South Pacific Costa Rica Real Estate Market Report (January 2022)

May 13, 2023 in Tips for Buyers, Tips for Sellers, Real Estate in Costa Rica

Our recap of 2021 in real estate and some of the trends we are seeing for 2022 in our South Pacific Costa Rica Real Estate Market Report. 2021 was by far our biggest year for sales and for website traffic. In the first week of January 2022, we are already seeing a 6% increase in web traffic over last year at the same time and our biggest months still lay ahead of us (February to May). Properties that sold in the least amount of time in 2021 were varied in nature but still share a few qualities. Newer builds were most popular, as were homes with three-plus bedrooms, large acreages, and amazing ocean views with lots of privacy.

Costa Ballena Market Highlights

The average time on the market in Costa Ballena throughout 2021 was about 180 days, or about six months.. However, the average price of sold listings increased from around $346,000 in the third quarter to $547,000 in the last quarter. The average list-to-sold price increased as well, from 93% of the list value to an average of over 95% towards the end of the year. Only two ocean view homes sold for under $500,000 in 2021: one with highway noise for $300,000 and the other for $500,000 after two years on the market waiting for someone to overlook the large number of renovations needed. Two-bedroom ocean view homes in Dominical, Uvita, and Ojochal basically start at $550,000 in 2022, and even those are slim pickings,” says Kevin Champagne, owner of Osa Tropical Properties. costa-rica-real-estate-market-report

Comparing Days On Market

Properties in Costa Ballena that spent the least amount of time on the market tended to be newer homes with an array of the most favored qualities like privacy, ocean view, modern, new or well-maintained, and stylish.

3 days on the market

Uvita modern home, brand new build, small lot, three bedrooms, pool, no view, walk to the beach. Makes a great rental.

21 days on the market

50-acre property with amazing views and 4 big building sites in Platanillo.

30 days on the market

2018 build, modern, Uvita, good privacy, large pool, and amazing ocean view.

33 days on the market

  4 bedrooms colonial home in Lagunas that is older but well-maintained and was priced right. Conversely, properties that have been on the market for the longest amount of time (three-plus years) tend to be older properties that need lots of work or luxury homes over $2 million, for which number of potential buyers is still quite small in this newly-discovered region. However, there were a record amount of closings of these more challenging properties in Costa Ballena in 2021.

3.5 years on the market

Built in 2000, 5 bedrooms, located in Tres Rios. Features an unpopular indoor swimming pool, colonial architecture, and yellow walls that no one could get over.

4 years on the market

Located in popular Escaleras, this two-story home was too much for most buyers, priced at $2,350,000 although the views are worth it.

4 years on the market

A 10-acre farm in Tres Rios with not much view at low elevation but still 3km from the highway.

4 years on the market

A strangely laid out home that is not well maintained or styled.  “Style and upkeep matter,” says Osa Tropical Properties realtor, Katherine Apsey. “Clients need to hear that. Most people who buy here want clean, easy, and turn-key! Most buyers are not interested in using their imaginations to see what a home can become with a bit of work and money. Buying a home in Costa Rica is complicated enough and buyers want immediate satisfaction afterwards.”

Property Resale Value Significantly Increased

Comparing properties that sold in 2019 (our previous busiest year on record) and again in 2021, we noticed a huge increase in the prices of homes, averaging around a 36% increase in value. This may sound like an impossibly large increase for those accustomed to reading horror stories on expat forums that they are likely to sell for a loss when they inevitably leave Costa Rica.  It is important to note that many of the resold properties in 2021 underwent some type of renovation or maintenance work between buying and selling. However, it is also important to mention that of the properties that were significantly updated, one, in particular, was resold in 2021 at a 262% increase in value (this percentage was not included in the average as it was purchased in 2017). Another property on this list was bought and sold twice this year alone at a 24% increase on the resale just six months later. Katherine is sure that this is increasing buyer confidence in 2022.  “Because the market was so active in 2021, clients really had to narrow their focus and be prepared to act when the right property became available.”

Types of Buyers in 2021

2021 has seen a huge influx of digital nomads in Costa Rica and beach towns like Dominical, Uvita, and Ojochal are practically rented out entirely with long-term renters looking to escape the nine to five corporate lifestyle. Freedom is an important value to these young workers who would gladly exchange a stiff office environment for more greenery and the sound of the surf. Retirees who were drawn to Costa Rica in 2021 wanted to simplify their lives while affluent buyers were making more health-driven lifestyle choices to improve their quality of life.  Families moving to Costa Rica have been one of the hottest segments of buyers, especially in Ojochal and Uvita. Two new educational facilities have opened in Ojochal in response to the increase in demand: Life Project Education and Osa Jungle Academy.

