Costa Rica Revisited
“The market is coming back, slowly, finally, but really only in San Jose to this point,” explained our driver as we pulled out from the airport in Costa Rica Friday morning.
“And we are beginning to see the start of some activity in Jaco.
“It’s just like back in the day…decades ago, when this country first attracted the attention of foreign retirees and investors. At first the interest was focused in and around San Jose. The first beach destination to draw outside buyers was Jaco…
“I think, now that the market seems to have turned, the activity will continue to spread, just as it did all those years ago…from Jaco to Guanacaste, etc.
“But, man, these past few years…things have been slooowww…”
As a result, as we’ve reported, prices and values in Costa Rica are reputed to be way down from their boom-time highs of pre-2007/2008. Which is why Lief and I made the trip last week to see the current state of the market for ourselves.
How far have prices fallen? And does the tumble mean now is the time to think about buying?
I won’t belabor the reasons I stopped endorsing Costa Rica as an investment or a retirement haven years ago. (If you’re interested, you can take a look here and here.)
Bottom line, we’ve identified more interesting, more appealing opportunities many other places in recent years.
Still, we get the question almost daily: Why not Costa Rica?
So we went, with open minds, to take a look, to see if we should reconsider our position.
The long-ballyhooed new road (promised for three decades) from San Jose to the beach is finally a reality, so the trip that I made for the first time more than 25 years ago is today quicker and less bumpy.
The Costa Rican countryside is as lovely as ever, lush and green and rolling.
There’s more to the beach town at Jaco than I remember—more bars, restaurants, souvenir shops, etc. Our guide for the day reported that nearly all these establishments closed following the market crash this country suffered post-2008. Today, they’re back in business. This is the bottom of the low season, and we saw a smattering of tourists.
In San Jose, after we’d left the airport and before we took off for the beach, we had lunch at Denny’s. I don’t think I’d ever eaten at a Denny’s before this, but it was there, it was quick, it was easy.
Likewise, in Jaco, we saw similar American exports, places where you could eat or shop quick and easy.
What we didn’t find were extraordinary bargains of the sort you might expect (and we were hoping) to find in a market that has suffered the downturn that this one has suffered.
We saw one opportunity that got Lief’s attention as a potential yield investment (he is researching further and will follow up for members of his Marketwatch service). But from the point of view of the would-be retiree or second-home owner, I wasn’t impressed.
“The buyer in Costa Rica today,” explained one investor we spoke with with long experience in this market, “wants Costa Rica. It’s the place he’s comfortable with, where his friends, his business partners, his attorney, his boating buddies own and spend time. So it’s where he wants to be. He’s got the money, so he buys Costa Rica.”
Fair enough.
More interesting to me, though, was an insight this same investor shared regarding where Costa Ricans are currently buying.
Even in this aftermath market climate, Costa Ricans can’t afford to own on their own Pacific coast. So they’re crossing the border to buy on the Pacific coast of Panama instead.
The beach house they can buy just over the border in Panama for US$125,000 would cost them three to four times as much on their own coast.
Where, specifically, are these Costa Rican beach bargain-hunters shopping?
More mañana…
Kathleen Peddicord
