January 19, 2024

.Osa Tropical Properties’ Market Projections Report: Costa Rica Real Estate 2024

Costa Rica real estate is poised to grow in 2024 according to the expert team at Osa Tropical Properties. We have been following the trends in our market and released our 2023/2024 market report last week with data showing a decline from the all-time high of 2022 – an outlier post-pandemic year that saw a lot of buyers fleeing urban living and more people choosing tropical destinations that are safe and affordable, like Costa Rica. This report offers expert realtor insights of the Costa Rican real estate market for 2024, synthesizing thoughts from notable realtors – Richard Owens, Mark Savoia, Felicia Clarke, Kevin Champagne, Rebecca Rowntree, Marcia Oro, and Nelly Reusse. It explores various facets of the market, including interest rate impacts, community living trends, global uncertainties, political factors, and the burgeoning influence of tourism.


Interest Rates and Market Adjustments


Insights from Richard Owens

Richard Owens of Osa Tropical Properties shines light on the complex interplay between high interest rates and homeowners' inflated pricing expectations that were prevalent in 2023. He says that the ensuing market corrections and the realtor-client communication gap will lead to continued unrealistic property valuations in 2024.

“High interest rates are impacting home sales, leading to a reality check for homeowners with inflated price expectations,” says Richard. He suggests that the real issue isn't interest rates but homeowner expectations, as evidenced by progressively lowering property prices that still don't match the market's reality.

Richard highlights a conflict in the realtor-client relationship, where realtors struggle to communicate the true value of properties to their clients. This communication gap leads to unrealistic pricing and eventually market corrections. 

“The influx of new realtors always happens during a booming market, and now that the market is normalizing, they are now leaving the industry.” Richard emphasizes that the market is adjusting, with only dedicated and knowledgeable realtors likely to remain active.


Marcia Oro's Observations

Long-time Osa Tropical Properties realtor, Marcia Oro, notes a pattern where US elections typically result in a slowdown in real estate activity among US clients. “There is a pattern where the year before US elections typically sees a slowdown in real estate activity among US clients,” says Marcia. She suggests that the political climate in the US affects decisions to purchase property abroad. "People are currently feeling frozen, not making decisions, until there is more assurance of who the candidates will be. Those who are dissatisfied with the choices will be the ones to consider leaving."

She suggests a general dissatisfaction with governments everywhere including Canada and concerns about global conflicts. These concerns are influencing decisions to invest in foreign real estate like in Costa Rica.

Marcia also mentions that the expectation that interest rates might decrease and strengthen real estate markets is a significant point. She observes that the beginning of 2024 shows more activity than the end of 2023, albeit with cautious buyers. 

“The beginning of 2024 is a little stronger than it was at the end of the quarter last year but buyers are still quite cautious.  They are looking at properties, they are sounding interested, but they are not yet making a move. Or if they are making a move, they are making a very low offer to try to scoop up properties, that will change" says Marcia.


Community Living and Health-Conscious Buyers


Mark Savoia's Perspective

Osa Tropical Properties' realtor Mark Savoia reports a shift towards community-oriented living and sustainable spaces. He notes Costa Rica's appeal due to its biodiversity and community culture. Mark underscores the increased demand for properties promoting health and wellness.

According to Mark, there's been a global shift in the last few years towards valuing community connections and open spaces, with many seeking either close-knit communities or more land for personal space and sustainability. 

“Costa Rica is known for its biodiversity, climate, and community-oriented culture, and it naturally attracts those seeking these qualities,” says Mark.

Recent years may have seen a spike in demand for properties that offer community benefits or larger land parcels in Costa Rica. This aligns with global trends of people moving away from urban centers. This creates an opportunity for developers and realtors who might focus on community-oriented residential projects or promote larger, rural properties.

Mark also emphasizes that much of Costa Rica’s wealth comes from the health benefits of living here. Costa Rica is already a well-known destination for medical tourism due to its affordable healthcare and high-quality medical services. However, ongoing global health issues might be driving individuals to seek healthier lifestyles and environments, for which Costa Rica has much to offer.

