One of the smallest countries in the world, Costa Rica is famous for its sandy beaches, spectacular coastal landscape, and its incredible diversity of plants and animals. In fact, though it is only about the size of West Virginia, nearly 20% on earth are found in that little country. Tourists flock to it in droves each year making it one of the hottest tourist destinations in Latin America. The majority of tourists are from America and Canada, of course, but there are also thousands of European travelers. In order to cater to the booming tourism industry, hotels, resorts, golf courses, restaurants, pubs, shopping malls, and other tourist attractions have popped up alongside beaches and other hot spots. This resulted in a sharp rise in Costa Rica real estate value over the last ten years since land is one commodity that is not plentiful in Costa Rica, a country with just one tenth of one percent of the world’s land mass.

This relative scarcity of available real estate in the face of development has resulted in a boom in new condos and homes along the coasts, in the mountains, and in urban areas.

The demand for real estate has been concentrated mostly in areas where the tourist influx is large particularly along the Pacific coast. The purchase of vacation property and real estate for relocation by expatriates are two main reasons why the property prices have gone up. In addition to the coasts, money is flowing into investments on farms (called fincas), mountain properties, and vacation rentals. Increasingly, Costa Rica is also being seen as a retirement destination by many retirees hailing from cold countries in Europe as well as America and Canada. The highly stable democratic political system and the beauty of this country attract real estate purchasers from around the world who want to have a piece of paradise to themselves. Costa Rica is one of only two countries in the world without an army, the other being Switzerland, and is extremely forward looking. The government is committed to sustainability and in a few years, Costa Rica will be the first country on the planet to have a zero carbon footprint. No wonder so many people fall in love with this place.

A number of years ago, the country realized the benefits of sustainable development and tourism. Unlike many other countries, Costa Rica has learned the lesson that unregulated exploitation of resources is ultimately detrimental. Wisely, in the face of sometimes intense pressure, it refuses to allow oil exploration off its coasts. Tropical forests, once cut or burned for little farms, are returning. As more and more of the international community is encouraged to visit, investors from around the globe have found that Costa Rica is a wonderful real estate market. And, indeed, over the last decade there has been a real boom in development along the Pacific coast.

Of course Costa Rica has felt the impact of the severe economic downturn in America and Europe. Sales of condominiums and single family homes for expats or as second homes in subdivisions have slowed dramatically and in some areas along the Pacific coast cash-strapped Americans are selling their tropical homes at steep discounts.

Despite today’s uncertain economic climate in the States and Europe, the general perception is that there will be a large rebound in Costa Rica real estate. Why? One reason is the incessant flow of investments based upon the lucrative returns to be had from property development. Another is that, in comparison to the Unites States and Europe, real estate prices, particularly on sunny, tropical coastlines remain incredibly reasonable. Land prices along the coasts are still just a fraction of the cost elsewhere. Further, real estate investors have found extraordinary returns on their investments over the last decade.

The beach properties along the Pacific coast have seen, and will probably see, the largest increase in prices over time. The Caribbean coast remains relatively undeveloped. Certainly prices there, like all of Costa Rica, are rising but not nearly as much as on the other coast (which, of course, means that stress on prices have been less lately than on the Pacific side). And, as more and more Ticos move from the country into the big urban area around San Jose, available prime property has become increasingly scarce. Demand remains strong in the urban areas and, for more and more expats who live in Costa Rica, the amenities and climate around San Jose are proving irresistible.

Vic Krumm writes about tropical Costa Rica and has an informative websiteCosta Rica Vacations. Check out the prettyCosta Rica Real Estate

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