Costa Rica's Investment Potential

 Costa Rica Real Estate Investment 

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 An Interesting Alternative

 

Soaring real estate prices in America’s Sun Belt region, particularly California and Florida, have begun, over the last few years, to open the doors for investors and retirees to consider off-shore locations – most notably in Costa Rica.  In some areas, property is found to be 50 to 70% less expensive than comparable property in the United States.  There have been plenty of cases, throughout the last decade, where Costa Rica Real Estate values have doubled or even tripled.   

 

In addition to the increasing ranks of baby boomers that are discovering the attractiveness of life and investment in Costa Rica, many other age groups have joined the movement of northerners to this jewel in Central America.  They, too, appreciate the scenic wonders, lower cost of living, yet high standards of living, along with attractive investment potential. 

 

Who Is Investing in Costa Rica?
 
In recent times electronics, pharmaceuticals, financial outsourcing, software development, and ecotourism have become the prime industries in Costa Rica's economy. High levels of education among its residents make the country an attractive investing location. 

Large corporations like IBM, Hewlett Packard, Microsoft, GE, Abbot Labs, Procter & Gamble, GlaxoSmithKline, Motorola and Gerber have discovered Costa Rica’s investment-friendly climate and pro-US policies in regard to financial security and tax laws. Their in-country investments have included both production and distribution facilities. Other high-tech companies are also considering the safe political environment and overall economic health of Costa Rica and are in the process of joining in.

In June, 2011, according to Costa Rica's most influential daily newspaper La Nacion, IBM is to invest $300,000,000 in opening a high technology professional services center which should generate 1,000 jobs in the next three years.  The announcement was made by President Laura Chinchilla, who called the IBM initiative as "the most significant foreign investment in Costa Rica in the last 13 years and the largest ever in the field of services." esident Laura Chinchilla 

 

Hewlett Packard began operations in Costa Rica in August 2003 with 123 employees and now in 2011 has 6,300 employees.  Arturo Velasco, Director General confirmed that HP invested $40 million in Costa Rica in the last few years and by the end of 2012, there are plans to hire another 2,000 employees.
 
On July 20th, 2010 HP announced within the next three months they will have 89 national
engineers in their Research and Development Center (Centro de Investigación y Desarrollo) in Heredia who will begin to design highly complex chips for use in wireless networks. 
 
It was announced in early 2012 that Hewlett Packard (HP) Costa Rica has been chosen by the parent company in the US as one of only six important, global infrastructure technology support centers.
 
HP executives were quoted as saying that: "Costa Rica has proven to be a tremendous
operation. Not only have we seen what can be done with clients in North America but
also in other countries in Europe, to provide services in other languages and in other
areas such as financial support." 

 

Well funded international corporations continue to expand, creating high paying jobs while improving the country’s infrastructure, resulting in an increasingly beautiful paradise.  

 
Procter & Gamble (P&G) was the first transnational company to chose Costa Rica
as a venue to offer support in the financial sector.
 
Tara Polanco took over general management of the Costa Rica operation of the
multinational company Procter & Gamble in 2011 however, she
has a broad knowledge of the company's progress in Costa Rica since it's arrival
in 1998.
 
At that time the local operation started with only 13 people, now the payroll is
close to 1,500 workers and the company continues to hire more staff.
 
In a recent interview Tara Polanco discussed the challenges the company faces:
 
"I can tell you that Costa Rica has adjusted well to the needs of the company.
We found that we can take any business wherever we need it, thanks to the
talent we have in the country. Costa Rica can continue to benefit from this..."
 
When asked what were the principal challenges faced by Costa Rica in continuing
to attract companies like P&G, she replied that:
 
"Speaking of the country's competitiveness, we found that the main strength is
the talent. That's why we came and why we stayed, and we have to continue to
ensure that the country can continue to provide the talent that we expect." 
 
 Many other multinational companies such as Lucent, Bristol Myers, Chiquita Brands, Esso, Texaco, 3M, UPS, DHL, Gillette, Warner Lambert, Xerox, Johnson & Johnson, SC Johnson, Sherwin Williams, Sony Music, Pfizer, Kimberly Clark, Manpower, Dole Fresh Fruit, Colgate Palmolive, LL Bean, Alcatel, BASF, KPMG, Price Waterhouse, Deloitte & Touche, Oracle, Unisys and Cisco Systems have made large investments in Costa Rica.
 
It was also announced in February, 2011 that US companies Curtiss Wright (one of the world's largest aviation companies), Value Access and Covidien will also be setting up new operations in Costa Rica.  They just keep on coming!   They just keep on coming. 

