Property Investing
May 13, 2023 in Tips for Sellers, Tips for Buyers, Real Estate in Costa Rica
The South Pacific Costa Rica real estate market continues to thrive in the third quarter (July, August, and September) of 2022. More people are visiting our region and staying in vacation rentals. Construction grew exponentially as turnkey property inventory dwindles and more buyers are purchasing land and building new homes as new contractors arrive in this area. Additionally, our office has noted that it appears that average property values are at their highest value in around 15 years. With the rise of remote work, people are choosing to move to areas that bring them joy rather than moving somewhere because of work. Costa Rica’s inviting Digital Nomad Visa makes this process more simple and opens the door for more remote workers to move to our coastal destination. The arrival of high-speed fiber optic internet to most neighborhoods in Costa Ballena in the last year was a big game-changer that is growing the real estate markets in Dominical, Uvita, Ojochal, and the surrounding areas significantly. A good way to analyze if a market is growing is to take a look at the net migration pattern, or how many are moving out versus moving in. Costa Ballena is in a positive net migration pattern where we are seeing more people coming in than leaving, creating increased demand. Eighty-six new listings came on the market in the third quarter of 2022 and seventy-two listings had successful offers in the Costa Ballena region at that time. Of those deals, 53 closed in this quarter for a total of more than $51 million, which is the highest total for the third quarter we have on record, and the biggest quarter so far this year. Of the total deals in the third quarter, 43 homes were sold and 22 lots. There were also four commercial properties with successful deals and three large farms over 20 acres in size. Micro markets, like luxury real estate that is truly turnkey, are the types of properties seeing the most appreciation in 2022. Currently, there are 308 properties for sale in Costa Ballena. 114 of those properties have homes on them with the majority for sale in Uvita. There are also 156 vacant lots for sale, 60 businesses (including hotels and Bnbs), six condos, and 22 farms available to purchase right now. As mentioned in previous market reports, the number of days that a listing spends on the market in Costa Rica is not an accurate depiction of the quality of a listing. Costa Rica is predominantly a destination real estate market. Buyers need time to plan a trip to see properties for sale in person. The newest homes get snapped up the quickest, with many brand-new, modern constructions going under contract within a month of listing. The oldest homes (those over 15 years old) spend the longest time on the market. The average days on market for listings in Costa Ballena in the third quarter was 362, with a median of 131 days. The average is skewed significantly because some homes spend years on the market, only to one day sell to the perfect buyers who finally made their way over. Not every buyer wants a brand-new modern home and many still appreciate the character and charm of an older Spanish colonial construction on a mature property with an established garden. The ten properties that sold the fastest had deals within 28 days. Three of these were lots for sale and seven houses. The values of these properties that sold quickly were between $89,000 USD and $1,750,000 USD. This shows that there is no one price bracket that is moving in today’s market. All of the homes that sold within a month were at least three bedrooms in size with at least two bathrooms and they averaged 3000 sq.ft. in size. Pools and established landscaping both factored into the quick sales of the fastest-sold properties (95% of the top 10 sold homes had these qualities), as did ocean views (8 out of 10 had big ocean views). Of the properties that took the longest to sell, these were mostly older homes or land that is located in not as popular areas (those without ocean views, rivers, or close to town). The average list-to-sold ratio was 92.9% for the third quarter. The highest-value home that sold between July and September went for 114% of the asking price was a luxury residence in the prestigious Las Olas development near Dominical. This property sale turned into a bidding war within two weeks of listing and the home garnered an extra $250,000 on top of the asking price. The properties that sold for the closest to the asking price in the third quarter of 2022 were mainly located in Ojochal and Dominical. All of the properties that sold for 100% of the asking price were house listings that featured pools, landscaping, modern/contemporary design, and with luxury ocean views. Newly-built homes are the easiest to price accurately because there is a clear correlation between the land price, the cost of construction, and the market value. The properties that sold for much less than the asking price in this quarter were small lots and large farms. Older homes on more established properties have a less-quantifiable value because different buyers see different values depending on their wants and needs. According to a quote from a local architect in South Pacific Costa Rica, to build a premium quality (not luxury) turnkey home is around $1575 per m2 ($146 per ft2). To renovate an existing structure with a new kitchen, windows, tiling, and the works can run between $1100 and $1350 per m2 ($102 to $125 per ft2), depending on the existing building condition. Luxury home builds with top-of-the-line finishes and furnishings and built in the most high-end construction style will cost between $1880 per m2 and $2420 per m2 (around $175 and $225 per ft2). Builders in Costa Ballena normally charge around 8.5% of the total budget for the design, construction plans, and building inspection, plus tax. Buyers may be able to save money by buying an existing home that is older and bringing it up to more modern or even high-end standards and many choose this option because some of the most beautiful properties in Costa Ballena were occupied by homes built more than 15 years ago during the last real estate boom in this area. The price of land in Costa Ballena was around $25 per m2 ($2.3 per ft2) on average of the vacant lots including luxury ocean-view land sold in the third quarter of 2022. Ocean view land alone averaged around $27.70 per m2 ($2.57 ft2) while mountain view averaged $14.50 per m2 ($1.34 per ft2). The average price per square meter of the three farms sold between July and September was far lower at $1.60 per m2 ($0.15 per ft2), or around $6,600 per acre. Many unfinished homes were sold in this period based on renderings and site visits. Buyers enjoy the opportunity to pick out their own finishes and furnishings while not having to go through the challenging process of managing a home build. There is also a backstage economy of developers selling unlisted homes before they even have a chance to be brought to market. Realtors in the know can help broker these deals so it is essential to find a good agent who knows the different developments happening in the area. The foreign buyer pool contacting our office is shifting from around 80% from the United States last year same quarter to 38.6%, leaving room to include more Canadians at around 14% and Europeans mainly from France, Germany, the United Kingdom, Switzerland, and the Netherlands. Japan, Russia, Mexico, and Spain are surprising new additions to the top 20 markets for researching Costa Rica real estate on our website. Web traffic from within Costa Rica (31.5%) represents the many realtors and buyers from within the country looking for real estate in Costa Ballena. This internal market includes expats already living in Costa Rica and interested in buying into the hot Costa Ballena real estate market. The most popular destinations in Costa Rica continue to be outside of the Southern Zone. The top beach destinations are Santa Teresa, Tamarindo, and Manuel Antonio, which is only 30 minutes from Dominical. Guanacaste is still the favored province and Puntarenas is still not on the radar for many visitors and investors. However, we have noted a marked increase in buyers from within Costa Rica who are seeking out our quieter jungle beaches rather than the drier and busier beaches up north. Costa Rica's capital, San Jose, is still the most researched destination in Costa Rica. Top rental homes in Costa Ballena are expected to be new, modern, and with amazing 180-degree ocean views from every room. Being located within close distance to a highway and amenities is key, and having separate luxury residences for multiple couples or extended families visiting gives more marketability. Popular construction features include high wooden ceilings, sliding glass doors opening to large covered terraces, luxury furnishings and finishes, spacious bedrooms with closets and full bathrooms, large kitchens with top-of-the-line appliances, and quality amenities like a lap pool and sauna. These types of homes will rent for over $5000 per month. Basic rental homes are expected to come with strong and reliable fiber optic internet, to have around two bedrooms, a private kitchen, and a bathroom, and to be in a quiet and peaceful location. Most renters prefer homes in well-maintained, good condition. These types of homes will rent for around $1000-$2000 per month, depending on the precise location and amenities. Christine Schiferl from Jaguar Property Management based in Uvita says that a lot has changed in her business in recent years. She says that her company had its best third quarter on record. Her company has been in business since 2013 and this has been its best year. In recent years, she changed the company’s business model to only accepting luxury vacation homes. “Luxury rental homes are those that are three or more bedrooms – the more the better – with full ensuite, all ocean view, and with rooms of equal size,” says Christine. “These types of vacation homes rent for $400 a night or more if they have all the bells and whistles. Jaguar Property Management receives the most inquiries for the Uvita area. “I think it provides the perfect blend of tours, activities, restaurants, nature, beaches, and it is very convenient for families because it has larger grocery stores, banks, shopping, and more,” says Christine. According to the way this year is tracking, she believes that the coming high season (December to May) will surpass the last high season’s records. “We are booking in the rainy season, which we have not seen very much in the past. We rarely got people staying in August, September, October, or November and now we have quite a number of people coming here and staying in the rainy season.” The digital nomad lifestyle is now being formally recognized by governments and tourism authorities. Costa Rica, Bali, Portugal, and Malaysia have introduced digital visa nomad visas in the last month to jump on this global trend. Under Costa Rica’s digital nomad visa program, holders of this visa can stay up to three months and then extend their stay for up to two years, according to the Costa Rica Minister of Tourism, William Rodríguez. They can open a local bank account, they do not need to pay Costa Rican income taxes, they can use their home country’s driver’s license, and they pay no import taxes on computers and other remote work equipment. Costa Rica’s population of 5 million people would benefit economically with less than a percent of the U.S. remote worker segment. “Our research says there are 3 million people working in the States from home,” said Minister Rodríguez. “If we can have half of one percent of that, we are done. We are aiming for that number.” Although it is difficult to accurately estimate the number of tourists who will arrive by the end of 2022, the Costa Rican Tourism Board (ICT) predicts that it is very likely that Costa Rica will close the year with more that 2 million tourists by air. Tourism figures for Costa Rica are showing a rapid regrowth this year from the height of 2019 numbers. All entry points in Costa Rica show 1.6 million visitors from January to August 2022, which is still down by 27% from 2019 numbers. But when comparing visitors arriving solely by air from North America and Europe, we can see that the numbers are closer to 2019's highs (90.6% and 94.8% of 2019, respectively). Costa Rica is considered one of the premiere destinations for ecotourism in recent years, and this naturally beautiful country is more than 50% forested. It has been part of the Happy Planet Index for several years, and has high-quality infrastructure established for global tourism. Tourism in Costa Rica is all about well-being in nature. The traveler type visiting Costa Rica has also changed in recent years. According to ICT, before the pandemic, the majority of visitors were made up of entire families. Now there is a higher concentration of couples or single travelers. Their studies note that the majority of tourist arrivals are from North America (71%), with the United States the bulk; followed by Europe (19.2%), South America (4.4%), Central America (3.7%), and the Caribbean (0.3%). Tourists who spend a vacation season in the country consider that they leave as better people, according to studies by the ICT. In their surveys of travelers carried out in national airports, visitors noted that Costa Rica is home to a “valuable society“. “Those who visit us consider that after spending a vacation season in Costa Rica they leave as better people, which has an incredible value from the point of view of communication, positioning, and other things that are essential to decide where we put our resources. tourism,” said William Rodríguez, Minister of Tourism. With high inflation and rising interest rates fueling speculation that a global recession is on the horizon, it may come as no surprise that realtors in Costa Rica are hearing concerns from their clients. Costa Rica real estate is not a financing-based market for foreign buyers. There is very little option for financing other than potential private seller financing so people are usually able to sit on their paid-off property in Costa Rica to wait out a bear market. Nevertheless, the push factors actually bringing people to Costa Rica appear to be growing in intensity as more and more foreigners from all over the world are looking to buy real estate in a more peaceful and less expensive location. Costa Rica real estate is generally considered to be a long-term hold and therefore potential buyers should consider that buying real estate in what may be a recession is not about trying to time the market but about the value of what type of property you can buy that fits with your lifestyle and is sustainable for hopefully 5-10 years. People appear to be interested in Costa Rica with renewed vigor. Nothing fuels the desire to buy a vacation home quite like the end of summer and the third quarter of 2022 showed us that many people envision a second home in Costa Rica as a source of family memories, wealth, rental income, and other lifestyle benefits. Property prices in Costa Ballena are set to rise, steadily driven by demand from foreign investors. With the many initiatives to continue growing tourism to this country and with the growing popularity of this region with families and digital nomads, we anticipate another record-breaking quarter to finish out 2022 with little sign of slowing next year. *Please note that we are not financial advisors and the contents of this article are only our opinions and not financial advice.Third Quarter Market Results For Costa Ballena Real Estate
In total, Costa Ballena saw over $51.6 million in sales in third quarter of 2022. This is a significant increase over the second quarter (April to June), which saw $44 million in sales. Even in the traditionally busiest first quarter (January to March), totaled less than the third quarter, with just over $50 million in sales. The third quarter of 2022 more than doubled the $22 million sold in the same time period in 2021, despite having more numbers of closings last year in the same quarter (99 deals between July and September 2021 versus 72 this year). The main reason for this increase in total values over last year is that home prices have significantly increased in 2022 and because this area is attracting more high-budget, luxury buyers due to more modern, top of the line constructions on some of the best ocean view properties in Costa Rica. 
