Well, with the news cameras focused on the spiraling market in the US, there is not a client who does not ask the question. So what is the real status of the Costa Rican real estate market?
I think for this conversation, it is important to separate the discussion in two parts: 1) Coastal real estate and 2) Central Valley real estate (San Jose/Escazu). Simply put, the coastal market is and has always been a destination for second home buyers, investors looking for cash flow properties, vacation homes and of course, those looking for retirement in such a tropical paradise. With the market in the US in the current condition, it is expected that this market would take a hard hit as buyers with money are watching their investments much closer. Additionally, with credits limited both in the US and Costa Rica, those who do not have the liquidity are currently out of the market, and those who have, and do not want to spend it, are likewise, looking for alternatives. However, on the coast, the buyers that are active, and competitive in the market place, are those who are looking for strong deals. These buyers are looking for sellers who are somehow tied to the US market, perhaps drowing on a second mortgage, or just needing liquidity to get out. There are sellers in this position, however, important to note, this is not the United States. At times when people criticized the CR banks for being very conservative both with interest rates, and strict lending requirements, this conservative mentality is paying off. Costa Rica does not suffer from a high default rate as low interest mortgages were never offered, and historically, this market has always been a cash market. Therefore, although we can assist in finding excellent opportunities on the market due to individual seller's needs (www.2costaricarealestate.com), this is not a global condition.
Certainly times on the coast are slow now, as buyers are smarter, looking for solid deals, and are weary of preconstruction projects full of promises. Strong sales are taking place at higher rates in projects that are finished, whose developers are offering incentives to close, or incentives to purchase. Owner financing, extended down payments and vacation clubs are trends that are being seen in today's market on the coast. With many of the previously announced 5 star, branded hotels on the fence now, buyers intelligently are asking the right questions to ensure their investment as the market settles. Myself, I look at this as a positive, as educating sellers to the realities of the market is a positive. Will Costa Rica see a blanket price drop like other areas...not likely, however, certainly, prices will become more buyer friendly, and the market for now, is a buyer's market. Therefore, get in touch with a real professional as now is a great time to acquire at strong buyer conditions...
In the Central Valley, the conditions are different. The market in the Central Valley, comprosing the suburbs of Escazu, Santa Ana and Ciudad Colon (the most popular areas both for foreigners and middle/upper class locals, bears very few speculative buyers and is truly driven by economic factors at a local level. The population has seen tremendous growth over the past few years due to a rapidly growing commercial sector, and with the passing of the free trade agreement, this growth is likely to continue at a rapid pace. People are choosing to live in these suburbs as they combine the conveniences of the best residential area, most affluent commercial office complexes, as well as the finest restaurants, shopping, bilingual schools, hospitals, etc... The only temporary crutch in this market has been the more recent tightening of residential finance programs, whose interest rates are currently over standard rates, haulting many buyers...Most insiders believe that early 09 will bring those rates back to a normal level, and the existing demand in the market, who are awaiting these news, will bring the market back into a much more competitive situation.
Likewise, with the release of these credits, the players in the high end commercial development market are likely to get involved, as most are waiting on the sidelines for some of the high profile land opportunities for construction of hotels, commercial centers, malls, etc...
Stay tuned, as I will be keeping you posted on some of the latest updates, trends, as well as my lifestyle down here in paradise....
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