Several clients have asked me whether Costa Rica real estate is heading for a double dip recession.
While it is difficult to predict the future, the worldwide real estate industry has some interesting trends property investors should pay close attention to.
As economic uncertainty continues, property prices will continue to trickle downward giving investors the opportunity to generate a great return on investment – providing they make their move wisely.
I do not believe that property prices will crash – but they will continue to fall until the worldwide economy begins to get back on its feet again.
So what advice am I giving to savvy investors who inquire about the Costa Rica property market?
BUY, BUY & BUY
1. In some regions of Costa Rica property values have lost between 50% and 70% of their peak value. Costa Rica as a whole is reporting a steady decline in property values over the past two years at a rate of 1-2% per month. While depreciation may scare first time property investors, I’ve seen many seasoned entrepreneurs snap up properties purely because of their income generating potential, especially in developing regions. If a property has a good cash flow you can make a good annual return taking into account the rental market has only fallen by approximately 15%.
In the South Pacific I would pay particular attention to ocean view lots and real estate with great income generating potential.
a) A brand new, beautiful two bedroom one bathroom property with swimming pool located in the South Pacific region of Ojochal. Surrounded by stunning landscaped and on the market for just $232,000 this property is priced to sell and promises a fantastic cash flow.
b) A beautiful lot in the exclusive ocean view gated community of Portasol – prices start from as little as $75,000. With upgraded infrastructure, excellent drainage, phone, water, electricity, satellite and WiFi as well as on site spa services this is a perfect investment.
2. If you are looking for a mortgage - interest rates are currently at lows that we are unlikely to see again in our lifetime. Interest rate hikes are a clear indication that the economy is beginning to recover. Acquire a property now with a low interest rate mortgage can save you thousands of dollars.
3. Don’t think that demand for property in Costa Rica isn’t high. The South Pacific of Costa Rica was positioned in the top three best worldwide real estate markets for 2012. Many property sales are closing with cash buyers and more homes would have sold if it were not for the high bar set by lenders and property valuations. As appraisals begin to rise there will be an influx of buyers who will fit the criteria to buy homes and this will in turn push property prices up.
If you are worried about investing in property during the recession, it’s completely understandable. Am I optimistic? Yes – but it’s not just hope that persuades me not to look for another career. I’ve witnessed how the worldwide real estate market dips and recover on many occasions. So what are you waiting for? It’s time to make your move?