“Properties with features promoting health and wellness, such as those near medical facilities or in environmentally pristine areas, may see increased demand in 2024,” says Mark.


Jacob Mena's Analysis

Jacob Mena, a Costa Rican-born realtor, provides a unique perspective on the evolving dynamics of the real estate market in Costa Rica for 2024, colored by recent global events and uncertainties. His analysis takes into account the profound impact of the COVID-19 pandemic, various presidential decisions, and ongoing global conflicts.

“Everyone is looking for a place to move and find shelter and in 2024 most of the people on earth will be looking for places to get away from pandemics, wars, and being stuck in small apartments,” says Jacob. “Costa Rica is one of the countries where people can live a little better away from all of that.”

People are increasingly looking to move away from the constraints and vulnerabilities of urban living, particularly from densely populated city apartments, in search of safer, more tranquil environments. Amidst these global shifts, Costa Rica emerges as a prime destination. According to Jacob, Costa Rica offers an appealing alternative to the chaos and confinement experienced in many urban centers worldwide. Its allure lies in the promise of a better quality of life, away from the threats of pandemics and wars. The nation's natural beauty, coupled with its relative political stability and community-centric living options, positions it as an ideal sanctuary for those seeking a more peaceful and sustainable lifestyle.

Jacob’s forecast underscores a potential surge in demand for Costa Rican real estate in 2024. This demand is likely to be driven not just by traditional factors like climate and lifestyle but also by the desire for safety and stability in an increasingly unpredictable world. This could lead to a rise in investment in both residential properties and land, as people seek to establish their own space away from global hotspots of unrest.


Current Market Dynamics and Future Projections


Felicia Clarke's Analysis

Felicia Clarke, a seasoned realtor now with Osa Tropical Properties, notes, "Our Costa Rica real estate market is is in alignment with the US and Canadian markets. Interest rates have increased in both countries and their real estate markets have slowed where prices and demand have dropped. This in turn affects the Costa Rican Market. " This observation aligns with our most recent market report, indicating a slowdown in the Costa Rican real estate market from an all-time high in 2022. There has been a noticeable decline in property transactions in the past year, which is reflective of broader economic trends.

The global landscape, marked by conflicts and economic challenges, plays a significant role in shaping the real estate market. Felicia mentions, "People around the world are dealing with conflicts and war and I think that might bring us buyers from other countries that wouldn’t normally look at purchasing in Costa Rica. Costa Rica is a very stable country at this time, we do not have a military and it is a very peaceful place to live. Because of this, we may see an increase in people from countries that might not normally buy in Costa Rica, show interest in our country." This sentiment is supported by an increase in inquiries from regions experiencing instability, suggesting potential for a diversified buyer demographic.

The upcoming US elections are a pivotal moment for market confidence. Felicia states, "I feel like people are holding onto their money a little tighter until November when the US elections happen. When people know which direction the US is headed, I believe that we will see an upswing in buyers in 2024." History shows a pattern of market hesitancy during election years and Felicia believes that this year will follow that pattern with a turnaround towards more demand.


Kevin Champagne's Projections

Kevin Champagne, owner and broker for Osa Tropical Properties predicts a significant influx of American, Canadian, and European expatriates, citing mounting global unrest as the driver. He emphasizes Costa Rica's attractiveness due to its natural beauty, tranquility, political stability, and favorable living conditions.

Kevin says that historical precedents show that political events can indeed influence emigration decisions. For instance, post-US election periods often see a spike in emigration interest.

“Many events are going to happen this year and in my opinion many people are going to leave the US, Canada, and Europe to search for a better way of living,” says Kevin.

Costa Rica has long been a favored destination for expatriates, especially Americans, due to its political stability, natural beauty, and relatively low cost of living. The country's healthcare system and expat-friendly policies further enhance its appeal.

The immediate outlook, according to Kevin, suggests a strong year for Costa Rica’s real estate. The potential increase in expatriates from around the world could drive demand, especially in regions popular among foreign buyers like the Pacific Coast of Costa Rica.


