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Costa Rica

Costa Rica: stable property prices, rising foreign demand

Last Updated: September 30, 2015

Costa Rica's higher-end property market continues to grow rapidly as foreign homebuyers flock in.

Due to the absence of official house price statistics, it is hard to assess the exact movements of house prices, but the trend is clear.

“We’re definitely having an uptick in sales,” said Shawn Ferguson of Coldwell Banker. Costa Rica’s property market is highly dependent on the U.S. economy, which represents the highest number of foreign homebuyers in the territory. “As the U.S. heads up, so do we,” added Ferguson.

Despite this, land prices have not yet recovered from the crisis.

A half-acre plot is currently priced at around US$150,000, far from its price of US$400,000 in 2008, according to Vladimir Spivak of Palm Real Estate in Guanacaste.

The most expensive and fastest-selling properties in Costa Rica are in the Central Valley, the greater metropolitan area (including San José, Alajuela, Heredia and Escazú) where most businesses are, and the Pacific coast.  The least expensive properties can be found in new developments in the Costa Rica’s southern region, such as the Osa Peninsula.

In San Jose, the country’s capital, the average listing price of houses increased slightly by 0.4% to US$1,131 per square meter (sq. m.) in August 2015 from the same period last year, according to On the other hand, condominium listing prices in San Jose were almost unchanged from a year earlier, at an average of US$1,623 per sq. m.

Popular investment locations currently experiencing dramatic increase in demand include Tamarindo, Playa Langosta, Playa Grande, Drake Bay, Santa Teresa and Mal Pais, Montezuma, Puerto Viejo, and Nosara and Playa Guiones. Waterfront properties in these areas are priced from just US$100,000.
  • In Santa Ana, a 3-bedroom single family home currently costs about US$212,000, according to the well-respected
  • In Ojochal, a similar property might cost around US$265,000.
  • In Tamarindo, 3-bedroom houses are priced at US$375,ooo.

Gated communities and condominiums are particularly popular among expats and foreign homebuyers. “In the last three years, 80% of sales in Costa Rica were at $200,000 and upward,” said Michael Klein of San Ramon Properties.

"Costa Rica has proven attractive to investors for its relatively open investment and trade policies, as well as for being the most politically stable country in Latin America," said Robert F. Davey of Century 21 Marina Trading Post.

Sales activity started to rise in 2013, when property sales transactions increased 14% from a year earlier. Property demand has been robust since then.

Gross rental yields in some parts of Costa Rica are moderately good, ranging from 6% to 8%, according to local property experts.

Costa Rica’s property market is expected to remain vibrant during the remaining months of 2015, according to local property experts.

Foreign investors buoy the housing market

US buyers are driving up property demand in Costa Rica.

“Higher median prices in the USA are now driving buyer interest in higher priced and luxury real estate properties, particularly for ocean view, beachfront, and near beach properties,” said Chris Simmons, the founder of Re/Max Ocean Surf.

“Buyers from hot markets in the USA like California and Florida see Costa Rica as offering great value in comparison to similar beach real estate in the United States. We still have luxury condos for under $200 per square foot, pricing that is rare in the USA,” Simmons added.

Costa Rica average listing priceAside from its scenic beauty and lower cost of living, many Costa Ricans, foreign investors and High Net Worth Individuals (HNWIs) are increasing being attracted to invest in the property market mainly because foreigners are entitled to the same ownership rights as Costa Rican citizens and there are no property taxes and no residency restrictions.

“Where else in the world can foreigners come to a country with no soldiers, a government that caters to investors and fee-simple real estate with no restrictions and where foreigners are entitled to the same ownership rights as Costa Rican citizens,” said licensed realtor Chaud Oskar Byers.
Rental Yields Last Updated: September 30, 2015

Costa Rica – prices still trending down

Prices in Costa Rica seem little changed over the past year. As there are no official time series we do not have accurate measures, but our data suggest that there has not been much movement in prices. The exception to this general rule is that houses and condominiums in Guanacaste and Puntarenas have continued to see the price-falls experienced during 2008 and 2009.

Gross rental yields on residential property in Costa Rica remains generally healthy, at around 6% to 7.8%

Read Rental Yields »

Taxes and Costs Last Updated: September 30, 2015

Progressive income tax rates in Costa Rica

Costa Rica modern housesRental Income: Rental income is taxed at progressive rates, from 10% to 25%. For tax year 2014-2015, the first CRC3,522,000 (US$6,559) income is not taxed.

Capital Gains: If capital gains are not derived from habitual transactions, they are tax exempt. Otherwise, capital gains are taxed at a flat rate of 30%.

