Why Costa Rica Real Estate?
Investment Security
Excellent Lending Market
Costa Rican real estate was transacted only on a cash basis until recently. About three years ago the lending market opened up in Costa Rica to foreigners interested in financing real estate purchases. Mortgage companies in Costa Rica now offer terms similar to traditional mortgage products offered by lenders in the United States.
Current terms that are typical to see at the major Costa Rica banks are 10% down and 5.75% to 7% annual interest. A weaker U.S. market resulting from the "Mortgage Meltdown" has lead many investors, speculators and winter/2nd home retirees will pump significant demand increases on top of the current factors increasing property prices and values in Costa Rica. With the supply constant and the demand rising, real estate values will continue on the rise. Increasing the ease of purchase with an enhanced lending market with "buyer friendly terms" coupled with the intrinsic value of the land will continue to push real estate investment in Costa Rica.
Conservative monetary policy has compassed Costa Rica away from the storm that is the speculative lending crisis in the United States. Costa Rica places careful limits and regulation on the sum of money banks can lend in proportion to their reserves. Costa Rica's federal reserves, for example, totals about $4.1 billion. This is the highest level that they have been at in over two years when they were at record highs.
Consolidations and M&A have been the recent trends in the banking industry as Costa Rica has been pushing to become a player in the global markets. Citicorp, Scotia Bank and HSBC have been acquiring and assimilating smaller banks throughout Costa Rica. U.S. real estate investors are relatively low risk in the Costa Rica market. Foreign assets are more and more easily leveraged by buyers to secure low fixed long term loans.
International acceptance of Costa Rica as a key opportunity market has helped bolster the lending market. Investment banks, private equity groups and hedge funds focused on fund offshore commercial real estate, are aggressively seeking to fund Costa Rica commercial real estate with both debt and equity as a noteworthy constituent of their asset allocation strategy.
These factors have lead all major financial analyst firms, mutual fund managers and investment firms in the U.S. to rate Costa Rica as a strong investment for international investment, aggressive growth and emerging market real estate investment.