Push and Pull Factors in Costa Rica Real Estate

In 2021, we noticed that the reasons for buying real estate in Costa Rica were shifting and more buyers were being pushed rather than pulled towards Costa Rica. Living in a city during the Covid-19 pandemic has been challenging for many people. Intensive lockdown measures have kept people living in populous areas so confined that they are feeling they need to escape. And the political circus of trying to deal with this health crisis among others has people yearning for something new. Yet, in spite of this, it is nearly impossible to buy a residence anymore in big cities like Toronto, Vancouver, Los Angeles, and New York. Buyers are being outbid and priced out of an equivalent quality home, even when considering moving to something smaller. They are finding that they can sell their expensive city residence and buy a gorgeous ocean view home in Costa Rica for a far more reasonable price with money to spare. OTP realtor, Rebecca Rowntree, says that most of her buyers in 2021 were avoiding lockdowns and cashing in on high real estate values for their family home. “The Canadians are going into lockdown again. And those who wanted to buy but didn’t last year are kicking themselves and kicking their plans for buying in 2022 into high gear.” Canadian buyers were her biggest market in 2021 because of both the intensity of the country’s lockdown measures and the record high real estate prices. “Right now, I’m working with more Canadian buyers than I am American buyers actually," says Rebecca. "And I'm also getting quite a lot of inquiries from European buyers. I did not have as many European buyers last year contacting me but I'm getting quite a lot now.” Canadians have been hesitant to buy in Costa Rica in recent years because of the uncertainty of the Canadian to US Dollar exchange. Costa Rica properties are valued in US Dollars so although a Canadian may sell their home for a high value, they are typically still buying less expensive properties so that they still have money to live on while trying to figure out what their lifestyle is going to be here. Rebecca says “whereas before people were thinking ‘I have to have a plan for what I’m going to do for work and to live here. Now, people are throwing caution to the wind and saying ‘we’re out’ and they are leaving home with the mindset that they will figure things out once they are here. Kind of like it can’t get any worse.” She cautions her buyers that now is the time. “My Canadian clients who were sitting around waiting for the exchange rate to get better and sitting and sitting and sitting. Now they are realizing that it may never change so what else are they waiting for?” Another interesting push factor being mentioned by people wanting to move to Costa Rica is to get away from the convenience of American life. Costa Rica is presented as a country where you can get back to nature and live a simpler life. Some buyers in 2021 have mentioned that the conveniences available in other parts of the world like Uber Eats and Amazon Prime have made them sedentary and left them feeling unhealthy and detached from nature and other people. The attention is on Costa Rica as an escape destination from people in high-pressure societies looking to move to a place with more natural beauty, peace-loving ethics, and a great sense of community. This attention has new sellers of in-demand properties in Costa Rica feeling encouraged by the amount of very quickly sold properties in the area, despite only experiencing about one-third of the tourism traffic of 2019.

Trends in Costa Rica Real Estate in 2021

The United States continues to be the biggest market for properties in Costa Rica. However, our website traffic indicates that Canadians and Europeans from France, UK, and Germany are all growing markets that will likely continue to expand in 2022. Australians and Israelis were two new markets that were showing strong interest in Costa Rica real estate in 2021 and are likely to continue growing. 2021 saw a shift in our real estate market towards favoring sellers, with sold prices reflecting this trend. This has attracted significantly more buyers to purchase properties in Costa Ballena sight-unseen in 2021 than ever before. Of the roughly 300 properties that were for sale in 2021, 17 were taken off the market by listers who decided to keep their properties after all. The most typical reason for this was that they wanted to keep the property for themselves after seeing the value of the property in light of the pandemic and the resounding international interest in Costa Rica.  Not all buyers are willing to spend big money to buy real estate in Costa Rica. OTP realtor, Nelly Reusse, says that she has been working with many land buyers towards the end of 2021 and now into 2022 whose budgets are not in-line with the market. “We still have many people inquiring about buying land. Most want ocean view land with privacy and under $100,000.”  Of the four ocean view lots that sold for under $100,000 in 2021, three were under an acre with very little privacy and one does not have a legal water source. “It is a near impossibility to find a good ocean view lot for that price in 2022,” says Nelly. Between ocean view and privacy, privacy seems to win out — but just barely. “It’s good to have both and hardly anyone wants to settle on one or the other,” she adds. Another trend we noticed in 2021 was buyers pushing forward their travel plans, feeling the pressure of the hot market and wanting to get in before they are priced out of their dream property. OTP realtor, Marcia Oro, said that a number of the clients she worked with in 2021 changed their flights to an earlier date because of how quickly listings are being sold. “They were concerned that everything they liked would be gone by December and they purchased the first property that they saw and liked, not wanting to wait and miss out,” she says. Extra bedrooms are popular, being used as legitimate home offices for the increasing number of working professionals moving to Costa Rica. High-speed internet will continue to draw in the younger professional crowd and Costa Ballena has risen to the task.