In addition, celebrities including Mel Gibson (purchased $25 million in real estate in May 2007), Michael Jordan, Pamela Anderson, Woody Harrelson to name just a few have also purchased land in Costa Rica. Visitors to Costa Rica in 2007 include, Vince Vaughn, Brad Pitt, Angelina Jolie and Danny DeVito.

And the latest entrant to the Costa Rican real estate market is Wall Street's Henry Kaufman, famous since 1957 when he took over the largest bond specialist unit of the New York Stock Exchange.

 

 

Nearly 80 million Baby Boomers began retiring in 2006.  Many of these retirees will search for the ideal place to spend the remainder of their lives.  They will find that areas once attractive to previous generations are now overpriced and most likely out of reach for the average person.  Some will discover the beauty and wonder of alternative locations like Costa Rica.  For those who may be apprehensive of full-time retirement outside of the US, they may opt for a second home or perhaps an enviable vacation spot.  If only a very small portion of the stream of future retirees decide to try Costa Rica, consider this as a possible scenario: 

 

 ¼ of 1% of the retiring pool of baby boomers investing in Costa Rica will increase the country’s total population by 5%.  Imagine the effect this would have on property values.       

And that’s just the result of one possible phenomenon.  Then you have current retirees, other generations, Canadians and Europeans, all of which can be found in Costa Rica.  Added together, the resulting statistics are even more impressive.  Savvy investors will begin to realize this and will not want to miss out on the attractiveness of this future investment potential. 

 

A few other reasons to consider Investment in Costa Rica:

          

  • Similar to the US and Canada, real estate ownership is fee simple with few restrictions
  • The government's futuristic medical health approach
  • Property taxes are significantly lower than in the US (around ¼% of the registered value)
  • Peaceful and stable government with annual economic expansion
  • Modern communications infrastructure
  • Steady growth in tourism:  According to the Costa Rican Tourism Institute,
      • 1.23 million tourists visited in 2003
      • 1.45 million tourists visited in 2004
      • 1.66 million tourists visited in 2005
      • 1.75 million tourists visited in 2006
      • 1.90 million tourists visited in 2007
      • 2.09 million tourists visited in 2008
      • 1.92 million tourists visited in 2009 
      • 2.10 million tourists visited in 2010 
      • 2.20 million tourists visited in 2011 
      • 2.30 million tourists visited in 2012
      • 2.40 million tourists visited in 2013
      • 2.52 million tourists visited in 2014 
      • 2.66 million tourists visited in 2015 
      • 2.90 million tourists visited in 2016 

These statistics show an 18% annual growth in 2004, a 14.5% growth in 2005, a 5.5% growth in 2006, 8.6% growth in 2007 and 10% in 2008.  While growth slowed in 2009, new record number of tourists visited Costa Rica in 2010 through 2016.

Tourism - 2014

Tourism Ministry officials on January 22nd reported that revenues from Costa Rica’s travel sector in 2014 totaled $2.6 billion, an 8.3 percent increase over the $2.4 billion registered in 2013, according to figures from the Central Bank.

Officials credited the 2,526,817 international arrivals registered in 2014, an increase of 4.1 percent over the previous year. That’s an increase of 98,876 arrivals by air, land and at ports, the Costa Rican Tourism Board (ICT) reported. 

A new global survey in 2014 confirmed that tourists love Costa Rica, naming the country most recommended tourism destination in the world. 

Tourism - 2015

The number of international arrivals in Costa Rica increased by 4.4 percent during the first half of 2015. According to data released by the Immigration Administration, 41,698 more international travelers to Costa Rica arrived by air this year, culminating in a total of 987,801 arrivals during the six-month period. The increase in arrivals resulted in $1.6 billion in tourism revenue, approximately $161 million more than the first half of the previous year. 

Tourism - 2016 

During the year 2,925,128 international arrivals to the country were reported, and over 70% came in by air, which represents the main means of entry. 2016 showed growth of 13.8%; in other words, almost 260 thousand more arrivals than in 2015. 

  2011 could be a new record.OverallDespite Wall Street's ups and downs and the political wrangling back home, tourists continue to arrive in droves into Liberia's Daniel Oduber International Airport (LIR).2011 is on track to break the record number of arrivals in 2010. Through September, arrivals are up a whopping 17% over last year.OWith the opening of the new passenger terminal at the Liberia International Airport as well as the new private Hospital CIMA, both due in November 2011, tourist arrivals are likely to increase even more.     

 

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