Real Estate Cycles: Why a Downturn Is an Opportunity in Costa Rica
The real estate market, much like the broader economy, moves in cycles. These cycles—recovery, expansion, hyper-supply, and recession—are a natural part of the investment landscape. While downturns can cause uncertainty, they also present unique opportunities for savvy investors, especially in markets with enduring strengths like Costa Rica.
Understanding Real Estate Cycles
Every real estate market experiences ups and downs. During downturns, prices may soften and competition for properties can decrease, giving investors more negotiating power and better entry points. Historically, those who invest during these periods often benefit most when the market recovers, as property values and rental yields tend to rise with renewed demand.
The Current Landscape: Tourism Slowdown and Opportunity
Costa Rica is currently experiencing a notable dip in tourism, with arrivals down by about 5% year-over-year and U.S. visitors—traditionally the largest group—falling by over 6%. This slowdown has impacted certain sectors of the real estate market, particularly in popular tourist regions such as the Nicoya Peninsula.
However, this phase is not expected to last. Forecasts indicate that Costa Rica’s tourism sector will fully recover by the end of 2025, surpassing even pre-pandemic levels, thanks to infrastructure improvements and continued interest from North America and Europe. The profile of tourists coming to Costa Rica may change, but the volume is expected to grow. As tourism rebounds, so too will demand for vacation homes, rental properties, and investment opportunities5.
Why Now Is the Time to Invest
Investing during a downturn offers several advantages:
Lower Entry Prices: Property values may be more attractive, and sellers are often more motivated.
Less Competition: With fewer buyers in the market, investors can negotiate better terms and secure prime locations.
Future Upside: As the market recovers, early investors typically enjoy significant appreciation and higher rental yields15.
Resilient Demand: Housing remains a fundamental need, and in markets like Costa Rica, the allure for both tourists and expats ensures long-term demand.
Costa Rica’s Enduring Strengths
Despite short-term fluctuations, Costa Rica remains one of the most desirable destinations for real estate investment in Central America. Here’s why:
Natural Beauty: From lush jungles to pristine beaches, Costa Rica’s landscapes are world-renowned, attracting nature lovers and adventure seekers alike5.
Safety: Costa Rica is consistently ranked as the safest country in Central America, offering peace of mind for residents and investors.
Welcoming Community: The Nicoya Peninsula and other regions boast vibrant communities of both locals and expats, fostering a sense of belonging and cultural exchange.
Great Surf and Outdoor Lifestyle: With world-class surf breaks and endless opportunities for outdoor recreation, the lifestyle here is a major draw.
English Widely Spoken: English is commonly used in tourist areas and among the expat community, making the transition easy for international buyers.
Stable Investment Environment: Infrastructure investments and a stable political climate continue to support long-term growth and property value appreciation.
Looking Ahead
While the current dip in tourism has created a temporary slowdown in the real estate market (for some segments), the fundamentals that make Costa Rica attractive remain unchanged. As the tourism sector gears up for a strong recovery, now is an opportune moment for investors to enter the market, secure prime properties, and position themselves for future gains.
At Cabuya Realty, we believe that today’s market conditions are not a setback, but a setup for the next wave of opportunity. If you’re considering investing in Costa Rica, there’s never been a better time to explore what the Nicoya Peninsula has to offer. These low phases don’t last long, so it really is all about timing and taking advantage of a rare opportunity.
Ready to take the next step? Contact Cabuya Realty to discover the best opportunities in Costa Rica’s most sought-after communities.