Costa Rica has long been a sought-after destination for real estate investors, but recent years have witnessed a remarkable transformation in the dynamics of this market. In this article, we delve into the evolving trends and developments that are shaping the future of real estate investment in Costa Rica in 2023.
Younger Families: A Shift in Demographics
Traditionally, the foreign real estate investor profile in Costa Rica was predominantly retirees seeking a peaceful retirement haven. However, the post-COVID era has ushered in a new wave of investors – younger families. Driven by a desire for a higher quality of life and the flexibility of remote work, these families are choosing Costa Rica as their investment destination.
Statistics reflect this shift, with the average age of foreigners living in Costa Rica dropping from 55+ to 51 between 2010 and 2020. Furthermore, the proportion of buyers under 45 has risen from 25% in 2018 to 34+% in 2020. This changing demographic has fueled a demand for larger family-oriented properties, often located near private schools, catering to a more permanent living experience.
Developers and brokers have responded by diversifying the market, with affordable homes in the $250,000 to $500,000 range gaining popularity. While traditional hotspots like Tamarindo and Escazú continue to thrive, newer locations like Dominical, Uvita and Ojochal have emerged to meet the preferences of younger families.
Digital Nomads Law: Attracting Remote Workers
To capitalize on the surge in younger investors and remote workers, the Costa Rican government enacted the “Digital Nomads Law” in March 2021. This law offers foreign individuals providing remote services a streamlined pathway to work and reside in Costa Rica. To be eligible, applicants must demonstrate a monthly income of at least $3,000 for an individual or $4,000 for a family, along with other requirements.
Nearshoring: Corporate Investment
At the corporate level, nearshoring is gaining traction as businesses seek to relocate their operations to countries closer to their home base. Costa Rica has emerged as an ideal nearshoring destination due to its educated workforce, proximity to the United States, and robust infrastructure.
The country’s skilled workforce, with a nearly 98% literacy rate and a significant percentage holding college degrees, is a major draw. The education system aligns with the needs of high-demand fields, making it easier for companies in sectors like engineering, computer science, and finance to find qualified talent. Moreover, Costa Rica’s commitment to sustainability and environmental protection aligns with international business community interests in eco-friendly practices.
The Costa Rican government has made significant investments in infrastructure, enhancing transportation and logistics capabilities. The expansion of the Juan Santamaria International Airport, construction of a new container terminal in the port of Moín, and the completion of the San José ring road are examples of these efforts.
Government Agencies: CINDE and PROCOMER
To attract further investments, the Costa Rican government has enlisted the help of two entities with a track record of promoting foreign investment: the Costa Rican Investment Promotion Agency (CINDE) and the Costa Rican Foreign Trade Promotion Agency (PROCOMER).
CINDE, voted the world’s top investment promoter by the United Nations International Trade Center, has played a pivotal role in attracting foreign direct investment (FDI) to Costa Rica. It has advised numerous high-level companies, including Intel and Bayer, in establishing their operations in the country.
PROCOMER focuses on promoting exports and foreign investment, actively contributing to nearshoring initiatives in Costa Rica. It identifies potential export markets and collaborates with businesses to develop export strategies.
Impact on Real Estate
The growth of nearshoring has significantly impacted the real estate sector in Costa Rica. Companies require office spaces and facilities for their operations, leading to increased demand for commercial real estate, particularly in areas like San José, Heredia, Orotina, Grecia, and Liberia.
Residential real estate has also felt the effects, with a surge in demand for rental properties as expats and foreign workers seek accommodation. Rental prices have risen, providing opportunities for real estate investors to generate income.
In the post-COVID world, Costa Rica’s real estate market is experiencing a profound transformation, driven by younger families, digital nomads, and the rise of nearshoring. These shifts have diversified the market and opened new avenues for investment. As the Costa Rican government actively fosters an environment conducive to foreign investment, it is evident that Costa Rica will continue to be an attractive destination for real estate investors in the years to come.