Investing in Costa Rica’s Real Estate Market – Is Playa Zancudo, Costa Rica the Last Frontier?
Over the past ten years, thousands have invested in the Costa Rica beach front real estate market along the upper Pacific Coast, mainly around and to the north of Quepos. Numerous others have invested in less expensive ocean view real estate overlooking the Pacific, farms and riverfront property in the interior, but mainly still near the ocean. Many others have purchased vacation homes, second homes, and retirement property in Costa Rica due to the cheap cost of living when compared to the United States and Europe.
Both the investor and casual real estate purchasers have already made, or stand to make, huge profits from their investments when they sell their real estate holdings along the coast. In today’s market, it appears many owners could profit around 500% for beach front investments held over a five-year period.
Many in the Jaco, Quepos, Puntarenas, Tamarindo, and the Flamingo areas stand to profit considerably more, but the market in the northern region is rapidly surpassing “affordable price levels”. Much of the beachfront real estate in these areas is being “gobbled up” by large corporate concerns to build gated subdivisions, condos, mega-hotels and resorts for the sun loving, vacationing Americans and Europeans. This corporate rush for prime beach front land is essentially putting it out of reach for the average investor or retiree.
The new airport near Liberia has resulted in a marked escalation of property prices in the beach towns surrounding Liberia. In addition, the region to the south of Liberia has experienced price increases in the neighborhood of 100% in the past two years and the Costa Rican government projects that real estate prices near Marbella will double in the next three to five years. A beach front ACCESS lot in this area is currently listed for around $300,000 for 54,000 square feet or 1.2 acres.
Dominical, south of Quepos, is currently experiencing a huge boom in prices as beach front condos are springing up like Palm Trees, and of course, the prices are escalating at an astonishing rate. I personally passed up a $150,000 cliff side lot near Dominical seven years ago. On a recent trip to San Jose I saw a cliff side lot, in the same area, that was advertised at $450,000, a three hundred percent return on an investment held for seven years. You can now expect to pay $350,000 for a lot near Dominical.
The same can be said for Palo Seco. In 2000, I looked at a huge lot there for $70,000. Today, lots on Palo Seco are being developed into condos. According to a realtor in the area, property on Palo Seco has escalated by 400% in the past two years and this does not include the escalation in the prior five years. 11,000 square foot building lots are selling for around $115,000.
With the approval of a new marina in Golfito property prices should shoot through the sky. There is great potential for making a lot of money on real estate in Golfito right now, but there is no beach or infrastructure development that most Americans or Europeans expect when investing in “city” property. Before Golfito really takes off, someone is going to have to foot the bill for these improvements, and you should not expect local taxation to pay the bill.
In the past seven years the small village of Zancudo and Zancudo Beach have shown a tremendous growth in real estate sales and land prices, but Playa Zancudo real estate still remains affordable for most investors, retirees, and those looking for second homes or vacation houses. As I stated, many of the beach front properties in Costa Rica have escalated in price by 300 – 400% (or more) over the past six to seven years and Zancudo investments have performed at the same level. However, large “unimproved” beach front lots on Playa Zancudo only sold for around $35, 000 each in 2000, some for less. Today, those same very large lots, unimproved, are selling for around $150,000 each – these are NOT small building lots, but rather large tracts of vacant real estate. Compare these prices to beach front, or riverfront property, up north and you will see why Playa Zancudo and the surrounding area is one of the last frontiers for affordable real estate investments on Costa Rica’s Pacific coast.
Prices here will probably be comparable to those we are seeing on the upper coast in another three to five years, possibly sooner once the new airport north of Golfito is completed. This means today’s investors could make substantial profits over the next few years, if the past history of real estate prices in Costa Rica continues.
When Opportunity Knocks — will you open the door?
Copyright 2007 By Donald Lee Johnson