Osa Tropical Properties' 2024 Cost-Of-Living Expat Report for Costa Rica Real Estate

One of the most asked questions that our Osa Tropical Properties real estate team receives regularly about moving to Costa Rica is: "What is it going to cost me to live there?" It should be obvious that this is a challenging and nuanced question to answer because of a variety of circumstances and criteria that differ between who's asking. Still, we accept this challenge and came up with the following report that provides a comprehensive analysis of the cost of living in Costa Rica compared to other popular expatriate destinations and countries from which a majority of expatriates originate. Our objective is to shed light on a spectrum of living costs, with an emphasis on real estate, property taxes, and home insurance, thereby assisting prospective residents in making an informed decision about making Costa Rica their new home.

Disclaimer: This report is provided for informational purposes only and reflects the current views and data available to us at the time of publication. While we strive to maintain accuracy and completeness in our research, we do not guarantee the reliability or precision of the information presented. This report is not intended to be and should not be construed as financial or investment advice. We accept no liability for any direct or consequential loss arising from the use of this report or its contents. Users are advised to conduct their own due diligence and consult with professional advisors before making any investment decisions based on this report.

Our 2024 cost-of-living analysis compares various aspects of typical living costs across different cities around the world that we felt were relevant for a variety of circumstances. This report is meant to offer a glimpse of general costs that can be compared between countries, including:

- Real Estate Prices (3-bedroom homes with ocean views or similar, and Home Insurance)
- Property Taxes (Annual property taxes for similar properties)
- Cost of Utilities (Basic utilities for an 85m2 apartment, and Internet)
- Groceries and Dining Out (Basket of Goods, and Average Meal for 2 People in a Mid-range Restaurant)
- Healthcare (Dental Procedure like Root Canal)
- Transportation (Fuel per Liter, and the cost of a new Volkswagen Golf 1.4 90 KW Trendline or equivalent)
- Family (International Primary School yearly fee for 1 child)
- Leisure and Entertainment (Gym Membership)

 

Countries Included in the Cost-Of-Living Report

There are many attractive features of the various countries and cities chosen for this report, emphasizing their appeal to expatriates, retirees, and property investors, particularly focusing on Costa Rica.

• Panama offers retiree-friendly policies and a blend of modern amenities with natural beauty, drawing comparisons with Costa Rica, especially in eco-tourism and property investment opportunities.
• Mexico is favored for its diverse landscapes, rich cultural heritage, and low cost of living. There's growing interest among Mexicans in Costa Rican real estate, attracted by its political stability and scenic tranquility.
• Thailand appeals to those seeking a holistic lifestyle with its tropical climate, affordable living costs, and culture emphasizing mindfulness and wellness. Despite its lower cost of living, many North American expats shy away from this destination due to its distance from "home."
• Portugal, known for its mild climate and historic towns, is popular among retirees and property investors, especially in the Algarve region. The Golden Visa program encourages non-EU property investment by offering residency.
• Spain attracts foreigners with its warm climate, diverse landscapes, and affordable living costs. Regions like Costa del Sol and the Canary Islands are particularly popular for beach lifestyles and holistic living.
• Europeans from the UK, Germany, and Spain show increasing interest in Costa Rica for its biodiversity, warm climate, and relaxed lifestyle.
• Americans and Canadians are significant foreign property buyers in Costa Rica, drawn by its natural beauty, stable democracy, and high quality of life. Canadians also appreciate Costa Rica's sustainability and eco-friendly living.

Specific cities highlighted in this report for their expatriate appeal include:

• Panama City, Panama: Offers a vibrant mix of modern amenities and natural beauty.
• Puerto Vallarta, Mexico: Combines traditional Mexican charm with conveniences appealing to expatriates.
• Lisbon, Portugal: Known for its rich cultural scene and relatively affordable cost of living.
• Valencia, Spain: Offers a pleasant climate and high quality of life, becoming an alternative to more expensive Spanish cities.
• Austin, Texas: Known for its vibrant cultural scene and economic opportunities.
• Halifax, Nova Scotia: Provides a more affordable alternative to cities like Toronto and Vancouver.
• Bristol, UK: Offers a lower cost of living than London and is known for its vibrant arts scene.
• Chiang Mai, Thailand: Popular for its affordable cost of living and relaxed lifestyle.
• Leipzig, Germany: Known for its lower cost of living and vibrant cultural scene.