The average sold listing value in the third quarter was $717,000 USD, which is nearly double the average selling price in the same quarter of 2021 ($346,000 USD). This is the highest average sold price that this region has seen in more than 15 years. The second quarter average sold prices this year were $659,000 for 71 properties and the first quarter saw property values average $607,000 across 104 property deals. These values equate to a more than 8% rise in values every quarter in 2022 so far. Vacant land that sold in Costa Ballena in the third quarter totaled $6.1 million and averaged $293,000 per lot across this coastal region. Farm sales (land over 20 acres in size) totaled more than $1.7 million and garnered an average of $589,000 for these larger, more raw parcels of land. Commercial properties were the second most valuable market, with $6.8 million in sales and averaging $1.7 million per commercial venture sold. Houses continue to be the biggest market for buyers in this region, taking in more than $37 million in sales for the quarter. Home values averaged $838,000 in Costa Ballena between July and September 2022. 
Time On Market
List-To-Sold Price Ratio
Construction Costs in Costa Ballena
Buyer Profiles and Driving Forces
Osa Tropical Properties' web traffic in the third quarter of 2022 was down 5% from the second quarter, which is within the standard seasonal deviation as we enter the rainiest part of the year (September, October, November). However, our website’s traffic is up 20% on last year and 3.5 times greater than what it was in the same period in 2019 and 2020. Traffic on our website began to increase considerably with the dawn of Covid restrictions in 2020. The shift to work-from-home culture brought with it the notion that living in a foreign country is within the realm of probability for more people. Those wanting to work in the tropics and in a similar time zone are finding much affinity in beautiful Costa Rica. Politics, mounting social strife, climate change, rising prices, and family security all continue to be the top factors driving buyers to Costa Rica. This is a country that proved to be decisive and fair during the pandemic and solidified its image as a place of safe and stable politics during this tumultuous time. People from all over the world are wanting to escape the increasingly hectic and aggressive urban lifestyle in search of a calmer social dynamic. Costa Rica tops the list of escape destinations because of its pura vida ethos, which has captured the hearts of many who have visited or know others who have. Increasing climate catastrophes are also pushing real estate buyers out of the traditional destination real estate markets like Florida, Texas, and California, as has the increase in taxation and the everyday cost of living. The cost of living is a huge driving force for people living in high-cost-of-living cities. Home prices, rents, and income taxes factor into this. NY, California, Illinois, New Jersey are all at the top of the list of the most expensive in the United States for the cost of living.Popular Destinations
Rental Market in Costa Ballena
New Developments in Costa Rica
Digital Nomad Visa
Continued Growth In Tourism
Are we entering a market recession?
Why Choose Costa Ballena Real Estate?
May 13, 2023 in Buying Process, Real Estate in Costa Rica, Tips for Buyers
Why are expats buying rental property in Costa Rica in 2021? Read on to find out about income, future planning, and the other reasons why Costa Rica rental properties are hot this year! A trend that we have seen in recent years is the rise of the income property. More often than not, Costa Rica property buyers are looking for something they can use for rentals. More than 50% of the buyers who have come through our real estate office this year are buying rental properties in Costa Rica that they can use for at least part of the year, or possibly live on the property and have rental cabins. Is this the right choice for you? Here is a list of questions that our rental property buyers ask us all the time. Can Americans and other foreigners legally buy property in Costa Rica? Absolutely! The great part about Costa Rica is that foreigners and locals have the same ownership rights when buying property. Foreigners can purchase property on a tourist visa without the need for residency or citizenship. Any foreigner, resident, or non-resident has the same rights as a citizen in Costa Rica, except for voting rights in presidential and municipal elections and can, therefore, purchase and own Costa Rica real estate legally. However, the one exception is that a foreigner can only own 49% shares in a property in a Maritime Zone (within 200 meters of the high tide line). In our experience of working with Costa Rica real estate buyers in 2021, this year, people are looking for a back-up plan. They have been thinking for some time about getting out of their current scenario of stress and overconsumption, and the Covid pandemic has presented a few new opportunities and reasons to want to branch out somewhere less crowded and more beautiful. These people may be close to retirement age but the majority of rental investors in Costa Rica are still working and raising families. They are looking to secure a safe investment and a possible place to live outside of their country while they keep working. Those who are able to work remotely tend to look for properties with multiple housing options so that they can live on the premises and rent out the vacant spaces. Life coaches, yoga instructors and practitioners of all types of therapeutic modalities are finding that Costa Rica provides powerful settings to host healing retreats. Many have chosen properties where they can grow food and invite guests into a beautifully organic living experience. There may not yet be any large, all-inclusive hotels in our South Pacific region of Costa Rica but there are an increasing number of investor groups who are scouting our region for income property opportunities to meet the growing demand. Expats generally want to be near other expats. This is not the case for everyone because there is a significant population of foreigners who move to Costa Rica to get away from everyone and enjoy living a simple life in a small Tico community. However, the majority of people want to live near people who are familiar to them in language and values. Towns that are populated with expats will attract more products and services that cater to expats, with international products, cuisines, and high-end services. Coastal communities like the Costa Ballena towns of Dominical, Uvita, and Ojochal are popular with expats who love nature, adventure, and peaceful living. There is not much traffic here and life is generally slower, which brings in a growing amount of local and international tourism from people looking for that type of escape into nature. Costa Rica is frequently ranked in the top 10 fastest growing tourism markets for a variety of reasons that include politics, environment, ease of travel, wildlife, and friendly people. All types of people are looking to spend time in this enlivening part of the world whose message of ‘pura vida’ (pure life) draws people in like magic. Digital nomads are a growing group of visitors to Costa Rica. The country’s government has recently passed a new law that allows Digital nomads to stay in Costa Rica for up to two years if they earn a foreign income of at least $3000 USD per month. Young entrepreneurs and families love this part of Costa Rica because the individualized rental opportunities have many value adds that make renting here unique. Maybe it’s a yoga pavilion, a five-star ocean view from bed, or a private waterfall on the property - these extras wow guests into wanting to stay as long as possible. When people first start thinking about buying property in Costa Rica, they will typically book a trip to visit. Oftentimes, people will visit more than once before committing to a location and a property. And those who have been visiting in recent years will note that rental prices in Ballena have gone up and rental availability is more and more scarce. Rental properties in Costa Rica can and do generate a net income but it is important to note that the return on investment doesn't typically happen right away. Unless you are buying a turnkey rental property at a premium price, you can expect to spend money on renovating to your standards and taste as well as upgrading the property’s amenities to current rental standards. We are in a strange time in the rentals market in Costa Rica because at a point in the year when it would normally be quiet, most rental homes in Costa Ballena are filled. They are, however, filled with long term tenants, most of whom are looking to stay for a while. Recent buyers who have purchased homes in Costa Rica are making 0.5% to 0.9% monthly return (6%-10% annual return on investment) on their purchase price at this time. One home recently bought for $450,000 is renting for $4000 per month to long-term renters. Another home purchased for $285,000 is charging $1500 to long-term renters. These rentals would normally cater towards short-term renters but because the pandemic has put a damper on international travel, rental home owners are not counting on intermittent traffic and would rather secure long-term renters for a lesser monthly income. When borders finally open, many rental home owners are likely to switch back to focusing on short-term renters. In recent years, rental property owners have netted an average return from long-term rentals. These figures can easily climb as high 8 – 10% ROI or more in the premium short-term rentals market. Although there are a few ambitious property buyers who want to build their dream property, most foreigners wanting an income property in Costa Rica are looking to buy something that they can use right away. A lot of homes on the market in the $200,000 - $400,000 USD price bracket will be looking at some renovations but you can still find ocean view homes with a pool in this price range if you are willing to put in some elbow grease. Simple cabina properties without too many frills can also be found in that bracket. When you move into the $400,000 - $600,000 USD bracket, you will find the conventional family vacation rentals that have a decent view, large and airy rooms, and a nice terrace with a pool. These types of homes are the bread and butter of our market today. From $600,000 USD and up, you start to get into the luxury property market. These are the fully-equipped homes with lavish amenities like a spa bath, infinity pool, gorgeous floral landscaping, and ocean views from every room. As you scale up the price ladder, the finishes become more refined, the spaces more grand, and the sky's the limit for how much luxury you can pack into a Costa Rica property. Most turnkey hotel properties start at over $1 million USD in Costa Ballena. Vacation rentals in Costa Rica come with many common expenditures that are important to take into consideration when investing. When it comes to Costa Rica taxes for Expats, both residents and non-residents are subject to taxation on the income they earn within the country. This means that any rental income you earn from a rental property in Costa Rica is subject to a 13% VAT tax. You will also have to declare your income in Costa Rica to the IRS or any other foreign revenue body that you are subject to. Income from foreign sources is not subject to Costa Rican taxes. Annual taxation on a property in Costa Rica includes the not high payment of property tax which is calculated at only 0.025% of property value. To learn more about taxes in Costa Rica for U.S. citizens, click here. Owners will quickly discover there are two roles that need to be filled—the property manager and the rental manager. Often, they are one in the same. The property manager deals with daily life on-site. They coordinate with the cleaning crew, the gardener, the pool service, the maintenance man, and everything else house related and local. The rental manager deals with the online listing across various vacation rental websites, the inquiries (the most important component), booking reservations, receiving funds, and potentially offering luxury services like organizing a personal chef and a masseuse. They may also arrange shuttle services and book excursions and tours. Many semi-retired owners or remote workers manage their own rentals in Costa Rica. It is easy to live comfortably on a Costa Ballena property and share it with renters and many people opt for this style of living to earn additional income. Those who choose to own a condo over a private residence in Costa Rica are looking for ease of ownership. They want to minimize maintenance costs and to have increased security. Many renters enjoy staying in a condo; however, this type of property is less popular with buyers who envision themselves eventually moving into the property. Condos simply are not representative of what makes life in Costa Rica extra special, which is primarily about living surrounded by nature. Costa Rica offers a program that grants residency through overseas investment, whether or not you plan to live here full-time. With an investment of at least $150,000 in local assets (this number decreased from $200,000 in 2021), foreigners can easily qualify for residency. This investor status also allows you to import up to two cars and a one-time shipment of household goods tax free. The short answer is no. The long answer is yes, but it’s not as straightforward as people are used to. Savvy investors will use a cash-out refinance, which involves pulling money from other investments they own to buy property in Costa Rica property. Others choose to use self-directed IRAs. These options are not available to everyone and require a large amount of preparation but they are successful. You may be anxious about not knowing the local culture and the language. But when you work with a great real estate team, you can expect that the process will be smooth and easy and that all of the most challenging parts will be explained thoroughly by your realtor who will guide you through the entire process. Buying property in Costa Rica is not the best kind of investment for highly leveraged and cash poor buyers. However, it can be a very good long and medium term investment for a more experienced and economically-stable buyer looking for rental income, long term price appreciation, and a lovely tropical family getaway or retirement home to sweeten the deal. Costa Rica is a very credit poor country and real estate therefore favors cash deals. Cash buyers with patience have access to rewarding investment opportunities with potentially high yields and value appreciation through renovation and remodeling. Pros Cons“Can expats own property in Costa Rica?”
