Costa Rica’s real estate market has attracted international investors for decades, with property values rising 8-12% annually in prime locations. Foreign buyers now represent 40% of all luxury property purchases across the country.
We at Osa Property Management see growing interest from investors asking: is property in Costa Rica a good investment? The answer depends on your risk tolerance and investment timeline.
What Are Costa Rica’s Current Market Trends?
Costa Rica’s residential real estate market is expected to reach US$287.72bn by 2025, with a 3.81% CAGR to 2029, driven by luxury and eco-friendly properties. The Guanacaste/Nicoya Peninsula commands the highest median price at USD 1.32 million as of June 2025, while San José apartment prices surged 12.08% year-on-year to USD 2,343 per square meter. The Central and South Pacific regions, including popular areas like Manuel Antonio and Dominical, reached median prices of USD 1.11 million with a solid 5.2% annual increase.
Investment Property Types That Generate Returns
Single-family homes near beaches consistently outperform condos in appreciation rates, with rental yields that average 7.84% nationwide. Condos in rental pools offer turnkey investment opportunities with lower maintenance requirements, though HOA fees range from USD 200-300 monthly for basic units to over USD 1,000 for luxury properties.
Commercial properties in tourism-centered markets like Jaco and Tamarindo deliver the highest ROI potential, while farmland (including teak and coffee operations) remains affordable with flexible usage options.
Foreign Ownership Rules You Must Know
Non-residents can own property outright in Costa Rica with no citizenship requirements, but beachfront properties within 200 meters of the high-tide line face ownership restrictions. The national registry at rnpdigital.com allows investors to verify property titles and check for claims before purchase. Most transactions occur in cash, though some sellers offer owner financing with substantial down payments required. Foreign buyers struggle to obtain local mortgages, which carry higher interest rates than domestic loans when available.
These market fundamentals create both opportunities and challenges that directly impact your investment returns and risk profile.
Why Costa Rica Beats Other Investment Markets
Costa Rica’s democracy ranks among Latin America’s most stable, with peaceful power transitions since 1949 and zero military coups in over 70 years. The country maintains investment-grade credit ratings from major agencies, while GDP grew 3.6% in 2024, outpacing regional averages. Unemployment dropped to 7.4% in Q2 2025, which creates stronger domestic demand that supports property values. The Central Bank reduced interest rates to 3.75% in July 2025, marking twelve consecutive cuts since 2023, which makes financing more accessible for developers and drives construction activity.
Tourism Revenue Creates Consistent Rental Income
Costa Rica welcomed significant international arrivals in 2024, with North Americans comprising 68% of tourists and Europeans 17%. This influx generates USD 4.9 billion annually in tourism revenue, which directly supports short-term rental markets in coastal areas.
Properties in Jaco average 75% occupancy rates during peak season, while Manuel Antonio vacation rentals command USD 200-400 per night. The government invested USD 2.1 billion in infrastructure improvements through 2024 (including highway expansions that reduce travel times from San José to popular beach destinations by 30 minutes).
Tax Structure Favors Property Investors
Property taxes remain fixed at 0.25% of assessed value, significantly lower than Mexico’s 0.8% or Panama’s 2.1% rates. Rental income faces a flat 15% tax rate on 85% of gross income, which creates effective tax rates around 12.75% for most investors. The luxury tax only applies to properties exceeding USD 233,900 in total value, affecting fewer than 8% of foreign-owned properties. Corporate structures cost approximately USD 1,200 annually to maintain but provide asset protection and simplified inheritance processes for international buyers.
Economic Fundamentals Support Long-Term Growth
The country’s focus on sustainability and eco-tourism aligns with global trends in environmentally conscious investment. Costa Rica abolished its military in 1949 and redirected defense spending toward education and healthcare, creating a skilled workforce that attracts international businesses. The stable colón currency (with controlled inflation at 2.2% in July 2025) protects investment values from currency devaluation risks common in emerging markets.
However, these advantages come with specific risks and challenges that investors must navigate carefully to protect their returns.
What Risks Should You Expect
Costa Rica’s property market faces pronounced seasonal swings that directly impact your returns. Tourist arrivals drop significantly during the rainy season, which cuts rental income for coastal properties by 40-70% during these months. Properties in Manuel Antonio and Jaco experience occupancy rates below 25% during rainy season, while maintenance costs spike due to humidity damage and storm repairs. The Central Bank reports that construction costs increased 18% in 2024, driven by imported materials and labor shortages, which affects renovation budgets and property values in older developments.
Management Costs Eat Into Profits
Professional property management fees range from 15-25% of gross rental income, but self-management from abroad creates bigger problems. HOA fees for beachfront condos average USD 400-600 monthly and include mandatory reserves for hurricane damage and infrastructure repairs. Utility costs run USD 150-300 monthly for typical vacation homes due to high electricity rates at USD 0.23 per kWh. Insurance premiums cost 0.8-1.2% of property value annually, with additional earthquake coverage required in most areas (pool maintenance alone costs USD 200-400 monthly). Gardening services add another USD 150-250 in tropical climates where vegetation grows rapidly.
Legal Pitfalls Threaten Your Investment
The Costa Rican Bar Association reports that 30% of foreign property disputes stem from inadequate title research. Environmental restrictions can block development plans after purchase, with SETENA permits taking 12-18 months and costing USD 5,000-15,000 for basic approvals. Squatter rights laws allow occupants to claim ownership after 10 years of continuous residence (making vacant property management essential). Corporate structures require annual filings and registered agent fees of USD 800-1,200, with penalties reaching USD 500 for late submissions. Tax compliance involves monthly rental income reporting regardless of occupancy, creating administrative burdens that many foreign owners underestimate when they calculate investment returns.
Final Thoughts
Is property in Costa Rica a good investment? The data reveals mixed results that depend heavily on your approach and timeline. Properties in prime locations like Guanacaste and Manuel Antonio have delivered 7.84% rental yields with steady appreciation, while political stability and tourism growth create favorable long-term conditions. However, seasonal rental income drops of 40-70% during rainy months, combined with management costs that reach 25% of gross income, significantly impact returns.
Legal complexities and environmental restrictions add layers of risk that many foreign investors underestimate. Success requires thorough due diligence, adequate cash reserves for seasonal fluctuations, and professional local support. Properties near established tourist areas with strong infrastructure offer the best risk-adjusted returns, while remote locations carry higher management challenges.
We at Osa Property Management have worked with investors across Jaco, Manuel Antonio, Dominical, and the surrounding areas (helping them navigate these market complexities). Our comprehensive property management services handle everything from tax compliance to maintenance oversight. Professional local support helps investors navigate the challenges while they work to maximize returns in Costa Rica’s dynamic real estate market.