 

Methodology of the Report

Most of the data for our 2024 cost-of-living report came from the website, Numbeo. We also used a variety of real estate websites (trying to keep them similar where possible) to find the average prices for items like real estate, property taxes, and insurance costs where Numbeo was not able to provide this data. We then aggregated this data into a chart and created a composite score for each country based on the following methodology:

• Data Preparation: Standardization of city-country pairs, column names, and numerical data formatting for cross-country comparison.
• Normalization: Application of Min-Max scaling to normalize costs in each category to ensure equal impact on the overall cost of living score.
• Composite Scoring: Calculation of average normalized scores across categories for each city to derive a composite score representing the overall cost of living.
• Country-Level Analysis: Averaging city scores to determine country-level cost of living scores for countries with multiple city data.
• Ranking: Ranking of countries based on composite scores from highest to lowest cost of living.

For real estate, we focused on 3-bedroom houses with comparable amenities to standardize data across locations. This includes features like views, pools, and size parameters, allowing for a fair lifestyle comparison despite local variations.

In our multi-city analysis within three countries, we chose cities representing diverse living conditions to provide a comprehensive view:

- United States: Daytona Beach and Austin were chosen to depict a coastal, tropical setting and a popular inland city, respectively.
- Canada: Halifax and Toronto were selected to contrast a coastal retirement community with an urban center's living costs.
- Costa Rica: We included data from San Jose for its extensive dataset and Ojochal to offer a personalized comparison to my living situation, aiding potential expats in understanding local costs.

This approach ensures a balanced comparison of living costs, assuming equal importance across all categories and offering a general overview for potential expats and residents.

 

Ranking and Results Overview

The analysis ranks countries from most expensive to least, with composite scores indicating the relative cost of living. The United States (Austin, Texas) tops the list as the most expensive, followed by Canada (Toronto, Ontario) and Portugal (Lisbon), among others. Costa Rica (San Jose) positions in the middle, offering an affordable option compared to other expatriate destinations.
Here are the updated rankings for each country, from most expensive to least expensive, along with their composite scores:

• • Austin, Texas, USA: Composite Score - 0.817
  • Toronto, Ontario, Canada: Composite Score - 0.558
  • Lisbon, Portugal: Composite Score - 0.432
  • Bristol, UK: Composite Score - 0.431
  • Leipzig, Germany: Composite Score - 0.405
  • San Jose, Costa Rica: Composite Score - 0.380
  • Valencia, Spain: Composite Score - 0.333
  • Puerto Vallarta, Mexico: Composite Score - 0.289
  • Panama City, Panama: Composite Score - 0.237
  • Chiang Mai, Thailand: Composite Score - 0.129

- Texas, USA has the highest composite score, making it the most expensive among the listed locations. 
- Ontario, Canada and Nova Scotia, Canada follow, indicating higher living costs, particularly in urban centers like Toronto compared to coastal retirement towns like Halifax.
- Portugal, UK, Germany, and Spain represent European countries in the middle of the ranking, with moderate to high living costs.
- Florida, USA and Mexico are next, suggesting a lower cost of living compared to the previously listed locations.
- Costa Rica falls directly in the middle, providing a relatively affordable option, especially when comparing Ojochal to the other international locations.
- Panama and Thailand are at the bottom of the list, indicating they are the least expensive countries among those compared.

This ranking provides a broad overview of the relative cost of living in each country, based on the average scores of the cities included in the comparison. It's important to remember that individual preferences, lifestyle choices, and specific local conditions can significantly affect personal experiences of the cost of living.

 

Comparative Real Estate Price Analysis Across Ten Countries

This report focuses on 3-bedroom houses with specific features such as views, pools, and size specifications. The aim is to provide a standardized comparison reflecting a similar lifestyle quality in each location, despite local variations in property standards and availability.

Costa Rica stands out in the real estate analysis, particularly in Ojochal, where many homes meet the specified criteria of 3-bedroom houses with amenities such as ocean views and pools. In contrast, countries like Germany and the United Kingdom face limitations in matching the size, privacy, and modernity criteria. This section underscores Costa Rica's advantage in offering properties that provide a high quality of life at relatively affordable prices.

Mexico (Puerto Vallarta)

• Property Type: Mainly condos/apartments, modern and new, often furnished.
• Lot Size: Typically fits the size of the home; walled compounds with limited garden space.
• Views: Ocean views are common.
• Privacy: Limited due to the nature of condos and apartments.

 

Portugal (Lisbon Region)

• Property Type: Few houses, with a prevalence of unfinished homes or condos in industrial zones.
• Lot Size: No acreage; properties lack privacy and greenery.
• Furnishing: Properties are generally unfurnished.
• Views and Features: Pools are common among the available homes.