“Who else is buying rental property in Costa Rica?”
“Where do most Americans buy rental property in Costa Rica?”
“Who rents property in Costa Rica?”
“Is owning rental property in Costa Rica actually profitable?”
“How much profit can I earn by owning a rental property in Costa Rica?”
“How much does it cost to buy a house in Costa Rica?”
“What are the common expenses when owning a rental in Costa Rica?”
“Do expats pay taxes in Costa Rica?”
“What regular tasks need to be done when owning a rental property in Costa Rica?”
“Should I buy a condo in Costa Rica or a house to use as a rental?”
“What are my options for residency if I buy a rental property in Costa Rica?”
“Can I get financing to buy property in Costa Rica?”
“Is it hard to buy and own property in Costa Rica?”
“Is investing in Costa Rica vacation property a good idea?”
“What are the pros and cons of owning rental property in Costa Rica?”
May 13, 2023 in Real Estate in Costa Rica, Tips for Buyers
Vacation rentals in Costa Rica were one of the most searched topics on our website in 2019. In that record-busy year, over 50% of Osa Tropical Properties’ buyers purchased properties for use as short-term rentals. Those who bought vacation rentals in Costa Ballena were tending to use the property themselves when they visit on holiday and rent it the rest of the year to offset some or all of the costs of ownership. Their eventual goal for this property was to be their retirement in Costa Rica. In 2021, after a year of global lockdowns, most rental homes are being used as long-term rentals because of the restrictions on travel. According to our newest Osa Tropical Properties realtor, Richard Owens, who doubles as a property manager, “the current rentals market in Costa Ballena is dominated by long-term renters. For short-term rentals, at the moment, we are really only getting bookings for the high season, which starts around Christmas time.” Rebecca Rowntree, long-time realtor for Osa Tropical Properties, says that she “constantly has people looking for long-term rentals. The majority are looking for something between $1000 and $1500 a month price point. There are so many people looking for that and it’s very hard to find, especially when they are trying to get in now for the high season.” On that note, we want to spend some time going over what our office is seeing today from buyers looking for income properties for sale in Dominical, Uvita, and Ojochal, and what we think will happen in the local rentals market in the near future. The start of this year has been very busy for our team of agents and the year continues to trend towards being even busy as travel restrictions ease. Rentals at the start of 2020 were close to 90% in some areas and then completely dropped off after March. But as Costa Rica’s borders open to more of the world, we are seeing rentals trending higher in 2021 than ever before. Those who were operating short-term rentals in 2020 saw next to no bookings for almost a year and many of these properties have been put up for sale, if they weren’t already. Osa Tropical Properties’ broker, Kevin Champagne, thinks that “because of Covid, people coming here right now want to live here full-time and so short-term rentals are having less success at the moment. I’m not seeing as many investors currently looking to buy properties to use primarily as short-term rentals for this reason.” However, those who are switching their rental M.O. from short to long-term are finding that having a long-term rental in Costa Ballena can be lucrative, too. Short-term rentals are different to regular homes in Costa Rica because they are geared towards providing the fullest vacation experience in a short amount of time. They will be more about the views and proximity to attractions and less about year-round livability. For instance, most home buyers in Costa Ballena are looking for an acreage that will offer them privacy and space to garden or build. A short-term rental home, will sacrifice property area in exchange for views and will have A/C in every room to mitigate the heat from being located on a sunset cliffside. A long-term buyer is more likely to choose a slightly shadier or breezy property that has less impressive views but is designed more for comfort. A short-term rental is also less likely to have a shed or bodega for tools and extra storage, which is pretty necessary for full-time living at the property. And vacation rental houses often have an owner's closet that has their personal items stored away in a dry and safe area. According to AirDNA, a rentals analytics tool, the most important features in a short-term rental home in Costa Ballena are air conditioning, parking, and internet. The least important are heating, cable tv, and a hot tub. The analytics site also shows that the most popular average vacation rental size in this area is about 2.6 Bedrooms and able to house 6.2 guests. Right now, long-term rentals dominate our coastal market. Families, digital nomads, and business owners who stay long-term in Costa Rica are coming with big budgets, ready to spend thousands of dollars on rent every month. Whether they are thinking about moving here for good or just looking for a different way of life for a little while, they are able to afford the expensive rental fees of some of the best vacation rentals, which would normally only rent to short-term renters because of the higher rental yields. Most, if not all, long-term rentals in Costa Ballena are booked for the foreseeable future, even though travel into the country has yet to fully manifest. The typically short-term rentals are either sitting vacant at present, or they taking on long-term renters at a decreased rate to their normal luxury prices, but with much more consistency, and much lower property management costs. Many more types of people are working remotely in 2021 and they are taking advantage of this new lifestyle by incorporating some vacation qualities into their everyday lives by moving to a more beautiful location. There’s nothing like making your office in the fresh air, with green and blue vistas all around you, dotted with color, and teeming with life. These are the types of welcome distractions that make water cooler banter feel like a thing of the past. With the recent passing of a new law that allows foreigners to enter into the path to residency in Costa Rica after investing $150,000 USD into assets in this country (it used to be $200,000 USD), the doors to a long life in Costa Rica have opened for many more people. This feature has more younger singles and couples thinking about moving here, but for a variety of reasons, many are cautious about jumping in head first. Anyone who has visited an expat forum on social media knows that one of the most frequently given pieces of advice is to visit Costa Rica many times before buying, and to travel all over the country first. Some recommend renting for at least a year in the place you are thinking of moving. These people are not the majority but they represent a large portion of buyers who need to make sure that they are not just high on the holiday vibe and that they actually, really, really want to live in Costa Rica. They want to know that they will like the climate, the community, the services, and the everyday pace of life. And the pandemic has allowed for more people to embrace this patient attitude, spending more time renting and waiting for their perfect property to come up for sale. According to Richard, “it does seem like more people are starting to book now. It seems like more people are coming into the country, too. Southwest started flying back into the country again. According to my clients coming into the country, the lines at the airport and the delays coming through customs are long.” Richard says that “as more people get their Covid vaccines, we’re hoping to see more short-term rentals next high season.” Our website traffic corroborates this idea, with more people searching for Costa Rica properties this year than every before. Our Osa Tropical Properties website traffic is up by 250% over the last two years and 2019 was our office’s best sales year to date. This says to us that as soon as the travel gates open, we will see sales numbers increase dramatically. People have been waiting a whole year to break out of lockdown and they are ready for a change. “Basically," says Richard, "from what I’m hearing from people who are looking specifically for long-term rentals, they are having a heck of a time trying to find anything that is available for the foreseeable future." Rebecca is also confident in the future of rentals in this area. “One of the properties I was having a hard time renting because the internet wasn’t very good. But last week we were able to get a new internet service and now its gone and I don’t think it will ever be vacant for more than a day in the foreseeable future - like this year and next year.” Although it is not our place to offer you financial advice, we do know what the buyers we work with want and what they are most happy with in a Costa Rica property. House hacking - where you own a property with multiple units and rent what you don’t use - is one of the most popular dreams that people come here with these days. They want to be able to make a life in Costa Rica work and part of that is to be able to earn an income. Many people find that having at least one rental on their property is a way to make this happen. Of course, short-term rental vacation properties in Costa Rica can have a bigger return if done property. But there are a lot of risks and expenses. It’s a game where you can win big and lose big. Although we are slowly rebounding, 2020 showed us that the short-term rentals market can dry up and crush the tourism industry. To be able to use a property as a short-term rental, a buyer needs to be able to make the numbers work with a lower but more steady long-term rental income. When times are better, rental owners can switch to short-term rentals for a higher income. There are currently 935 active rentals in Costa Ballena listed on AirBnb. The average daily rate for a rental home in this region is around $200 per night. In the last three months, the average occupancy rate has been about 40% and was between 60-70% for the first three months of the year. This is in a time when travel into the country is far from its full capacity. This makes for an an average annual gross revenue of about $60,000 USD on a standard rental in Costa Ballena, with numbers going into the three figures in the best rentals in the prime locations in this region. Looking at AirDNA data, since 2018, this region has seen an average of 8% quarterly growth in rentals, including the dip in 2020. And Q1 of 2021 is at the same level of the last tourism high in this region, which was in Q1 2020. Those who are waiting to buy a property in Costa Ballena are finding that the types of properties they are interested in are selling out from under them. In better times, we are in a popular region for tourism and are likely to rebound more strongly than ever when travel restrictions are fully lifted and people feel confident to move about again. Spending a holiday at an ocean view properties in our coastal, hillside jungles is a unique experience that many people want to experience again and again. The rental numbers for this region reflect that.What is the rentals market like in Costa Rica in 2021?
