by Bernie Stackhouse
Were you affected by the real estate market correction that started in late 2006? Were you caught with your pants down holding onto condos or homes that you could not sell? If you answered yes to any of those questions, trust me, you were not alone. I won’t overwhelm you with statistics, because quite frankly, they are quite maddening, but you can rest assured that the majority of South Floridians that invested in the real estate boom lost on any proper bought post-2005.
Today I’ll look into an emerging market that has been an intriguing market, to say the least. Having first hand development-selling experience in Costa Rica since 2004, I feel I can report on the state of the economy down there and provide an analysis of where things went, where they are, and where they are going.
If you got into Costa Rica investing in the 1990′s, you would be laughing right now. Costa Rica land was incredibly cheap, and there was basically zero infrastructure to connect and support cities as they became populated with expatriates that discovered the serene, peaceful setting that makes up this Central American country. Today, as we enter 2010, Costa Rica boasts a world-renowned Four Seasons resort, multiple Marriot properties, and several multi-national corporations that have chosen Costa Rica as their home base for call center operations. The San Jose area has many respected Universities, and their graduates are usually bi-lingual and able to enter the workforce for any multi-national corporation.
There was a large Costa Rica land boom in the early 2000′s that led to a lot of this new development. Many large corporations, hedge funds, and money managers dove into Costa Rica’s west coast and gobbled up any and all land possible. With most of the major development happening on this side of the country, called “Guanacaste,” the country had to drastically expand it’s operations at it’s small international airport that services the area. In fact, during a published 2006 article in a local newspaper, a survey showed that 60% of the people who flew into that airport were there looking for real estate.
As the U.S. and global economy tanked in 2007 and further into 2008, Costa Rica Land remained a solid buy. Many land owners will remark that although their property may not be as liquid as it once was, due to many people losing buying power, however the value is still there. In short, if you buy Costa Rican land you will come out a winner in the long run.
So, is the land rush over?
While the buying has slowed down and people do not have to fight with many other interested parties to buy land in Costa Rica, large investment firms are still buying land in bulk and holding it as a safe long-term play. Of course, land holds value anywhere in the world, and especially in a tropical place such as Costa Rica, there will always be opportunities for raw land.
One area of Costa Rica that is ripe for development is Nosara. Located on the Southern side of the west coast, this is a quaint town that has not been overbuilt yet. Nosara land is among the most appreciated in the country, as it has easy access to several white sand beaches (not the black sand beaches that some beaches in Costa Rica have) and has a very relaxed, tranquil atmosphere.
Costa Rica land investments have held up versus ANYTHING you could have invested in if you put money anywhere circa 2005 or after. If you are looking for a solid land investment, you should give Costa Rica a look.
Bernie Stackhouse is a real estate investment consultant and contributor to Miami blog.