“Why are there still so many for-sale signs if it is a seller’s market?”

There are a number of properties in South Pacific Costa Rica that are special and require the perfect person to see them and fall in love. These types of properties include jungle view lots, one-bedroom homes, and properties with minimal privacy, among others. By putting for-sale signs on these properties, sellers are giving themselves the best chance of that “perfect buyer” seeing the property. In the meantime, that sign may be up for years, adding to the appearance of everything being for sale. Because the market for real estate in Costa Ballena has increased in popularity and price, more people are putting their properties up for sale so as to capitalize on the market value increase. There are also many listers who experience unforeseen circumstances, like a birth in the family requiring grandparents to be around, or a family member has inherited a property in Costa Rica that they prefer to sell rather than keep. With a large population of retired expats, these scenarios are inevitable and properties come onto the market regularly for these reasons and not necessarily because everyone is tired of life in the tropics.

New Investments In Costa Rica

A few of our clients in 2021 sought out investors to help them make their dream business happen. Investment groups have been finding their footholds in Costa Rica for years and they are finally finding their way into the South Pacific in larger numbers.  The newest large-scale investor project is currently breaking ground in Chontales (just south of Ojochal). A recent Costa Rican news publication cited that a development company is going to build up to two thousand homes in the South Pacific zone of Costa Rica. We have gathered that they are speaking about Ventanas Del Pacifico, which is responsible for having developed a large majority of Ojochal and the communities south of it. Their next phase of large-scale development will be in Chontales and an investment group based out of South Florida that has been involved with a number condo developments in that area over the last decade will be selling spec homes in Chontales for between $500,000-$1,500,000 and developing the infrastructure of this area to support this increase in traffic. Those interested in getting ahead of the curve in Chontales can contact our team to learn about turn-key properties available for sale in this up-and-coming South Pacific village. The Costa Rican Investment Promotion Agency (CINDE) reported 103 new business investment projects in 2021 – 30% more than 2020. 41% of new projects come from countries other than the United States and include investments from Canada, Switzerland, Spain, Israel, India, South Africa, Brazil, and Chile. Companies such as Bayer, Amazon, Roche, Intel, Concentrix, Firestone, and Terumo announced expansions in Costa Rica in 2021.  Eric Scharf, President of the Board of Directors at CINDE, commented, "Results from 2021 show that Costa Rica continues to grow and consolidate internationally as a destination for sustainable investment, in line with our value proposition based on people, planet, and prosperity.” The country showcased its capacity to establish a coordinated response to avoid shutdowns and ensure business continuity in support of the needs of the foreign trade sectors. Thus, it proved the resilience and response that Costa Rica can offer to investors as a reliable destination for their global business strategies.

Ojochal, Dominical, and Uvita Rentals Market in 2021

Rentals in Dominical, Uvita, and Ojochal were largely occupied by long-term guests in 2021. Foreign buyers looking for property, home sellers who are in between selling one property and building another, and digital nomads working from home in the tropics are the biggest market for rentals today, filling many of the available properties in the area. According to data from AirDNA (an AirBnb rental analysis website), rentals in the most upscale part of Dominical, in Escaleras, receive an annual revenue of $46,000,000 USD alone, with an average nightly rate of around $400 and average occupancy of 57% in 2021. The average nightly rate for a rental in Uvita was $270 with an expected occupancy of about 48% during this time period while the average daily rate for a rental property in Ojochal was around $150 with a 43% expected occupancy rate for the month of June. Stay tuned for Osa Tropical Properties' 2022 Rental Market Report coming soon. Sign up to our newsletter to stay up to date. The United States continues to be the main source of tourists, a trend that has been maintained in recent months with a total of 732,343 international arrivals by air from January to November 2021, or 63.8% of the same period in 2019. To date, 27 of the 29 airlines that were flying to Costa Rica pre-pandemic have resumed flights into the country, while also adding new routes to key markets in Canada, the United States, Mexico, and the United Kingdom. Travel experts forecast that the travel trends poised to shape the upcoming year include the desire for more nature, workcations, active holidays, and a return to socialization – all of which can be fulfilled in Costa Rica.