What makes a short-term rental different to a long-term rental in Costa Rica?
Who is renting in Bahia Ballena in 2021?
Why do people rent long-term instead of buying property in Costa Rica?
What is the future of the short-term rental buyer’s market in Costa Ballena?
Should you buy an income property in Costa Ballena?
May 12, 2023 in Life in Costa Rica
On Saturday, August 1, 2020 a new phase began in the government's plan for tourism in Costa Rica, which will alternate openings and closings as a way of finding a balance between public health and the health of the economy. Costa Rica received its first international commercial flight in four and a half months on August 3rd, 2020. This is the first of a small number of flights planned to come into the country since a state of national emergency was declared by the SARS-CoV-2 pandemic. A gradual opening is being proposed with a limited number of flights coming into Costa Rica from the European Union, United Kingdom and Canada. The hope is that this limited reopening of the borders will bring optimism to the micro and small companies that depend on tourism in Costa Rica while taking measures to keep safe the Costa Rican population in these pandemic times. A negative COVID-19 PCR test from within 48 hours of flight time is requested of all passengers and crew members. Passengers and crew must wear masks in the terminals and on the flight, as well as keeping social distance where possible. Travel insurance is also mandatory to cover accommodation in case of quarantine and medical expenses for acute illness. Those arriving in Costa Rica are asked to fill out an epidemiological form and receive temperature measurements. As an exception to the rule, the Costa Rican Health Chamber donated 13 PCR tests to the tourists on this first flight, which came from Spain, who did not meet this requirement in their approach. The test was applied upon arrival on Costa Rican soil and an isolation order was issued for 24 hours until the test showed a negative result. Mass tourism will likely be a thing of the past and Costa Rica is changing its efforts to take better advantage of the country’s natural riches for this new tourism paradigm. The National Chamber of Ecotourism and Sustainable Tourism of Costa Rica (Canaeco) indicated that the country is ahead on this front, having declared 25% of its territory to be national parks and 50% of Costa Rica's landmass already reforested. Costa Rica also boasts a national energy grid that runs on almost 99% renewable energy annually, for which it is internationally acclaimed. The first big change that tourism in Costa Rica will experience is the need to guarantee sanitary security and protocols for tourists to feel protected. There will also be an increased demand for small lodgings, less crowded destinations, high expectations for clean and open environments, and private experiences. Tourists will be thinking more about how the dollar they invest benefits the communities they reach. Therefore, it will be important to show how different community sectors participate in tourism activities and the impact of the ecological footprint it generates. The crisis caused by the COVID-19 pandemic has created a golden opportunity for rural tourism entrepreneurs, especially those who can offer a wellness experience. There is a large niche of tourists willing to pay for these services and Costa Rica has great opportunities to project its strength in this area. Treatment centers, spas and tourist activities such as open-air experiences that take place on organic farms, chocolate or coffee tours, hot springs and forest baths are just some of the quality tourism experience that Costa Rica already has on offer. Companies that feature this natural potential will likely find that they have the biggest draw for tourism. Quality will be the differentiating element. Mauricio Ventura, former Minister of Tourism of Costa Rica and President of Sinergia Consulting Group, says that the reactivation of the tourism sector is an essential issue. Opening of airports and aid to entrepreneurs are a start but we must look further. “COVID-19 transformed everything and makes us think that it is time to take advantage of the crisis. There are three phases: rescue companies, guaranteeing access to sources of capital; implement sanitary protocols permanently; and promote a national tourism campaign.” It will be essential that Costa Rica take advantage of the biodiversity, culture and the offers of small and medium-sized companies to attract tourists. Mr. Ventura suggests that the future tourism trends in Costa Rica are likely be: A New Style of Tourism
Opportunity for Wellness Tourism
Differentiation is key
May 12, 2023 in Tips for Sellers, Tips for Buyers, Real Estate in Costa Rica, Discover Costa Ballena
If you’ve been receiving our newsletter about Costa Ballena real estate for longer than a year - firstly, thank you very much for subscribing and reading! We value our newsletter database immensely and we get a lot of great feedback so we hope you’ve enjoyed yourself and learned a few things about our real estate market along the way. Secondly, if you’ve been reading for a while, you may have noticed a significant uptick in the number of new listings coming out in the first month of 2020. That’s because we saw an increase of over 43% in new listings in the Costa Ballena over January 2019! This is huge news and a sign of seller confidence in listing properties in our South Pacific region of Costa Rica. Read on to learn about what might be inspiring growth. For a period of about 6 months after last year's high season (December to May), new listings seemed to take a dip. Inventory was low after a big selling season and developers took the opportunity to build spec homes and condos in 2019. It appears to our Osa Tropical Properties office that developers and other property sellers in 2020 are taking the example of last year and listing their properties in Costa Ballena at the start of this high season. This will ensure that their property is positioned at the top of most local real estate websites and seen by the largest amount of new buyers. The growth in tourism in Costa Rica may also be a significant factor in inspiring seller confidence in our South Pacific Costa Rica real estate market. Throughout Costa Rica, 3.1 million tourists visited the country in 2019, signifying a 4.1% growth in tourism over the previous year. More than half of those tourists came from North America and the majority from the United States, which on its own experienced a 5.5% increase in visits here. And tourism from Canada represented more than 8% growth over 2018. Half a million tourists in Costa Rica originated in Europe in 2019. The European countries that represent the highest contributions to Costa Rica’s tourism industry are Germany, the United Kingdom, France, Spain, and The Netherlands. Each of these countries has regular direct flights to Costa Rica and more are planned in the near future. Also in 2019, 2% of travelers to Costa Rica were from Asia and the Pacific. Tourism is one of Costa Rica’s economic pillars according to the government. Tourism accounts for 20% of Costa Rica’s total exports, which is why the government spent a record amount on international promotion throughout North America and Europe. Most tourists to Costa Rica arrived by air in 2019 and nearly two-thirds of those transited through Juan Santamaria Airport. The Costa Rican government plans to invest $160 million through 2020 to improve the nation’s largest airport’s infrastructure to support and increase this growth. Daniel Oduber Quiros International Airport in Liberia experienced an increase of 8.5% visitors transiting through in 2019, with the expectation of further growth in 2020 after several new flights are inaugurated in the coming months. Costa Rica’s growth in tourism exceeded the global average of 4% according to the World Tourism Organization. This growth comes in spite of unfavorable international economic scenarios like Brexit and strained US trade relations. President Carlos Alvarado stated last week that “Costa Rica is a world leader in the field of tourism, which is a fundamental pillar for equitable development, economic activation, and job creation.” Roughly 5% of Costa Rica’s population is employed in the country’s tourism sector in 2018. Foreign visitors in 2019 stayed for an average of 12.6 days and spent roughly $1,400 USD each. They came mainly to visit beaches, volcanoes, and national parks. Rental homes are the most popular way that tourists are enjoying our South Pacific region of Costa Rica, according to Christine Schiferl of Jaguar Property Management in Uvita. She says that she has seen her business shift in the last year, moving steadily towards the luxury rentals market. In the last year, Costa Rica introduced new tax reforms, a new IVA tax, and digital receipts, meaning that business owners following the law have needed to increase prices. This has reflected in the type of tourists visiting Costa Rica. What used to be hippies and surf bums visiting the South Pacific have become luxury ecotourists. Schiferl has noted a particular increase in Europeans visiting, especially from Switzerland and Germany, with aesthetic sensibilities that primarily lean towards contemporary, with clean lines and premium details. "If you want to have a successful rental in Costa Ballena," says Schiferl, "you have to stand out in the crowd and have all of the right boxes checked. Think oceanview, close to town, private, and an all-around beautiful home." She believes that luxury rental homes in Costa Ballena that have all the right bells and whistles have the highest occupancy rates. "Our top three rental homes right now are seeing 90% occupancy rates and each of them has all of the things a guest could want in a luxury rental home in Costa Ballena." Our local Costa Ballena real estate market (including Dominical, Uvita, Ojochal and beyond) has been inundated with tourism at the start of 2020 with no appearance of slowing down. Local confidence in the market is being expressed by a number of new restaurants opening and by the number of potential buyers that we have contacting our office looking for income properties. Sold listings in the Costa Ballena last month increased by 12.5% over January of last year. The properties selling in our region in 2020 so far are mainly homes and lots under $250,000, showing that foreign market confidence is low for making large investments at the moment. But following the typical pattern of new buyers in Costa Rica, the growth in tourism to our region bodes well for creating future demand for homes. Over the years, we have noted that the vast majority of buyers begin as tourists who fall in love with our region on sight and head home with the burning desire to return for longer, with a few committing right away to purchasing property sometime in the near future. If this pattern continues, we can expect an increase in property sales in our region in the coming year. Economic Confidence in Costa Ballena
Increased Tourism in Costa Rica in 2020
Importance of Tourism Industry to Costa Rica
Rental Homes in Costa Rica
Costa Ballena Real Estate Market in 2020
May 11, 2023 in Real Estate in Costa Rica, Tips for Sellers, Tips for Buyers
