Costa Rican Real Estate Market Update: Why Costa Rica is Recession Resistant
By Erich Heidemann
The U.S. economic down-turn appears to spell bad news for the Costa Rican real estate market. But the very same factors that negatively affect the U.S. real estate market will actually boost the value of Costa Rican real estate, and even make the market recession resistant. Here’s why:
- Stable Real Estate Market – U.S. investors, frustrated with current market conditions at home, are looking for another market to invest in. Most U.S. real estate investors are somewhat uncomfortable with investing abroad, and have traditionally avoided it. However, given Costa Rica’s friendliness toward foreign investment, its history of stability, and geographic proximity, investors have found an alternative market that meets their requirements.
- Second Homes That Keep Their Value – Many of the second homes located in the U.S. have limited value in poor economic times. They lack many of the features that give value to first homes, like proximity to jobs, schools, and transportation. They also have limited value in the rental market. While a fishing cabin in the middle-of-nowhere has special appeal to its owner, it’s not the vacation spot of choice for the masses. Second homes in the U.S. have traditionally been a way to spend money, not earn it. Second homes in Costa Rica have the ‘exotic location factor’ that drives throngs of snow-weary vacationers to spend their vacations, and money, within the country.
- Comparatively Low Airfare – The ever-increasing costs associated with travel are reducing the number of vacations Americans take far abroad. Prices of airfare to Costa Rica remain relatively low, given its short distance from most of the U.S. So while far-flung vacation spots suffer, Costa Rica remains a viable option. So viable, in fact, that people find flying here more economically feasible than driving cross-country on vacation.
- Lower Costs of Food and Services – An increase in fuel costs directly relates to higher prices for food and commodities. This, in turn, increases the cost of services provided by the people who eat the food and consume the commodities produced and shipped with petroleum. While it may cost slightly more to fly to Costa Rica than a vacation destination inside the U.S., the cost of food, services, and entertainment is so much lower in Costa Rica that a more indulgent vacation can be had for much less money.
- Favorable Exchange Rate – While the rise of the Euro continues to make European travel expensive for U.S. tourists, the dollar still rules in Costa Rica. The favorable exchange rate, combined with widespread acceptance policies, means tourists prefer Costa Rica over European destinations, funneling much of the vacation traffic from Europe to Costa Rica.
- All of the Above – The current economic woes in the U.S. have been described as the ‘perfect storm’. Each individual factor would never slow the economy down by itself, yet when presented together, the sum of the trouble is indeed greater than its parts. Yet these issues combine to make the perfect opportunity for those willing to look a bit beyond the borders of their previous real estate investment experience.
If you are looking for a recession resistant alternative to investing in U.S. real estate, and aren’t afraid of trying something a bit different from your standard fare, Costa Rica may be the market you’ve been looking for. Turn-key real estate investment scenarios, such as the Sonesta Jaco Resort (www.SonestaJaco.com), serve to remove the main stumbling blocks that present themselves when investing abroad, providing a powerful marketing program, brand recognition, clear title, a responsible management program, and does away with worries about maintenance and collecting rental income.
Stop by our website, or give us a call toll-free at 1-866-864-9859 to find out how we can assist you in riding out this ‘perfect storm’ in perfect comfort!
About the Author
LOTS OF THINGS TO WRITE! MANY ARTICLES TO COME
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