 

Spain (Valencia)

• Property Type: Predominantly modern homes with pools, but most are apartments or condos.
• Views: Many properties offer ocean views.
• Privacy: Limited, given the prevalence of apartments and condos.

 

Thailand (Chiang Mai)

• Property Type: Limited selection of homes meeting the criteria; no properties with acreage or significant privacy.
• Features: Pools are a common feature among the available 3-bedroom homes.
• Views and Lot Size: Lack of ocean view or acreage properties.

 

United States (Daytona Beach, Florida)

• Property Type: Mostly smaller homes than the specified size, with limited availability of acreage or privacy.
• Features: Pools are common in the available homes.
• Views: Suburban views, with some properties offering ocean views.

 

Canada (Toronto)

• Property Type: Challenging to find large 3-bedroom homes; focus on properties with pools to match the lifestyle criterion.
• Lot Size and Privacy: Limited availability of large lot sizes or private settings.
• Views: Typically suburban.

 

Costa Rica (Ojochal)

• Property Type: A better match for the specified criteria, with many homes on acreage and featuring ocean views.
• Features: Pools are standard in the selected homes.
• Privacy: More prevalent due to larger lot sizes.

 

Panama (West Coast including Boquete, Coronado Bay)

• Property Type: A mix of condos, apartments, and standalone homes, but fewer private homes with acreage.
• Features: Pools common among the selected 3-bedroom homes.
• Privacy and Views: Limited availability of properties with significant privacy or expansive views.

 

Germany (Leipzig)

• Property Type: Mostly older suburban-style homes, with almost no modern new constructions.
• Size and Privacy: Challenges in finding homes with the minimum specified size and privacy or acreage.
• Features: Limited availability of homes with pools or expansive lot sizes.

 

United Kingdom (Bristol)

• Property Type: Difficult to match all specified criteria, with most homes offering typical suburban views.
• Size and Features: Limited in terms of large construction or lot sizes, and views beyond suburban settings.

 

Comparative Analysis of Property Tax Rates Across Ten Countries

This report provides a comparative analysis of property tax rates across ten diverse countries, focusing on the nuances of each jurisdiction's taxation system and identifying which countries have the highest and lowest tax rates for real estate. 

Costa Rica

In Costa Rica, the annual property tax is assessed at a fixed rate of 0.25% of the property's value​​. Compared to the countries previously mentioned, Costa Rica's property tax rate is on the lower end of the scale. For instance, it is significantly lower than the rates found in Daytona Beach, Florida (1.42%), and even lower than the rates in Mexico (Puerto Vallarta), where the property tax is already considered low by North American standards.

Therefore, in the context of the highest to lowest scale of property tax rates among the countries analyzed, Costa Rica ranks towards the lower end, offering one of the more favorable property tax environments for real estate owners.

Panama

In Panama, property tax rates are tiered and vary by the type of property (primary vs. secondary residences, commercial, industrial). Primary residences valued up to $120,000 are exempt, with a 0.5% rate applied between $120,001 and $700,000, and 0.7% above $700,000. Secondary and other properties have a $30,000 exemption, with rates between 0.6% and 1.0%.

United States

• Daytona Beach, Florida: The average property tax rate is about 1.42%. Actual rates vary based on specific location and eligibility for exemptions such as the homestead exemption.
• Austin, Texas: Property taxes are calculated by combining county and city rates, with Travis County at 0.304655% and the City of Austin at 0.4458% for the fiscal year 2023-2024. The total rate applied depends on the property's location within Austin and potential exemptions.

Canada (Greater Toronto Area)

Property tax rates in the GTA vary by municipality. Toronto's residential rate for 2023 was approximately 0.611013%, including city and education tax rates. Rates in other GTA municipalities may differ.

Mexico (Puerto Vallarta)

Property taxes, or "predial," are relatively low, based on assessed rather than market value. Recent changes have increased rates for properties valued over 1.5 million pesos, but overall, taxes remain significantly lower than North American standards.

Portugal

Portugal's property tax system includes IMI (0.3% to 0.45% for urban properties) and AIMI for higher-value properties. Taxes are based on the property's VPT, assessed by tax authorities.

Spain

Spain's IBI tax rates range from 0.4% to 1.1% of the property's catastral value, which is assessed by local authorities and often lower than market value.

Thailand

Following the 2020 reform, residential property tax rates are progressive and based on the government's appraised value. The first THB 50 million of a primary residence's value is exempt.