Realtors in the South Pacific region of Costa Rica are expecting continued growth in the Costa Ballena real estate market. Residential and commercial properties are seeing growth in sales frequency and price since 2018. An undersupply in certain price brackets, amenities and locations is leading to increased prices. The same cannot be said for every region of Costa Rica. San Jose and other Central Valley communities have seen a decline in growth, largely due to a surplus of new construction. But on the coastal south, land is a precious commodity that is depleting in the most popular regions. The Costa Ballena communities of Dominical, Uvita and Ojochal are popular with international expats for their amenities, services, and utilities. Each of these towns has paved major roadways in the last year and experienced increases in new businesses opening. Ojochal, for one, has a new plaza at the entrance to the village, with a doctor's office, pharmacy, and dentist. Coupled with the newly paved main road, these advancements are bringing more tourism traffic and providing new services to residents in the area. When analyzing the best time and place to buy a house in Costa Rica with foreign currencies, it’s good to review the economy. Try to understand what goods, services and life in general will cost--now and in the near future. Costa Rica’s economic growth has slowed in recent years and government debt is increasing. Costa Rica’s economy enjoyed strong and stable growth since 2010. This growth slowed in 2018, dropping from a 4.6% high in 2017 to 2.6% in 2018. Alongside this economic decline, the Costa Rican colon has seen its lowest exchange rates in years against the USD. In a continued effort to increase economic growth, the president of Costa Rica, Carlos Alvarado, is set to travel to Silicon Valley and beyond, where he will seek investments in Costa Rica from the tech sector. “The objective will be the attraction of investment, welfare and employment to the country” said Alvarado in a statement from Casa Presidencial. His agenda includes meetings with Amazon, Pop Digital, MicaSense, Microsoft, HP, Intel and Google to discuss the expansion of their operations in Costa Rica. Our office has noted an increase in buyer traffic from the West Coast regions of the United States. Younger expats are finding their way to our coast, retiring earlier to live a more peaceful, less expensive lifestyle in the beauty of the jungle. Most of the recent buyers coming through our office have been from the United States, with Canadians and Europeans trailing as a distance second combined. American expats are continuing to choose Costa Rica for the favorable exchange rate and proximity to home. There are numerous quick, direct, and inexpensive flights from major hubs like Houston, Denver, Fort Lauderdale and Los Angeles. As the colon slowly drops in value over time, Americans are going to gain an even more favorable exchange. They also make big savings on the much less expensive healthcare at top notch facilities, the cheaper dental care at state of the art facilities, and the cutting edge and well-priced aesthetic treatments. And, of course, the great weather and beaches that make you feel like you're on holiday all year long. But the Canadians and Europeans who can afford a USD cash offer on property in Costa Rica are finding that the investment is worthwhile. Not only is the proximity of Costa Rica to home good, resale values are also climbing. Kevin Champagne, real estate broker for Osa Tropical Properties, says that his Canadian clients have been buying retirement properties in Ojochal because of increases in cost of living in metropolitan areas like Vancouver and Toronto. And with these real estate markets at a peak, many are choosing to sell in Canada and buy in Costa Rica, where real estate prices are still rising. Osa Tropical Properties agent, Rebecca Rowntree, notes that Canadians sellers are seeing great returns on their investment now, thanks to the low exchange rates on the US Dollar. Those who cash purchased real estate in the Costa Ballena in the last 10 years are receiving a good return in USD today. Marcia Oro, another realtor in the Osa Tropical Properties team, is counseling her real estate clients from Canada to buy right now. She has seen a steady increase in property prices for 3 to 4 bedroom ocean view homes. “In 2017, we sold out of ocean view homes under $300,000. Then, in 2018, we sold out of ocean view homes under $400,000. In 2019, we are seeing an influx of buyers in the $500,000 range, looking for three-bedroom ocean view homes in Ojochal.” “We haven’t seen these numbers since 2008,” says Kevin Champagne, who is excited about the prospects for his area of interest. “As long as all of the property's due diligence is in order, we are finding buyers with successful offers.” Recent buyers have all but cleared out the large inventory of “fixer-uppers” (older homes in need of renovation but often sitting on maturely landscaped properties with incredible ocean views). Many of the best fixer-uppers have sold in the last year. Small 2-3 bedroom homes with mountain or jungle views can be found in the $200,000-$300,000 in Ojochal and other places in the Costa Ballena. Some home buyers are choosing these options for their unique beauty and investment potential. Mountain views are truly majestic in the jungle and their green ridges emerge out of the backdrops of many of these properties. Riverside homes are in this price range, too, which are favored for their abundant animal sightings. And when it comes to tourism in Costa Rica, many visitors are coming for the spectacular flora and fauna.Costa Rica's Economy
Buyer's of Costa Ballena Real Estate
Canadian and European Expats
Properties For Sale
May 13, 2023 in Tips for Sellers, Tips for Buyers, Real Estate in Costa Rica
The South Pacific Costa Rica real estate market continues to thrive in the third quarter (July, August, and September) of 2022. More people are visiting our region and staying in vacation rentals. Construction grew exponentially as turnkey property inventory dwindles and more buyers are purchasing land and building new homes as new contractors arrive in this area. Additionally, our office has noted that it appears that average property values are at their highest value in around 15 years. With the rise of remote work, people are choosing to move to areas that bring them joy rather than moving somewhere because of work. Costa Rica’s inviting Digital Nomad Visa makes this process more simple and opens the door for more remote workers to move to our coastal destination. The arrival of high-speed fiber optic internet to most neighborhoods in Costa Ballena in the last year was a big game-changer that is growing the real estate markets in Dominical, Uvita, Ojochal, and the surrounding areas significantly. A good way to analyze if a market is growing is to take a look at the net migration pattern, or how many are moving out versus moving in. Costa Ballena is in a positive net migration pattern where we are seeing more people coming in than leaving, creating increased demand. Eighty-six new listings came on the market in the third quarter of 2022 and seventy-two listings had successful offers in the Costa Ballena region at that time. Of those deals, 53 closed in this quarter for a total of more than $51 million, which is the highest total for the third quarter we have on record, and the biggest quarter so far this year. Of the total deals in the third quarter, 43 homes were sold and 22 lots. There were also four commercial properties with successful deals and three large farms over 20 acres in size. Micro markets, like luxury real estate that is truly turnkey, are the types of properties seeing the most appreciation in 2022. Currently, there are 308 properties for sale in Costa Ballena. 114 of those properties have homes on them with the majority for sale in Uvita. There are also 156 vacant lots for sale, 60 businesses (including hotels and Bnbs), six condos, and 22 farms available to purchase right now. As mentioned in previous market reports, the number of days that a listing spends on the market in Costa Rica is not an accurate depiction of the quality of a listing. Costa Rica is predominantly a destination real estate market. Buyers need time to plan a trip to see properties for sale in person. The newest homes get snapped up the quickest, with many brand-new, modern constructions going under contract within a month of listing. The oldest homes (those over 15 years old) spend the longest time on the market. The average days on market for listings in Costa Ballena in the third quarter was 362, with a median of 131 days. The average is skewed significantly because some homes spend years on the market, only to one day sell to the perfect buyers who finally made their way over. Not every buyer wants a brand-new modern home and many still appreciate the character and charm of an older Spanish colonial construction on a mature property with an established garden. The ten properties that sold the fastest had deals within 28 days. Three of these were lots for sale and seven houses. The values of these properties that sold quickly were between $89,000 USD and $1,750,000 USD. This shows that there is no one price bracket that is moving in today’s market. All of the homes that sold within a month were at least three bedrooms in size with at least two bathrooms and they averaged 3000 sq.ft. in size. Pools and established landscaping both factored into the quick sales of the fastest-sold properties (95% of the top 10 sold homes had these qualities), as did ocean views (8 out of 10 had big ocean views). Of the properties that took the longest to sell, these were mostly older homes or land that is located in not as popular areas (those without ocean views, rivers, or close to town). The average list-to-sold ratio was 92.9% for the third quarter. The highest-value home that sold between July and September went for 114% of the asking price was a luxury residence in the prestigious Las Olas development near Dominical. This property sale turned into a bidding war within two weeks of listing and the home garnered an extra $250,000 on top of the asking price. The properties that sold for the closest to the asking price in the third quarter of 2022 were mainly located in Ojochal and Dominical. All of the properties that sold for 100% of the asking price were house listings that featured pools, landscaping, modern/contemporary design, and with luxury ocean views. Newly-built homes are the easiest to price accurately because there is a clear correlation between the land price, the cost of construction, and the market value. The properties that sold for much less than the asking price in this quarter were small lots and large farms. Older homes on more established properties have a less-quantifiable value because different buyers see different values depending on their wants and needs. According to a quote from a local architect in South Pacific Costa Rica, to build a premium quality (not luxury) turnkey home is around $1575 per m2 ($146 per ft2). To renovate an existing structure with a new kitchen, windows, tiling, and the works can run between $1100 and $1350 per m2 ($102 to $125 per ft2), depending on the existing building condition. Luxury home builds with top-of-the-line finishes and furnishings and built in the most high-end construction style will cost between $1880 per m2 and $2420 per m2 (around $175 and $225 per ft2). Builders in Costa Ballena normally charge around 8.5% of the total budget for the design, construction plans, and building inspection, plus tax. Buyers may be able to save money by buying an existing home that is older and bringing it up to more modern or even high-end standards and many choose this option because some of the most beautiful properties in Costa Ballena were occupied by homes built more than 15 years ago during the last real estate boom in this area. The price of land in Costa Ballena was around $25 per m2 ($2.3 per ft2) on average of the vacant lots including luxury ocean-view land sold in the third quarter of 2022. Ocean view land alone averaged around $27.70 per m2 ($2.57 ft2) while mountain view averaged $14.50 per m2 ($1.34 per ft2). The average price per square meter of the three farms sold between July and September was far lower at $1.60 per m2 ($0.15 per ft2), or around $6,600 per acre. Many unfinished homes were sold in this period based on renderings and site visits. Buyers enjoy the opportunity to pick out their own finishes and furnishings while not having to go through the challenging process of managing a home build. There is also a backstage economy of developers selling unlisted homes before they even have a chance to be brought to market. Realtors in the know can help broker these deals so it is essential to find a good agent who knows the different developments happening in the area. The foreign buyer pool contacting our office is shifting from around 80% from the United States last year same quarter to 38.6%, leaving room to include more Canadians at around 14% and Europeans mainly from France, Germany, the United Kingdom, Switzerland, and the Netherlands. Japan, Russia, Mexico, and Spain are surprising new additions to the top 