more mainstream, it's not just about affordability. The technology itself has improved, offering more realistic and engaging experiences. This has made virtual tours not only a viable option but often the preferred one for international buyers. Real estate firms are betting big on VR, expecting it to drive further growth in the market.
Sources: PhotoUp, GlobeNewswire, ADS Marketing
We made this infographic to show you how property prices in Costa Rica compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
15) More European buyers will invest in Costa Rica’s real estate as they look for opportunities outside the EU
European interest in Costa Rica's real estate is on the rise.
One big reason is the increase in direct flights from Europe, making it easier for Europeans to visit. For example, KLM and British Airways have resumed flights from San José to Amsterdam and London, which is expected to bring more European tourists and potential investors to Costa Rica.
Costa Rica's stable political climate and favorable property laws are also key attractions. Many Europeans are looking to invest outside the EU, and Costa Rica offers a secure environment for such ventures. The country's focus on sustainability and eco-friendly living is a big draw for environmentally conscious buyers.
The media often highlights Costa Rica as a top spot for expatriates, thanks to its tropical climate and stable governance. This coverage is likely to attract more European buyers. The lower cost of living and warm weather make it especially appealing to European retirees looking for a better lifestyle.
These factors combined make Costa Rica a compelling choice for European real estate investors. The country's commitment to eco-friendly developments is expected to boost demand among those who value sustainability.
Sources: Savills, Costa Rica DMC, BTI Project
16) High-end real estate will become less affordable due to changes in property tax laws
Changes in property tax laws will impact the affordability of high-end real estate.
In Costa Rica, new tax changes are on the horizon for 2025, and they could shake things up for property owners, especially those with luxury homes. If you own a high-end property and earn a good chunk of rental income, these revisions to income tax might hit your wallet. The government is looking to adjust how much high earners pay, which could mean more taxes for those with luxury properties.
Another thing to keep an eye on is the increase in the Value Added Tax (VAT). This isn't just a small bump; it could make everything from property management to real estate transactions pricier. So, if you're thinking about maintaining or selling a luxury property, expect those costs to rise. It's all part of the bigger picture of how tax changes can make owning high-end real estate more expensive.
There's also talk about a new tiered property tax rate system. What does that mean for you? Well, if you own a high-end property, you might find yourself paying a higher tax rate compared to others. This is a move by the government to impose different rates on various property types, and luxury homes could be at the top of the list. It's a trend that's been happening, with new assessment methods already introduced in 2024.
These tax changes are not just random tweaks; they're part of a broader strategy. The government seems to be focusing on how to balance the books, and high-end real estate is in the spotlight. If you're in the market for a luxury property, it's crucial to understand how these changes might affect your investment. The cost of owning and maintaining such properties could see a noticeable increase.
So, if you're considering buying a high-end property in Costa Rica, it's essential to stay informed. These tax changes could significantly impact your financial planning. Keep an eye on how these developments unfold, as they could shape the real estate landscape in the coming years.
Sources: Osa Property Management, Pura Vida Escrow and Trust, Osa Property Management
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.