Market News

The Beach Times
Foreign Investment in Local Property Trebles

By Leland Baxter-Neal
Central Bank Points To First Quarter in Puntarenas and Guanacaste

Foreign investment in Costa Rica's real estate industry has nearly tripled in the past 12 months, according to Costa Rica's Central Bank. By the bank's estimate, mostly US investors and homebuyers bought at least $192 million worth of property in the first three months of this year, largely in the provinces of Guanacaste and Puntarenas. That compares to $70 million during the same period in 2006. The estimate excludes purchases of hotels, tourism businesses and deals worth less land has, in some cases, "gone triple."

Mr Nunez chalks up the jump in prices to the arrival of major name brand projects in the region, such as the Westin Hotels and Resorts and the Mandarin-Oriental.

Some 20 high-end hotels are currently being planned or built for Guanacaste's northern coast, which would add hundreds of rooms to the area's offerings and represent hundreds of millions of dollars in investment.

Mario Solano, an economist with the Central Bank who worked on the property investment estimate, said that, though tourism investment figures for 2007 are not yet available, it nearly tripled between 2005 and 2006. He expects this year's growth to be "a little more than that," which is a factor pushing real estate investment.
"We see a relationship between the two. The Hyatt comes out promoting people to come stay at its hotel, and a lot of people are going to be interested in buying property in that area."

That is precisely what has real estate agents in the Central Pacific, particularly around Jacó, excited. Last year, Starwood Hotels & Resorts Worldwide announced they would be building a St Regis Resort with residential elements in the Central Pacific with Costa Rican development firm Genesis. In addition to 133 luxury hotel rooms, the project includes 49 "condominium-hotel residences," 42 "whole-ownership condos" and nine estate homes.

In Esterillos, just south of Jacó, two golf courses and attached residential communities – Cabo Caletas and Del Pacífico – are under construction. In Jacó, an estimated 2000 condos are at different stages of development, from un-permitted plans to near-completion. "What's happened is the Central Pacific has really now started to move in a forward direction, with growth and bigger name projects with branding," said Scott Williams, a real estate agent with 2 Costa Rica Realty. "Those things were before exclusively Guanacaste." Tim Kopatich, with Crystal Clear Realty, said that 1800-square-foot homes that his company is selling in Bejuco, south of Esterillos, have gone from $135,000 last year to $275,000 today. In general, however, he says prices in and around Jacó have increased about 35 to 40 percent over the last year.

Jeff Fisher, of CR Beach Investment Real Estate, says prices in Jacó, Herradura and Playa Hermosa are up, and sometimes way up. "They're asking $1000 to $1400 per square meter, while a year ago they were asking $600 to $1000," he said.

Most dramatic, however, has been the increase in rent for commercial space along Jacó's main boulevard, Avenida Pastor Díaz, Mr Fisher said, where rent has gone from $300 per square meter to $1000.

Mr Fisher said his buyers "are overwhelmingly buying condos, but a lot of my sales are also gated-community, single-family homes five blocksfrom the beach for $215,000.