20 markets for researching Costa Rica real estate on our website. Web traffic from within Costa Rica (31.5%) represents the many realtors and buyers from within the country looking for real estate in Costa Ballena. This internal market includes expats already living in Costa Rica and interested in buying into the hot Costa Ballena real estate market. The most popular destinations in Costa Rica continue to be outside of the Southern Zone. The top beach destinations are Santa Teresa, Tamarindo, and Manuel Antonio, which is only 30 minutes from Dominical. Guanacaste is still the favored province and Puntarenas is still not on the radar for many visitors and investors. However, we have noted a marked increase in buyers from within Costa Rica who are seeking out our quieter jungle beaches rather than the drier and busier beaches up north. Costa Rica's capital, San Jose, is still the most researched destination in Costa Rica. Top rental homes in Costa Ballena are expected to be new, modern, and with amazing 180-degree ocean views from every room. Being located within close distance to a highway and amenities is key, and having separate luxury residences for multiple couples or extended families visiting gives more marketability. Popular construction features include high wooden ceilings, sliding glass doors opening to large covered terraces, luxury furnishings and finishes, spacious bedrooms with closets and full bathrooms, large kitchens with top-of-the-line appliances, and quality amenities like a lap pool and sauna. These types of homes will rent for over $5000 per month. Basic rental homes are expected to come with strong and reliable fiber optic internet, to have around two bedrooms, a private kitchen, and a bathroom, and to be in a quiet and peaceful location. Most renters prefer homes in well-maintained, good condition. These types of homes will rent for around $1000-$2000 per month, depending on the precise location and amenities. Christine Schiferl from Jaguar Property Management based in Uvita says that a lot has changed in her business in recent years. She says that her company had its best third quarter on record. Her company has been in business since 2013 and this has been its best year. In recent years, she changed the company’s business model to only accepting luxury vacation homes. “Luxury rental homes are those that are three or more bedrooms – the more the better – with full ensuite, all ocean view, and with rooms of equal size,” says Christine. “These types of vacation homes rent for $400 a night or more if they have all the bells and whistles. Jaguar Property Management receives the most inquiries for the Uvita area. “I think it provides the perfect blend of tours, activities, restaurants, nature, beaches, and it is very convenient for families because it has larger grocery stores, banks, shopping, and more,” says Christine. According to the way this year is tracking, she believes that the coming high season (December to May) will surpass the last high season’s records. “We are booking in the rainy season, which we have not seen very much in the past. We rarely got people staying in August, September, October, or November and now we have quite a number of people coming here and staying in the rainy season.” The digital nomad lifestyle is now being formally recognized by governments and tourism authorities. Costa Rica, Bali, Portugal, and Malaysia have introduced digital visa nomad visas in the last month to jump on this global trend. Under Costa Rica’s digital nomad visa program, holders of this visa can stay up to three months and then extend their stay for up to two years, according to the Costa Rica Minister of Tourism, William Rodríguez. They can open a local bank account, they do not need to pay Costa Rican income taxes, they can use their home country’s driver’s license, and they pay no import taxes on computers and other remote work equipment. Costa Rica’s population of 5 million people would benefit economically with less than a percent of the U.S. remote worker segment. “Our research says there are 3 million people working in the States from home,” said Minister Rodríguez. “If we can have half of one percent of that, we are done. We are aiming for that number.” Although it is difficult to accurately estimate the number of tourists who will arrive by the end of 2022, the Costa Rican Tourism Board (ICT) predicts that it is very likely that Costa Rica will close the year with more that 2 million tourists by air. Tourism figures for Costa Rica are showing a rapid regrowth this year from the height of 2019 numbers. All entry points in Costa Rica show 1.6 million visitors from January to August 2022, which is still down by 27% from 2019 numbers. But when comparing visitors arriving solely by air from North America and Europe, we can see that the numbers are closer to 2019's highs (90.6% and 94.8% of 2019, respectively). Costa Rica is considered one of the premiere destinations for ecotourism in recent years, and this naturally beautiful country is more than 50% forested. It has been part of the Happy Planet Index for several years, and has high-quality infrastructure established for global tourism. Tourism in Costa Rica is all about well-being in nature. The traveler type visiting Costa Rica has also changed in recent years. According to ICT, before the pandemic, the majority of visitors were made up of entire families. Now there is a higher concentration of couples or single travelers. Their studies note that the majority of tourist arrivals are from North America (71%), with the United States the bulk; followed by Europe (19.2%), South America (4.4%), Central America (3.7%), and the Caribbean (0.3%). Tourists who spend a vacation season in the country consider that they leave as better people, according to studies by the ICT. In their surveys of travelers carried out in national airports, visitors noted that Costa Rica is home to a “valuable society“. “Those who visit us consider that after spending a vacation season in Costa Rica they leave as better people, which has an incredible value from the point of view of communication, positioning, and other things that are essential to decide where we put our resources. tourism,” said William Rodríguez, Minister of Tourism. With high inflation and rising interest rates fueling speculation that a global recession is on the horizon, it may come as no surprise that realtors in Costa Rica are hearing concerns from their clients. Costa Rica real estate is not a financing-based market for foreign buyers. There is very little option for financing other than potential private seller financing so people are usually able to sit on their paid-off property in Costa Rica to wait out a bear market. Nevertheless, the push factors actually bringing people to Costa Rica appear to be growing in intensity as more and more foreigners from all over the world are looking to buy real estate in a more peaceful and less expensive location. Costa Rica real estate is generally considered to be a long-term hold and therefore potential buyers should consider that buying real estate in what may be a recession is not about trying to time the market but about the value of what type of property you can buy that fits with your lifestyle and is sustainable for hopefully 5-10 years. People appear to be interested in Costa Rica with renewed vigor. Nothing fuels the desire to buy a vacation home quite like the end of summer and the third quarter of 2022 showed us that many people envision a second home in Costa Rica as a source of family memories, wealth, rental income, and other lifestyle benefits. Property prices in Costa Ballena are set to rise, steadily driven by demand from foreign investors. With the many initiatives to continue growing tourism to this country and with the growing popularity of this region with families and digital nomads, we anticipate another record-breaking quarter to finish out 2022 with little sign of slowing next year. *Please note that we are not financial advisors and the contents of this article are only our opinions and not financial advice.Third Quarter Market Results For Costa Ballena Real Estate
In total, Costa Ballena saw over $51.6 million in sales in third quarter of 2022. This is a significant increase over the second quarter (April to June), which saw $44 million in sales. Even in the traditionally busiest first quarter (January to March), totaled less than the third quarter, with just over $50 million in sales. The third quarter of 2022 more than doubled the $22 million sold in the same time period in 2021, despite having more numbers of closings last year in the same quarter (99 deals between July and September 2021 versus 72 this year). The main reason for this increase in total values over last year is that home prices have significantly increased in 2022 and because this area is attracting more high-budget, luxury buyers due to more modern, top of the line constructions on some of the best ocean view properties in Costa Rica. The average sold listing value in the third quarter was $717,000 USD, which is nearly double the average selling price in the same quarter of 2021 ($346,000 USD). This is the highest average sold price that this region has seen in more than 15 years. The second quarter average sold prices this year were $659,000 for 71 properties and the first quarter saw property values average $607,000 across 104 property deals. These values equate to a more than 8% rise in values every quarter in 2022 so far. Vacant land that sold in Costa Ballena in the third quarter totaled $6.1 million and averaged $293,000 per lot across this coastal region. Farm sales (land over 20 acres in size) totaled more than $1.7 million and garnered an average of $589,000 for these larger, more raw parcels of land. Commercial properties were the second most valuable market, with $6.8 million in sales and averaging $1.7 million per commercial venture sold. Houses continue to be the biggest market for buyers in this region, taking in more than $37 million in sales for the quarter. Home values averaged $838,000 in Costa Ballena between July and September 2022. Time On Market
List-To-Sold Price Ratio
Construction Costs in Costa Ballena
Buyer Profiles and Driving Forces
Osa Tropical Properties' web traffic in the third quarter of 2022 was down 5% from the second quarter, which is within the standard seasonal deviation as we enter the rainiest part of the year (September, October, November). However, our website’s traffic is up 20% on last year and 3.5 times greater than what it was in the same period in 2019 and 2020. Traffic on our website began to increase considerably with the dawn of Covid restrictions in 2020. The shift to work-from-home culture brought with it the notion that living in a foreign country is within the realm of probability for more people. Those wanting to work in the tropics and in a similar time zone are finding much affinity in beautiful Costa Rica. Politics, mounting social strife, climate change, rising prices, and family security all continue to be the top factors driving buyers to Costa Rica. This is a country that proved to be decisive and fair during the pandemic and solidified its image as a place of safe and stable politics during this tumultuous time. People from all over the world are wanting to escape the increasingly hectic and aggressive urban lifestyle in search of a calmer social dynamic. Costa Rica tops the list of escape destinations because of its pura vida ethos, which has captured the hearts of many who have visited or know others who have. Increasing climate catastrophes are also pushing real estate buyers out of the traditional destination real estate markets like Florida, Texas, and California, as has the increase in taxation and the everyday cost of living. The cost of living is a huge driving force for people living in high-cost-of-living cities. Home prices, rents, and income taxes factor into this. NY, California, Illinois, New Jersey are all at the top of the list of the most expensive in the United States for the cost of living.Popular Destinations
Rental Market in Costa Ballena
New Developments in Costa Rica
Digital Nomad Visa
Continued Growth In Tourism
Are we entering a market recession?
Why Choose Costa Ballena Real Estate?