Germany

Property tax is based on an assessed value that is often outdated and significantly lower than market value. The total rate combines a basic federal rate and a municipal multiplier, which varies widely.

United Kingdom

Council Tax is based on valuation bands determined in 1991 (England and Scotland) or 2003 (Wales), not directly on market value. The bands range from A to H, with tax amounts set annually.

Highest and Lowest Tax Rates

• Highest Rates: The United States, specifically Daytona Beach, Florida, appears to have one of the higher average rates at 1.42%. Spain's maximum rate of 1.1% also positions it towards the higher end.
• Lowest Rates: Mexico, particularly Puerto Vallarta, and Thailand offer some of the lowest property tax rates, making them attractive for property investors seeking lower annual tax liabilities.

 

Comparative Analysis of Home Insurance Costs Across Ten Countries

This report delves into the variations in home insurance rates and coverage inclusions across ten countries, with a focus on a standardized property profile: a $500,000 family home, approximately 3000 sq.ft., constructed with concrete blocks, situated on a 1-acre lot, including earthquake coverage, equipped with security measures, and containing $100,000 worth of contents. The analysis aims to highlight the countries with the highest and lowest insurance rates for real estate, considering the complexity and diversity of insurance markets worldwide.

The estimated annual insurance costs for a family home in Costa Rica range from $2,000 to $4,000 USD, placing it towards the mid to higher range among the countries analyzed. Despite being relatively high, the inclusion of earthquake coverage is a significant factor due to Costa Rica's seismic activity, justifying the rates.

Costa Rica

Costa Rica's insurance market accounts for its seismic activity, making earthquake coverage crucial. The presence of security measures could lower risks, affecting premiums favorably. Estimated annual premiums range from 0.4% to 0.8% of the property value, translating to $2,000 - $4,000 USD.

Panama

Panama's susceptibility to floods and earthquakes influences its insurance costs. The estimated annual premium ranges between 0.3% to 0.7% of the property value, amounting to approximately $1,500 - $3,500 USD.

Mexico

Given Mexico's diverse climate and seismic activity, insurance costs can vary significantly. The estimated cost ranges from 0.4% to 0.8% of the property value, roughly $2,000 - $4,000 USD annually.

Portugal

Portugal's lower natural disaster risks could lead to more favorable insurance premiums, estimated between 0.2% to 0.5% of the property's value, or $1,000 - $2,500 USD per year.

Spain

Spain's competitive insurance market sees costs influenced by the property's location. Estimated insurance costs range from 0.3% to 0.6% of the property value, translating to $1,500 - $3,000 USD annually.

United States

The U.S. presents a wide variance in insurance costs due to diverse natural disaster risks across states, ranging from 0.2% to 1.5% of the property value, or $1,000 - $7,500 USD per year.

Canada

Canada's stable insurance market sees costs influenced by climate risks, with estimated premiums ranging from 0.3% to 0.7% of the property value, approximately $1,500 - $3,500 USD annually.

United Kingdom

The UK's insurance premiums are influenced by flood risks and property value, with estimated costs ranging from 0.2% to 0.5% of the property value, or $1,000 - $2,500 USD per year.

Thailand

Thailand's significant risks from flooding and other natural events impact insurance costs, with estimated premiums ranging from 0.5% to 1% of the property value, roughly $2,500 - $5,000 USD annually.

Germany

Germany's well-developed insurance market and relatively low natural disaster risks lead to moderate insurance costs, estimated between 0.2% to 0.5% of the property value, or $1,000 - $2,500 USD per year.

Analysis of Highest and Lowest Insurance Rates

• Highest Rates: The United States and Thailand exhibit the highest potential insurance rates, reflecting the broad range of natural disaster risks present in these countries.
• Lowest Rates: Portugal and Germany present some of the lowest estimated insurance rates, attributed to their lower risks of natural disasters and stable insurance markets.

 

2024 Cost-Of-Living Report Conclusion

Costa Rica emerges as an attractive destination for expatriates in the comparative analysis, offering a balance between affordability and quality of life. The country's real estate market provides large properties surrounded by nature, with incredible views and amenities, at costs lower than in many expatriates' home countries. Coupled with low property taxes and reasonable insurance rates, including essential coverage like earthquake insurance, Costa Rica presents a compelling case for topping expatriates' relocation lists. The stability, safety, and community-oriented lifestyle further enhance its appeal, making it an ideal destination for those seeking a serene and fulfilling expat experience.