Costa Rica real estate has always been driven by emotional buyers. There are a variety of offerings in Costa Rica that have made this a popular repeat destination for many different types of people. But in the last two years, the number of people wanting to invest in Costa Rica has increased significantly and nearly all of these people are making their decision with emotional reasoning.
Situations in North America and Europe have changed such that more people are feeling the push to want to leave or at least have an escape plan. Costa Rica has enough pull factors that many of these pushed buyers are feeling the pull of ‘pura vida.’
Some of these “emotional buyers” are feeling so propelled that they are buying property online – sometimes sight-unseen – which was virtually unheard of pre-pandemic.
Costa Rica feels like it is the place to be in 2022 and our South Pacific region has barely even hit the map. Dominical, Uvita, and Ojochal are all experiencing a hot buyers’ markets and most people don’t even know about us yet. We don’t have celebrities coming here to vacation as they do in Guanacaste, and yet so many developments are being sold out, even pre-construction!
There is more luxury money coming to our market, which can be clearly seen on Airbnb and other rental sights. Some property values have doubled or even tripled in the last two years. But it is important to keep a focus on the emotional drivers bringing buyers to Costa Rica because these are the factors that will determine how much joy you get out of your Costa Rica investment.
What is an emotional buyer in Costa Rica?
Ever since the first expats moved to Costa Rica, real estate buyers were motivated by their emotions. They had the desire to be different or to seek a better future, or better well-being. They wanted to feel the thrill of making different life choices with their friends and colleagues. They wanted to find somewhere they felt they belong. They wanted to be somewhere that cares about the environment. They wanted to be somewhere that allowed them to be who they want to be, feel secure, and succeed in life.
Harvard Business Review refers to these feelings as “emotional motivators.” They drive the choices that fulfill our deep and often unconscious desires. Most people are not even aware of their emotional motivators but that doesn’t stop these factors from driving their choices every day. Despite millions of years of evolution and the development of abstract thought and critical thinking, humans still rely heavily on emotions when making decisions.
Douglas Van Praet, the author of Unconscious Branding: How Neuroscience Can Empower (and Inspire) Marketing, phrases it well:
“The most startling truth is we don’t even think our way to logical solutions. We feel our way to reason. Emotions are the substrate, the base layer of neural circuitry underpinning even rational deliberation. Emotions don’t hinder decisions. They constitute the foundation on which they’re made!”
Most of us who move to Costa Rica today continue to be driven by emotions. This makes for a unique environment in which to make a big decision about investing in real estate. Rather than focusing on the rational, wealth-building asset that property is in other parts of the world, foreigners who buy real estate in tropical destinations like Costa Rica are buying real estate for reasons that are based almost entirely on emotion.
What attracts emotional buyers to Costa Rica real estate?
When the pandemic hit, a lot of people panicked about everything. They wanted a life outside of the city. They wanted a second home somewhere quiet, warm, and by the beach. Then, when international borders reopened to travel, people burst out of the gate and started panic buying real estate in Costa Rica, among other tropical destinations.
Expats in Costa Rica have always been emotional buyers but Covid pushed people’s emotions in ways that we never expected. All of a sudden, we had a whole new wave of people interested in Costa Rica real estate being driven by a slew of emotional factors.
Stock markets, cryptocurrencies, and even real estate go up and down in value. What has changed recently for people with wealth is that they not only want a safe haven for investment but they are also looking for a safe haven for themselves.
People who visit Costa Rica tend to love it so much that they want to buy property. That is the effect that this country has on us. This is a place where there is more time, more space, and less stress to do the things that we want to do. We feel like we have more capacity for life here. The government seems to function well and puts the priority on the health of the people and the wealth of the nation (which is in nature and the eco-tourism that it draws).
As today’s buyers watch this hot market, the increases in property values, as well as the number of solds, is playing even further with the desire of people wanting to move to Costa Rica.
Costa Rica is unique because it offers it all: a safe place to invest that is clean, beautiful, sparsely populated, and civilized. People who are happiest here are getting back to their human roots by being in nature and growing a lot of their own produce. Natural assets are Costa Rica’s greatest resource and people from the city (especially after covid) are driven to spend more time in places that are tranquil and natural, where they feel at ease.
How to use your emotions to make smart decisions in Costa Rica real estate
Costa Rica real estate is a stable market. Real estate in Costa Rica is a cash market and cash buyers are people who have diverse portfolios and are looking for more than just a financial investment. Their purchasing power tends to be less affected by the ups and downs of other markets.
Costa Rica offers a safe destination to diversify a portfolio. If your goals revolve around returns, there are better avenues to invest your money. This is a place for people wanting to move some of their money into a stable asset that gives more than financial returns. There has to be more reason than money for you to want to be here. You need an emotional attachment to Costa Rica or you won’t make it very long because you won’t see the value in this investment.
When you invest in Costa Rica real estate, you are preserving your wealth rather than growing your investment. There is absolutely potential to grow your investment here but this should be a secondary driver for wanting to buy real estate in Costa Rica.
If you are considering renting your property in Costa Rica when you are not using it, you can count on a dividend return of 1-3%, which can be constituted as a safe investment. But more than that, property in Costa Rica is something that you can enjoy. Unicorn properties do pop up occasionally that receive 10-15% annual returns but these are rare and come down to many factors, including how the owner handles the property.
These types of expectations are not healthy, though. Costa Rica offers so much more as far as a change in lifestyle with less stress and healthier habits. Your investment in Costa Rica should be in living a better life that satisfies your emotional drivers.
It is not a smart play to spend all of your savings on Costa Rica real estate. But if you are in the position to afford it, why wouldn’t you let your emotions drive you towards investing in enhancing your life?