May 13, 2023 in Buying Process, Real Estate in Costa Rica, Tips for Buyers
Why are expats buying rental property in Costa Rica in 2021? Read on to find out about income, future planning, and the other reasons why Costa Rica rental properties are hot this year! A trend that we have seen in recent years is the rise of the income property. More often than not, Costa Rica property buyers are looking for something they can use for rentals. More than 50% of the buyers who have come through our real estate office this year are buying rental properties in Costa Rica that they can use for at least part of the year, or possibly live on the property and have rental cabins. Is this the right choice for you? Here is a list of questions that our rental property buyers ask us all the time. Can Americans and other foreigners legally buy property in Costa Rica? Absolutely! The great part about Costa Rica is that foreigners and locals have the same ownership rights when buying property. Foreigners can purchase property on a tourist visa without the need for residency or citizenship. Any foreigner, resident, or non-resident has the same rights as a citizen in Costa Rica, except for voting rights in presidential and municipal elections and can, therefore, purchase and own Costa Rica real estate legally. However, the one exception is that a foreigner can only own 49% shares in a property in a Maritime Zone (within 200 meters of the high tide line). In our experience of working with Costa Rica real estate buyers in 2021, this year, people are looking for a back-up plan. They have been thinking for some time about getting out of their current scenario of stress and overconsumption, and the Covid pandemic has presented a few new opportunities and reasons to want to branch out somewhere less crowded and more beautiful. These people may be close to retirement age but the majority of rental investors in Costa Rica are still working and raising families. They are looking to secure a safe investment and a possible place to live outside of their country while they keep working. Those who are able to work remotely tend to look for properties with multiple housing options so that they can live on the premises and rent out the vacant spaces. Life coaches, yoga instructors and practitioners of all types of therapeutic modalities are finding that Costa Rica provides powerful settings to host healing retreats. Many have chosen properties where they can grow food and invite guests into a beautifully organic living experience. There may not yet be any large, all-inclusive hotels in our South Pacific region of Costa Rica but there are an increasing number of investor groups who are scouting our region for income property opportunities to meet the growing demand. Expats generally want to be near other expats. This is not the case for everyone because there is a significant population of foreigners who move to Costa Rica to get away from everyone and enjoy living a simple life in a small Tico community. However, the majority of people want to live near people who are familiar to them in language and values. Towns that are populated with expats will attract more products and services that cater to expats, with international products, cuisines, and high-end services. Coastal communities like the Costa Ballena towns of Dominical, Uvita, and Ojochal are popular with expats who love nature, adventure, and peaceful living. There is not much traffic here and life is generally slower, which brings in a growing amount of local and international tourism from people looking for that type of escape into nature. Costa Rica is frequently ranked in the top 10 fastest growing tourism markets for a variety of reasons that include politics, environment, ease of travel, wildlife, and friendly people. All types of people are looking to spend time in this enlivening part of the world whose message of ‘pura vida’ (pure life) draws people in like magic. Digital nomads are a growing group of visitors to Costa Rica. The country’s government has recently passed a new law that allows Digital nomads to stay in Costa Rica for up to two years if they earn a foreign income of at least $3000 USD per month. Young entrepreneurs and families love this part of Costa Rica because the individualized rental opportunities have many value adds that make renting here unique. Maybe it’s a yoga pavilion, a five-star ocean view from bed, or a private waterfall on the property - these extras wow guests into wanting to stay as long as possible. When people first start thinking about buying property in Costa Rica, they will typically book a trip to visit. Oftentimes, people will visit more than once before committing to a location and a property. And those who have been visiting in recent years will note that rental prices in Ballena have gone up and rental availability is more and more scarce. Rental properties in Costa Rica can and do generate a net income but it is important to note that the return on investment doesn't typically happen right away. Unless you are buying a turnkey rental property at a premium price, you can expect to spend money on renovating to your standards and taste as well as upgrading the property’s amenities to current rental standards. We are in a strange time in the rentals market in Costa Rica because at a point in the year when it would normally be quiet, most rental homes in Costa Ballena are filled. They are, however, filled with long term tenants, most of whom are looking to stay for a while. Recent buyers who have purchased homes in Costa Rica are making 0.5% to 0.9% monthly return (6%-10% annual return on investment) on their purchase price at this time. One home recently bought for $450,000 is renting for $4000 per month to long-term renters. Another home purchased for $285,000 is charging $1500 to long-term renters. These rentals would normally cater towards short-term renters but because the pandemic has put a damper on international travel, rental home owners are not counting on intermittent traffic and would rather secure long-term renters for a lesser monthly income. When borders finally open, many rental home owners are likely to switch back to focusing on short-term renters. In recent years, rental property owners have netted an average return from long-term rentals. These figures can easily climb as high 8 – 10% ROI or more in the premium short-term rentals market. Although there are a few ambitious property buyers who want to build their dream property, most foreigners wanting an income property in Costa Rica are looking to buy something that they can use right away. A lot of homes on the market in the $200,000 - $400,000 USD price bracket will be looking at some renovations but you can still find ocean view homes with a pool in this price range if you are willing to put in some elbow grease. Simple cabina properties without too many frills can also be found in that bracket. When you move into the $400,000 - $600,000 USD bracket, you will find the conventional family vacation rentals that have a decent view, large and airy rooms, and a nice terrace with a pool. These types of homes are the bread and butter of our market today. From $600,000 USD and up, you start to get into the luxury property market. These are the fully-equipped homes with lavish amenities like a spa bath, infinity pool, gorgeous floral landscaping, and ocean views from every room. As you scale up the price ladder, the finishes become more refined, the spaces more grand, and the sky's the limit for how much luxury you can pack into a Costa Rica property. Most turnkey hotel properties start at over $1 million USD in Costa Ballena. Vacation rentals in Costa Rica come with many common expenditures that are important to take into consideration when investing. When it comes to Costa Rica taxes for Expats, both residents and non-residents are subject to taxation on the income they earn within the country. This means that any rental income you earn from a rental property in Costa Rica is subject to a 13% VAT tax. You will also have to declare your income in Costa Rica to the IRS or any other foreign revenue body that you are subject to. Income from foreign sources is not subject to Costa Rican taxes. Annual taxation on a property in Costa Rica includes the not high payment of property tax which is calculated at only 0.025% of property value. To learn more about taxes in Costa Rica for U.S. citizens, click here. Owners will quickly discover there are two roles that need to be filled—the property manager and the rental manager. Often, they are one in the same. The property manager deals with daily life on-site. They coordinate with the cleaning crew, the gardener, the pool service, the maintenance man, and everything else house related and local. The rental manager deals with the online listing across various vacation rental websites, the inquiries (the most important component), booking reservations, receiving funds, and potentially offering luxury services like organizing a personal chef and a masseuse. They may also arrange shuttle services and book excursions and tours. Many semi-retired owners or remote workers manage their own rentals in Costa Rica. It is easy to live comfortably on a Costa Ballena property and share it with renters and many people opt for this style of living to earn additional income. Those who choose to own a condo over a private residence in Costa Rica are looking for ease of ownership. They want to minimize maintenance costs and to have increased security. Many renters enjoy staying in a condo; however, this type of property is less popular with buyers who envision themselves eventually moving into the property. Condos simply are not representative of what makes life in Costa Rica extra special, which is primarily about living surrounded by nature. Costa Rica offers a program that grants residency through overseas investment, whether or not you plan to live here full-time. With an investment of at least $150,000 in local assets (this number decreased from $200,000 in 2021), foreigners can easily qualify for residency. This investor status also allows you to import up to two cars and a one-time shipment of household goods tax free. The short answer is no. The long answer is yes, but it’s not as straightforward as people are used to. Savvy investors will use a cash-out refinance, which involves pulling money from other investments they own to buy property in Costa Rica property. Others choose to use self-directed IRAs. These options are not available to everyone and require a large amount of preparation but they are successful. You may be anxious about not knowing the local culture and the language. But when you work with a great real estate team, you can expect that the process will be smooth and easy and that all of the most challenging parts will be explained thoroughly by your realtor who will guide you through the entire process. Buying property in Costa Rica is not the best kind of investment for highly leveraged and cash poor buyers. However, it can be a very good long and medium term investment for a more experienced and economically-stable buyer looking for rental income, long term price appreciation, and a lovely tropical family getaway or retirement home to sweeten the deal. Costa Rica is a very credit poor country and real estate therefore favors cash deals. Cash buyers with patience have access to rewarding investment opportunities with potentially high yields and value appreciation through renovation and remodeling. Pros Cons“Can expats own property in Costa Rica?”
“Who else is buying rental property in Costa Rica?”
“Where do most Americans buy rental property in Costa Rica?”
“Who rents property in Costa Rica?”
“Is owning rental property in Costa Rica actually profitable?”
“How much profit can I earn by owning a rental property in Costa Rica?”
“How much does it cost to buy a house in Costa Rica?”
“What are the common expenses when owning a rental in Costa Rica?”
“Do expats pay taxes in Costa Rica?”
“What regular tasks need to be done when owning a rental property in Costa Rica?”
“Should I buy a condo in Costa Rica or a house to use as a rental?”
“What are my options for residency if I buy a rental property in Costa Rica?”
“Can I get financing to buy property in Costa Rica?”
“Is it hard to buy and own property in Costa Rica?”
“Is investing in Costa Rica vacation property a good idea?”
“What are the pros and cons of owning rental property in Costa Rica?”
