This story is part of an ongoing series on global property that examines the shifts and trends in the housing market on the international stage.
Long a haven for expats, Costa Rica is finally recovering from the beating its real estate values took during and after the mortgage meltdown in the United States.
"The crash of 2008 was hard on the second-home market," said Sarah Breitlander, co-owner of KRAIN Costa Rica Real Estate. "It took a while to come back, but now it's back with a vengeance."
Already in 2013 purchasing activity in real estate rose by 14 per cent over 2012. Tourism, too, is on the rebound, hitting record visitor numbers last year thanks to a 4-per-cent increase over the previous year.
Yet housing prices remain a bargain. "We are seeing the pendulum swing from where nothing was moving, and it was a buyers' market for sure," said Ms. Breitlander, "to where properties are going back up. People are saying let's get in while the market is low."
One Canadian couple considering buying property is Michael and Melanie Engel, from Winnipeg. Last winter, they moved to the Guanacaste region on the country's Pacific Coast for a year-and-a-half stay with their four school-age children. "The one thing that surprised me about Guanacaste is that everything is for sale," said Ms. Engel. "Condos, houses, lots, everywhere you look, you see 'Se Vende' signs. I think that the real-estate market is going to see a tremendous increase here."
The Engels are considering purchasing a lot in a new, local development on which to build a house with a beach view. Along with the returning health of the market in general, plans for a new marina in the area have persuaded them that they could "double or triple our investment if we sell," she said.
Renting out such a home is another potential option, she said.
According to Ms. Breitlander, there is big demand for rentals and many pre-retirees do just that. "In some instances the property pays for itself by the time they move down here." Average figures on gross rental yields in some parts of Costa Rica are between 6 and 8 per cent.
According to Michael Klein, a real-estate writer and co-owner of San Ramon Properties, new infrastructure development, such as marinas and highways, is indeed going to drive longer-term investment opportunities. "Going forward 10 years, there are two main things that are going to play out," he said.
One is in the currently underdeveloped Caribbean side of the country. "You've got new highway development going in there," he pointed out, "and you've got the government putting a lot of money in and around Puerto Limon.
The other," he added, "is the new international airport planned for 2025 in Orotina, slightly west from where it is now. That is a big development and is going to compete with Panama, which is currently the main international hub for Central America."
The new terminal will enhance property values in Costa Rica's central valley, which is where the biggest percentage of expats – and Costa Ricans – live.
"The buyers' profile has really changed over the past years," said Mr. Klein. "Before the bubble popped, it was people with extra money. They were buying income properties and flipping on an almost weekly basis. It was a crazy time.
"The demographic now," he added, "is baby boomers who are looking for a place where they can come to, in Central America, and outlive their nest egg." Retirees tend to like the central region, he explained, because of its almost permanent, spring-like weather and proximity to both beaches and cities.
While pre-retirees make up the largest percentage of her firm's business, said Ms. Breitlander, the Pacific Coast is also increasingly attracting families such as the Engels.
"These are people who could work anywhere in the world because of technology," she added. "So they are taking a look, and asking themselves 'what kind of environment do we want to live in?' Some families move here for a year or two, and make it an adventure. Others move down here permanently. It is a wonderful opportunity to bond with your family."
"In the last three years, 80 per cent of sales in Costa Rica were at $200,000 and upward," said Mr. Klein. Gated communities and condominiums are particularly popular.
"In rural areas, in smaller villages up in mountains," he said, "you can find little places that are under $100,000. There, a half-hectare piece of property with no house on it will go for $30,000 to $40,000."
"There is really a variety of products," said Ms. Breitlander of her area, "whether you want a $100,000 condo or a $200,000 home or a $2-million home." In fact, the one market sector that grew throughout the downturn was luxury properties.
Since it first became a magnet for environmentally minded visitors, Costa Rica has continued to benefit from its biodiversity and protected natural areas. For Ms. Engel, "it's all about nature here. There are so many different kinds of animals and plants. It's so clean, and the people are so friendly, relaxed. Everyone you meet," she said, "is like a ray of sunshine."
But along with surfing and hiking trails, the country offers excellent, government-run health care – medical tourism is becoming a major growth sector – and automatic resident status to individuals investing a minimum of $200,000.
It is also inexpensive. "Foreigners can live very comfortably here for between $1,500 and $2,000 a month," said Mr. Klein.