Costa Rica’s Government Bolstering The Real Estate Market

By the end of 2021, Costa Rica received around 1.3 million international tourists – about 40% of the visitors who crossed the border in 2019. According to Costa Rica’s Tourism Institute, ICT, this figure is likely to increase with the start of the high season, which began in the last week of November, and will conclude at the beginning of March 2022. “It is a very important percentage considering that the pandemic is not over yet and that world tourism is experiencing the most acute crisis in its history,” said Gustavo Alvarado Chaves, Minister of Tourism and Executive President of the ICT. “The route of the reactivation and recovery of the tourism sector is gradual, and most international experts foresee that the return to the levels of 2019 will occur within approximately two years,” added the Minister. Costa Rica’s growing popularity can be directly tied to their growing reputation as a green leader in the world. In 2021’s Cop26 gathering of world leaders to talk about the environment, President Carlos Alvarado Quesada was the star attendee. Schmoozed by the likes of Leonardo DiCaprio, Jeff Bezos, Boris Johnson, and Prince William, it seems that everyone was eager to speak to President Alvarado and bask in Costa Rica’s green glow. Costa Rica is the only tropical country that has successfully halted and reversed deforestation, a commitment dozens of others made at Cop26 but are far from achieving. It is aiming for total decarbonization by 2050 – not just a net-zero target – and is helping lead the world in efforts to protect 30% of the Earth by the end of this decade. ”In 2020, 99.78% of our energy has been generated from clean sources,” President Carlos Alvarado announced. “We are at six consecutive years of generating more than 98% of our electricity from renewable sources. We advance in the line of decarbonization, which protects the environment and generates economic benefits.” According to the Tico Times, in 2020, Costa Rica has generated 72% of its energy from hydropower, 14.9% from geothermal sources, 12% from wind and 0.54% ​​from biomass and solar panels. In October, Costa Rica was among the five inaugural Earthshot prize winners for its policy to pay citizens to protect standing forests and restore ecosystems. Next on the agenda for Costa Rica is a vast new marine protected zone. All of these factors are hugely influential for real estate buyers who are impressed with the actions of the Costa Rican government, especially when compared to those of their home countries.

Cost Of Living In Costa Rica

Costa Rica is not an expensive country to live in, despite what some say. Comparing the prices of goods and services, Spain is 11% more expensive to live in than Costa Rica, the United States is 51% more expensive, and the UK is 54% more expensive. Many Latin American countries are cheaper to live in than Costa Rica but the quality of life is incomparable to the clean, peaceful, and green landscape of Costa Rica.  Although financing is limited for foreigners to purchase real estate in Costa Rica, some are able to take equity on their assets at very low interest rates in their home country and then pay cash for a home in Ojochal. Our property buyer clients are most impressed with the very low property tax rate in Costa Rica, which is 0.025%. "That is one-quarter of one percent," says Katherine, who says her clients are flabbergasted when she emphasizes this. "That is maybe a few hundred dollars a year for most home owners." However, the cost of developing a property in Costa Ballena increased in cost by about 30% by the end of 2021. OTP realtor, Richard Owens, says "material and labor shortages are responsible for this high increase due to the amount of projects that are in construction right now." https://www.youtube.com/watch?v=ls9ItRpnez8 Interview With A Builder In Costa Rica — Richard Owens Talks To David Lopez in Ojochal, Costa Rica

Advice For Buyers Of Real Estate in 2022

In a seller’s market, it is important to have an agent that’s highly responsive and efficient. You don’t want to miss an opportunity because your agent dropped the ball. Also, it’s essential that the agent has the local expertise to help you distinguish between a fair-priced and overpriced property. They will also regularly update you on new listings as soon as they hit the market and help you make a competitive offer when you are ready to buy. Our Osa Tropical Properties realtors are also armed with a number of pocket listings that have not yet hit the general market for a variety of reasons. "There are great opportunities right now," says Marcia, "to get something without the competition of being a general listing." 

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