May 13, 2023 in Real Estate in Costa Rica, Tips for Buyers
Vacation rentals in Costa Rica were one of the most searched topics on our website in 2019. In that record-busy year, over 50% of Osa Tropical Properties’ buyers purchased properties for use as short-term rentals. Those who bought vacation rentals in Costa Ballena were tending to use the property themselves when they visit on holiday and rent it the rest of the year to offset some or all of the costs of ownership. Their eventual goal for this property was to be their retirement in Costa Rica. In 2021, after a year of global lockdowns, most rental homes are being used as long-term rentals because of the restrictions on travel. According to our newest Osa Tropical Properties realtor, Richard Owens, who doubles as a property manager, “the current rentals market in Costa Ballena is dominated by long-term renters. For short-term rentals, at the moment, we are really only getting bookings for the high season, which starts around Christmas time.” Rebecca Rowntree, long-time realtor for Osa Tropical Properties, says that she “constantly has people looking for long-term rentals. The majority are looking for something between $1000 and $1500 a month price point. There are so many people looking for that and it’s very hard to find, especially when they are trying to get in now for the high season.” On that note, we want to spend some time going over what our office is seeing today from buyers looking for income properties for sale in Dominical, Uvita, and Ojochal, and what we think will happen in the local rentals market in the near future. The start of this year has been very busy for our team of agents and the year continues to trend towards being even busy as travel restrictions ease. Rentals at the start of 2020 were close to 90% in some areas and then completely dropped off after March. But as Costa Rica’s borders open to more of the world, we are seeing rentals trending higher in 2021 than ever before. Those who were operating short-term rentals in 2020 saw next to no bookings for almost a year and many of these properties have been put up for sale, if they weren’t already. Osa Tropical Properties’ broker, Kevin Champagne, thinks that “because of Covid, people coming here right now want to live here full-time and so short-term rentals are having less success at the moment. I’m not seeing as many investors currently looking to buy properties to use primarily as short-term rentals for this reason.” However, those who are switching their rental M.O. from short to long-term are finding that having a long-term rental in Costa Ballena can be lucrative, too. Short-term rentals are different to regular homes in Costa Rica because they are geared towards providing the fullest vacation experience in a short amount of time. They will be more about the views and proximity to attractions and less about year-round livability. For instance, most home buyers in Costa Ballena are looking for an acreage that will offer them privacy and space to garden or build. A short-term rental home, will sacrifice property area in exchange for views and will have A/C in every room to mitigate the heat from being located on a sunset cliffside. A long-term buyer is more likely to choose a slightly shadier or breezy property that has less impressive views but is designed more for comfort. A short-term rental is also less likely to have a shed or bodega for tools and extra storage, which is pretty necessary for full-time living at the property. And vacation rental houses often have an owner's closet that has their personal items stored away in a dry and safe area. According to AirDNA, a rentals analytics tool, the most important features in a short-term rental home in Costa Ballena are air conditioning, parking, and internet. The least important are heating, cable tv, and a hot tub. The analytics site also shows that the most popular average vacation rental size in this area is about 2.6 Bedrooms and able to house 6.2 guests. Right now, long-term rentals dominate our coastal market. Families, digital nomads, and business owners who stay long-term in Costa Rica are coming with big budgets, ready to spend thousands of dollars on rent every month. Whether they are thinking about moving here for good or just looking for a different way of life for a little while, they are able to afford the expensive rental fees of some of the best vacation rentals, which would normally only rent to short-term renters because of the higher rental yields. Most, if not all, long-term rentals in Costa Ballena are booked for the foreseeable future, even though travel into the country has yet to fully manifest. The typically short-term rentals are either sitting vacant at present, or they taking on long-term renters at a decreased rate to their normal luxury prices, but with much more consistency, and much lower property management costs. Many more types of people are working remotely in 2021 and they are taking advantage of this new lifestyle by incorporating some vacation qualities into their everyday lives by moving to a more beautiful location. There’s nothing like making your office in the fresh air, with green and blue vistas all around you, dotted with color, and teeming with life. These are the types of welcome distractions that make water cooler banter feel like a thing of the past. With the recent passing of a new law that allows foreigners to enter into the path to residency in Costa Rica after investing $150,000 USD into assets in this country (it used to be $200,000 USD), the doors to a long life in Costa Rica have opened for many more people. This feature has more younger singles and couples thinking about moving here, but for a variety of reasons, many are cautious about jumping in head first. Anyone who has visited an expat forum on social media knows that one of the most frequently given pieces of advice is to visit Costa Rica many times before buying, and to travel all over the country first. Some recommend renting for at least a year in the place you are thinking of moving. These people are not the majority but they represent a large portion of buyers who need to make sure that they are not just high on the holiday vibe and that they actually, really, really want to live in Costa Rica. They want to know that they will like the climate, the community, the services, and the everyday pace of life. And the pandemic has allowed for more people to embrace this patient attitude, spending more time renting and waiting for their perfect property to come up for sale. According to Richard, “it does seem like more people are starting to book now. It seems like more people are coming into the country, too. Southwest started flying back into the country again. According to my clients coming into the country, the lines at the airport and the delays coming through customs are long.” Richard says that “as more people get their Covid vaccines, we’re hoping to see more short-term rentals next high season.” Our website traffic corroborates this idea, with more people searching for Costa Rica properties this year than every before. Our Osa Tropical Properties website traffic is up by 250% over the last two years and 2019 was our office’s best sales year to date. This says to us that as soon as the travel gates open, we will see sales numbers increase dramatically. People have been waiting a whole year to break out of lockdown and they are ready for a change. “Basically," says Richard, "from what I’m hearing from people who are looking specifically for long-term rentals, they are having a heck of a time trying to find anything that is available for the foreseeable future." Rebecca is also confident in the future of rentals in this area. “One of the properties I was having a hard time renting because the internet wasn’t very good. But last week we were able to get a new internet service and now its gone and I don’t think it will ever be vacant for more than a day in the foreseeable future - like this year and next year.” Although it is not our place to offer you financial advice, we do know what the buyers we work with want and what they are most happy with in a Costa Rica property. House hacking - where you own a property with multiple units and rent what you don’t use - is one of the most popular dreams that people come here with these days. They want to be able to make a life in Costa Rica work and part of that is to be able to earn an income. Many people find that having at least one rental on their property is a way to make this happen. Of course, short-term rental vacation properties in Costa Rica can have a bigger return if done property. But there are a lot of risks and expenses. It’s a game where you can win big and lose big. Although we are slowly rebounding, 2020 showed us that the short-term rentals market can dry up and crush the tourism industry. To be able to use a property as a short-term rental, a buyer needs to be able to make the numbers work with a lower but more steady long-term rental income. When times are better, rental owners can switch to short-term rentals for a higher income. There are currently 935 active rentals in Costa Ballena listed on AirBnb. The average daily rate for a rental home in this region is around $200 per night. In the last three months, the average occupancy rate has been about 40% and was between 60-70% for the first three months of the year. This is in a time when travel into the country is far from its full capacity. This makes for an an average annual gross revenue of about $60,000 USD on a standard rental in Costa Ballena, with numbers going into the three figures in the best rentals in the prime locations in this region. Looking at AirDNA data, since 2018, this region has seen an average of 8% quarterly growth in rentals, including the dip in 2020. And Q1 of 2021 is at the same level of the last tourism high in this region, which was in Q1 2020. Those who are waiting to buy a property in Costa Ballena are finding that the types of properties they are interested in are selling out from under them. In better times, we are in a popular region for tourism and are likely to rebound more strongly than ever when travel restrictions are fully lifted and people feel confident to move about again. Spending a holiday at an ocean view properties in our coastal, hillside jungles is a unique experience that many people want to experience again and again. The rental numbers for this region reflect that.What is the rentals market like in Costa Rica in 2021?
What makes a short-term rental different to a long-term rental in Costa Rica?
Who is renting in Bahia Ballena in 2021?
Why do people rent long-term instead of buying property in Costa Rica?
What is the future of the short-term rental buyer’s market in Costa Ballena?
Should you buy an income property in Costa Ballena?
May 12, 2023 in Life in Costa Rica
On Saturday, August 1, 2020 a new phase began in the government's plan for tourism in Costa Rica, which will alternate openings and closings as a way of finding a balance between public health and the health of the economy. Costa Rica received its first international commercial flight in four and a half months on August 3rd, 2020. This is the first of a small number of flights planned to come into the country since a state of national emergency was declared by the SARS-CoV-2 pandemic. A gradual opening is being proposed with a limited number of flights coming into Costa Rica from the European Union, United Kingdom and Canada. The hope is that this limited reopening of the borders will bring optimism to the micro and small companies that depend on tourism in Costa Rica while taking measures to keep safe the Costa Rican population in these pandemic times. A negative COVID-19 PCR test from within 48 hours of flight time is requested of all passengers and crew members. Passengers and crew must wear masks in the terminals and on the flight, as well as keeping social distance where possible. Travel insurance is also mandatory to cover accommodation in case of quarantine and medical expenses for acute illness. Those arriving in Costa Rica are asked to fill out an epidemiological form and receive temperature measurements. As an exception to the rule, the Costa Rican Health Chamber donated 13 PCR tests to the tourists on this first flight, which came from Spain, who did not meet this requirement in their approach. The test was applied upon arrival on Costa Rican soil and an isolation order was issued for 24 hours until the test showed a negative result. Mass tourism will likely be a thing of the past and Costa Rica is changing its efforts to take better advantage of the country’s natural riches for this new tourism paradigm. The National Chamber of Ecotourism and Sustainable Tourism of Costa Rica (Canaeco) indicated that the country is ahead on this front, having declared 25% of its territory to be national parks and 50% of Costa Rica's landmass already reforested. Costa Rica also boasts a national energy grid that runs on almost 99% renewable energy annually, for which it is internationally acclaimed. The first big change that tourism in Costa Rica will experience is the need to guarantee sanitary security and protocols for tourists to feel protected. There will also be an increased demand for small lodgings, less crowded destinations, high expectations for clean and open environments, and private experiences. Tourists will be thinking more about how the dollar they invest benefits the communities they reach. Therefore, it will be important to show how different community sectors participate in tourism activities and the impact of the ecological footprint it generates. The crisis caused by the COVID-19 pandemic has created a golden opportunity for rural tourism entrepreneurs, especially those who can offer a wellness experience. There is a large niche of tourists willing to pay for these services and Costa Rica has great opportunities to project its strength in this area. Treatment centers, spas and tourist activities such as open-air experiences that take place on organic farms, chocolate or coffee tours, hot springs and forest baths are just some of the quality tourism experience that Costa Rica already has on offer. Companies that feature this natural potential will likely find that they have the biggest draw for tourism. Quality will be the differentiating element. Mauricio Ventura, former Minister of Tourism of Costa Rica and President of Sinergia Consulting Group, says that the reactivation of the tourism sector is an essential issue. Opening of airports and aid to entrepreneurs are a start but we must look further. “COVID-19 transformed everything and makes us think that it is time to take advantage of the crisis. There are three phases: rescue companies, guaranteeing access to sources of capital; implement sanitary protocols permanently; and promote a national tourism campaign.” It will be essential that Costa Rica take advantage of the biodiversity, culture and the offers of small and medium-sized companies to attract tourists. Mr. Ventura suggests that the future tourism trends in Costa Rica are likely be: A New Style of Tourism
Opportunity for Wellness Tourism
Differentiation is key