Inheritance: Transfer of Costa Rican properties, even by way of inheritance, is taxed at progressive rates, from 1% to 2%.

Residents: Residents pay tax on their worldwide income at progressive rates. Income from non-employment sources are taxed separately from employment income.

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Buying Guide Last Updated: September 30, 2015

Total transaction costs are moderate in Costa Rica

Total roundtrip transactions costs are around 9.32% to 16.32%, inclusive of the real estate agent's fee that ranges from 5% to 10%. It is customary for the buyer and the seller to share the costs equally. The buyer must be wary of buying a property with liens or squatters.

Read Buying Guide »

Landlord and Tenant Last Updated: September 30, 2015

Costa Rica's tenancy law is still pro-tenant

Costa Rica houses and propertiesDespite the passage of a new law aiming to strike a balance between landlords and tenants, the rental market is still pro-tenant.

Rent: Rents can initially be freely negotiated between landlord and tenant. If rent for housing purposes is agreed in US dollars or other foreign currency, no yearly increases are allowed. Rent increases are allowed only in the case of agreements in colones, the Costa Rican currency.

Tenant Security: The minimum lease term is three years, but the tenant can cancel it anytime by giving a three-month notice. Unpaid rent can be very difficult to collect.

Read Landlord and Tenant »

ECONOMIC GROWTH Last Updated: September 30, 2015

Widening fiscal deficit is a concern

Costa Rica GDP inflationCosta Rica, with a total population of about 4.8 million and GDP per capita of US$10,083 in 2014, has long been a popular tourist destination. Beautiful beaches and valleys, tropical greenery, wide biodiversity and a comfortable climate attract a growing number of tourists.

Costa Rica's economy is projected to expand by 3.8% in 2015, after 3.5% growth in 2014, 3.4% in 2013, 5.2% in 2012, 4.5% in 2011, and 5% in 2010, according to the International Monetary Fund (IMF).

Costa Rica had robust economic growth from 2003 to 2007, with annual average real growth of 6.7%, according to the IMF. However, the economy grew just 2.7% in 2008 and contracted by 1% in 2009, due to the global crisis.

During the first half of 2015, the total number of tourist arrivals by air to Costa Rica increased 4.4% from the same period last year, to reach 987,801 visitors, according to the Costa Rican Tourism Board. Tourism revenues reached about US$1 billion in H1 2015, up by around US$161 million from a year earlier.

Tourist arrivals averaged 2.3 million people from 2010 to 2014. Americans accounts for about 40% of all visitor arrivals in Costa Rica every year.

Costa Rica now faces growing fiscal deficits. The country’s deficit stood at 6.4% this year, up from 6% in 2014, 5.4% in 2013, and 4.4% in 2012. Costa Rica’s fiscal deficit is expected to reach 6.9% of GDP in 2016.

As the country struggles to rein in widening deficits, Moody’s Investors Service cut Costa Rica’s credit rating to junk status last year. Earlier, Costa Rica had already been rated junk by Standard & Poor’s and Fitch Ratings.

The country’s total debt is equivalent to 49% of GDP in 2015, up from 40% in 2014 and 25% in 2008.

The current account deficit remained steady at 4.7% of GDP in 2014, from 5% in 2013, 5.3% in 2012, 5.4% in 2011, and 3.5% in 2010, according to the IMF.

During the second quarter of 2015, unemployment stood at 9.5%, up from 9.1% in a year earlier, according to the  Instituto Nacional de Estadística y Censos de Costa Rica (INEC).

In August 2015, consumer prices in Costa Rica dropped 0.74% from a year earlier, the second consecutive month of falling prices and in sharp contrast with an inflation of 4.39% in December 2014. This allowed the central bank to cut its policy interest rate to a record low of 3% in July 2015.

In August 2015, the average monthly exchange rate stood at US$1=535 colones.  The Costa Rican colon (CRC) was revalued in 2010, from US$1=557 colones to US$1=493 colones.  Since then the US dollar has gradually appreciated against the colon.

In January 2015, the BCCR abandoned its nine-year-old currency band system and instead adopted a managed float exchange rate regime which established a range of 500 to 800 colones per USD1. The central bank vowed to intervene only when the currency shows excessive fluctuations.

Title: Property in Costa Rica | Costa Rican Real Estate Investment

Description: A look at real estate investment in Costa Rica from the perspective of property income, taxes and Costa Rican investment prospects

Keywords: global property guide, property guide, global property, Costa Rica, rental yields, overseas property, property markets, property investments