Costa Ballena, Costa Rica Real Estate Market Report – Q3 2023

In today’s ever-evolving global real estate landscape, staying well-informed is critical for those involved in the dynamic Costa Rica real estate market. As the world grapples with shifting economic dynamics, geopolitical tensions, and rising interest rates, the importance of making astute investments cannot be overstated. In this report, we aim to provide a simple overview of the key trends and insights that are particularly pertinent to buyers and sellers of Costa Rica real estate. For more detailed insights, contact one of our knowledgeable realtors to request specific market information about the area that interests you most.

Costa Rica Real Estate Market Overview

The Costa Rica real estate market is closely intertwined with the tourism industry, with over 85% of Costa Rican businesses relying on international visitors, primarily from the U.S. and Canadian markets, according to Barry Roberts, former president of the National Chamber of Tourism in Canada and vice president of the ICT (Tourism Ministry) in Costa Rica. However, several economic factors have influenced the market during the third quarter of 2023:

  • Currency Fluctuations: The fluctuating exchange rate between the U.S. dollar and the Costa Rican colón has impacted businesses pricing their services in dollars, affecting their income.
  • Cost of Living: Costa Rica’s cost of living is higher than the Latin American average, making it important for businesses to remain competitive in the international market.
  • Seasonality in Tourism: Concerns about a potential decrease in reservations during the second semester of the year have arisen, reflecting a return to seasonality in tourism. The pandemic era changed the landscape of tourism in Costa Rica for the last three years to all-year highs in occupancy, although this trend appears to be changing back to a high season and low season.
  • Security Issues: Security concerns have affected Costa Rica’s image as a safe destination, warranting efforts to address these issues to maintain the country’s appeal, to which the Costa Rican government has stepped up its efforts significantly. Precautions like security cameras and alarms are recommended to protect properties, which is something we find many of our clients are already accustomed to having installed at their homes around the world.

Costa Ballena Real Estate Market Trends

  • The Costa Ballena real estate market has slowed slightly in 2023 but remains active. Properties in the third quarter of 2023 sold for approximately 93.2% of their list price, which is a decline from last quarter (94.1%), but up from the same quarter in 2022 (92.9%). This is evidence of market stability, even while property prices in Costa Ballena slowly but steadily rise.
  • 44 properties sold or went under contract in the third quarter of 2023, totaling around $20 million in sales for this three-month period across Costa Ballena (Dominical, Uvita, Ojochal, and surrounding areas). This quarter showed a sharp decline in the number of sales and the value when compared to the first half of 2023 and the same quarter in 2022. We see this as evidence of Costa Rica’s tourism and real estate industries returning to traditional seasonality, with the third quarter of the year historically being the quietest for visitors due to it being the summer season in our most popular markets (United States, Canada, and Europe).
  • Of the properties that sold in the third quarter, land sales accounted for more than 40% of properties sold.
  • Rising interest rates have impacted some clients, particularly those using second loans for Costa Rican real estate investments.
  • Improved financing options from banks like BCT and Lafise are making Costa Rica real estate more accessible for buyers.
  • The market has shifted towards a buyer’s market, with more properties seeing a 50/50 split in closing costs.
  • High-end buyers continue to prefer gated communities for their exclusivity and security.

Uvita and Ojochal Lifestyle and Real Estate

  • Uvita and Ojochal offer unique lifestyles that attract individuals and families seeking a different way of life, especially post-COVID.
  • Successful vacation rentals in Uvita and Ojochal typically feature three to four-bedroom homes with modern architecture and proximity to amenities and the beach.
  • Creative property development ideas, such as luxury ocean view homes or properties with private rivers and waterfalls, can set vacation rentals and homes for sale apart from their competition.
  • Opportunities exist for various businesses, including recreation centers, construction, storage, and convenience stores.

Costa Rica offers diverse investment opportunities, accommodating various budgets and goals. Land banking is a popular strategy in today’s market, allowing for flexibility in development over time. While popular tourist destinations like Manuel Antonio and Dominical remain attractive, emerging areas like Uvita, Ojochal, and Tres Rios offer growth potential.

Costa Rica Luxury Property Trends

The surge in demand for luxury properties (typically referring to multi-bedroom ocean view homes on an acreage property with modern amenities like pool, a/c, high-end fittings and décor, etc.), driven by hybrid working and a quest for improved work-life balance post-pandemic, is of particular interest. This trend has been observed in regions of Costa Rica, especially along the Pacific Coast, extending as far south as the Osa Peninsula. 

The implications for Costa Rica’s luxury property market are worth considering in Costa Ballena as tourism continues to increase in this region. Many couples and young families are visiting Costa Rica for a post-pandemic detox and finding themselves falling in love with the offerings here and seeking a more permanent stay.

Despite economic challenges, we have seen growth in high-net-worth individuals purchasing property in Costa Ballena. This suggests that some investors have managed to thrive even in difficult times, potentially making them more inclined to consider luxury real estate investments. The drivers of positive wealth performance include real estate, currency trades, market timing, and returns on cash. Real estate today remains an attractive option for wealth preservation and growth, further bolstering Costa Rica’s allure.

The allure of luxury real estate as a diversification tool and an inflation hedge is on the rise. This reaffirms the attractiveness of luxury real estate investments, including those with ocean views, for high-net-worth individuals looking to safeguard their wealth from inflation.

Global Real Estate Market Trends

As the world navigates an ever-changing investment landscape, staying informed about changing market dynamics and being prepared to adapt strategies is paramount. Volatility in financial markets is driving some investors to seek diversification, which is particularly relevant for Costa Rica real estate. Furthermore, rising geopolitical turmoil is motivating wealthy individuals from unstable regions to look for “Plan B” properties, potentially making the Costa Rican real estate market even more attractive to foreign investors. For some, these challenging factors create more recessive investment energy, while for others, the various crises of our time are the biggest push factors for making them seek out new places to live that offer a different lifestyle, like Costa Rica.

The Costa Ballena real estate market in Costa Rica continues to evolve in response to global and local dynamics. While facing challenges, such as currency fluctuations and security concerns, it also offers diverse investment opportunities and the allure of sustainable tourism. Whether you are a buyer or a seller, understanding these market trends and opportunities is crucial for making informed decisions in the Costa Rican real estate market. Stay flexible, embrace innovation, and invest in a way that aligns with your values and goals to thrive in this unique and dynamic market.

To learn more about the Costa Ballena real estate market, contact our team at info@osatropicalproperties.com

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