Rebecca Rowntree's Observations

OTP realtor, Rebecca Rowntree, highlights the growing interest in Costa Rica as a residential destination, not just for investment. She predicts a stable market, attractive to foreign investors, particularly Americans and Europeans looking to live a more peaceful and enjoyable lifestyle.

The Costa Rican real estate market experienced robust growth in 2023 when not compared to the outlier year of 2022. There was a significant increase in sales and market activities compared to previous years. For instance, a 17%+ increase in 2022 over the previous year was noted, and the momentum continued into 2023. 

Rebecca feels that a notable demographic shift has been observed. Younger families, influenced by remote work flexibility and quality of life considerations, have become increasingly prominent in the real estate market in addition to the growth of the traditional retiree and investor markets. This change has sparked a demand for larger, family-oriented properties, a trend reinforced by the implementation of the “Digital Nomads Law” in Costa Rica​​

“People are just fed up and want out,” says Rebecca. “They want a change to somewhere that seems more tranquil, tropical, beautiful, and just overall ‘goodness’.”

Rebecca notes that the real estate market has been booming, driven by hotel, residential, and mixed-use projects. Her observation aligns with the trends seen in 2023, where there was a growing interest in Costa Rica as a destination for living rather than just investment. This is supported by the increasing budgets of buyers, many looking in the $800K range and above, reflecting a preference for high-quality living spaces​​.

Despite global uncertainties, Costa Rica's real estate market has been characterized by its stability and attractiveness to foreign investors, especially from the U.S. The enduring stability, affordable property prices, and the supportive measures by the government are likely to continue making Costa Rica an attractive market for real estate investment in 2024​​​​, says Rebecca.


Tourism's Impact on Real Estate


Nelly Reusse's Insights

Nelly Reusse, realtor with Osa Tropical Properties, notes the significant role of tourism in shaping real estate trends. Despite challenges in 2023, such as unsold hotels and B&Bs, she anticipates a robust investment climate in 2024, driven by a historic surge in tourism and the availability of properties with high potential ROI.

In 2023, Costa Rica witnessed an influx of air visitors, even surpassing the previously record-setting year of 2019​​. This growth in tourism is a clear indicator of global interest in Costa Rica, which appears to be a long-term trend. Such a trend bodes well for the real estate market, especially for properties catering to tourists, like hotels and bed-and-breakfasts.

Nelly notes that many hotels and B&Bs on the market in 2023 did not find purchasers. This could be due to various factors such as the international economic context, interest rates, the impact of the American election, or lingering effects from the COVID-19 pandemic. Despite these challenges, the properties on the market are seen as having attractive returns on investment (ROI) or enormous potential.

“Investors are now back,” says Nelly. “The first ones will be able to be choosy but not for long!”

The return of investors to the market in 2024, as observed by Nelly, is a significant development. Early investors are likely to have a more extensive choice, although this window of opportunity might not last long. Nelly says that investors who act promptly could benefit from the current market conditions.


Concluding Thoughts


In 2024, the Costa Rican real estate market is set for a promising and multifaceted growth, shaped by a combination of local strengths and global influences. Key factors such as evolving political landscapes, a booming tourism sector, and shifting buyer preferences are converging to create a landscape ripe with diverse investment opportunities. The informed insights from Osa Tropical Properties' realtors weave together a comprehensive narrative, spotlighting the market's dynamic nature and its promising potential.

The market's current trajectory, especially in residential sectors catering to both part-time and permanent residents, is bolstered by the influx of younger families and digital nomads, alongside the enduring appeal of Costa Rica's stability and charm. This synergy of factors is driving an upward trend in demand and investment in high-quality residential spaces, making Costa Rica an increasingly attractive destination for real estate investments, particularly among U.S. investors.

Acknowledging the prevailing global uncertainties, Costa Rica's real estate market stands out for its resilience and allure to international investors. Its consistent stability, reasonable property pricing, and government support are pivotal factors that will continue to make it a favorable and lucrative market for real estate investments in 2024 and beyond.

Investors and potential homeowners are thus encouraged to seize this opportune moment to explore and engage with Costa Rica's thriving real estate landscape, capitalizing on the unique opportunities it offers for both personal and investment growth.

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