South Pacific Real Estate Market Update – 2013
As we head into the last half of 2013 its time to take a closer look at how the real estate market has been performing in the South Pacific of Costa Rica. How have property sales fared compared to 2012? Which properties are selling more and who is buying? Taking this information into account I’ll tell you how I think the following 12 months will play out.
Property Sales are Up in the Southern Zone
The great news is that property sales are up compared to this time last year. North America and Europe have highlighted the South Pacific of Costa Rica as one of the hotspots for international property investment in Latin America and its clear that investors are listening.
This particular region of Costa Rica is really coming together in terms of improved accessibility thanks to infrastructure – a key indicator when it comes to investment.
The Southern Zone is a unique location that offers investors the opportunity to acquire quality real estate at a price you would be pushed to find anywhere else. Especially when the average cost Per Sq Meter of Beachfront land is about $75-100!With unspoiled beaches, a stunning tropical landscape, mountain views and an abundance of flora and fauna this has become the perfect retreat for many.
When we combine this with the increase in tourism arrivals for Costa Rica as a whole it’s clear that investors have identified an area that is showing healthy growth.
In 2012 Costa Rica received a total of 2.34 million visitors, a 6.9% increase compared to 2011. According to the Costa Rican Tourism Institute (Instituto Costarricense de Turismo (ICT), 2012 registered the most visitors in the past 5 years. Another interesting statistic shows that there has been an 11.7% increase in tourism related income between 2011 and 2012 – specifically $232 million more than the previous year. A slice of this increase can be associated with the rise in popularity of Costa Rica vacation rentals.
The South Pacific of Costa Rica is a Buyers’ Market
Compared to 2012 the real estate industry in the South Pacific of Costa is strong. It is important to note that the market is still very much geared towards buyers with competitively priced properties selling the fastest.
When it comes to the average amount of time a property is on the market it really does depend on the price. Properties priced to sell see an average of 6-10 months on the market. The overall average days on the market for real estate in the region is approximately 1.5 years.
Which Properties are Selling the Most?
70% of real estate sales are finished homes and 30% are land sales. It is clear that the trend has gone from land sales to home sales and now luxury home sales are emerging. Finished new homes, priced between $400k to $800k are selling the most. The average Cost Per. Sq Feet of Luxury Construction is $225.
Feedback from buyers demonstrates that they are most interested in acquiring property to use straight away either for themselves or for income generation.
Construction is up 20-30% compared to the last 4 years in the South Pacific and this will encourage increased sales because buyers are looking for new product.
But Who is Buying?
Trends show that the type of buyers in the market righ now are first time home buyers for retirement homes or for a second property serving as an income generating vacation rental. Of course the fact that we are in the South Pacific of Costa Rica definitely helps as more buyers discover the incredible beauty of the region and international travel and real estate media continue to recognize our region as a premier destination. Buyers that are coming with cash in hand continue to drive the market in Ojochal, Dominical and Uvita.
We've seen a dramatic increase in buyers originating from Canada, specifically Toronto. The US buyers are also steady and we believe that ease of access plays a big role. Taking into account that Costa Rica is only a 5 hour flight – investors are actively visiting the region to source good investment opportunities.
Good Indications for 2014
Taking into account the uptick in the past 6 months I believe that 2014 will be strong in terms of real estate sales in the South Pacific of Costa Rica. We definitely see the same trends as in the US Real Estate market and are seeing signs of a robust bounce back. I can only assume that this will have a positive impact on the Costa Rican real estate industry.