Review of last years predictions…
- January 22, 2014
On our post that can be found here:
We had made some predictions about the market in 2013. Lets review:
1) Change in demographic of buyers in Nosara. With all of the recent press the area has received, the demographic of buyers in the area has evolved – where as in prior years or eras in Nosara, location and access to the beach was the most important factor, buyers are now looking for high quality, luxury finished homes for sale. The market will shift more towards “quality of construction” and “turn key” product rather than a thatched roof shack on the maritime zone. This phenomenon can be seen in other markets in Costa Rica that are a bit more advanced than here in Nosara, including places like Papagayo, Playa Coco, and Playa Flamingo.
Take a drive around town these days – the homes that have been built here, and some of the new resorts, and yoga centers are just stunning. The quality of new construction and the budget of 2013 buyers all demonstrate the trend in this direction.
2) Property prices will trend upwards, but appreciate in the single digit percentage range. In years past, Nosara had at times experienced rapid appreciate of raw land prices, especially in Playa Guiones. The years of 10-30% price appreciation is over, and now we can expect something a little more inline with inflation and GDP numbers.
Well – I was way off the mark on this one. Land prices, are up 50%. Yes – 50%. I know this might sound crazy, but yes – I can give you details if you would like the info, please contact me. Lots that were $90 per m2 last year are trading at $140 this year. Lots that were $250 m2 are trading at $375 m2. I guess when put in perspective, it is more like, prices are up 50% over the last 4 years… even though prices were flat for 3 years – it makes the leap look a little more in perspective. Considering the S&P and stock market were up about 30% this year and the fact that it is up over 100% from 2009 – it isn’t quite such an unexpected event.
3) Construction, construction, and more construction. Its almost impossible to find a home for each buyer we have in our office. Buyers are more sophisticated and know exactly what they want, but are smart enough to see the benefit in buying a lot and going through the construction process instead of purchasing something they don’t particularly love, even though it may have great potential.
No need to even go over this one – there is more construction in 2013 and into 2014 than probably ever before in Nosara. Driving around, you can’t escape a construction site within walking distance.
4) The market will expand outwards and upwards. As the subdivisions in the beach areas get smaller and smaller, those who are coming to Costa Rica to live in harmony with nature, will be turned off by the 200-300 square meter lots being carved out in the areas closest to the beach. Buyers will find that the risk reward for searching for properties just outside the main beach areas will give them flexibility in saving the majority of their budget for construction, and not just on the land price. Additionally, sophisticated buyers looking for a “second home” will want more property for the same price, and will look elsewhere besides the beach lots, for privacy and tranquillity. Additionally, I anticipate that new markets will open in the mountain areas surrounding Nosara because of the cooler, much more comfortable climate, and the amazing views.
The markets outside of Nosara were pretty cold for most of 2013 but there was a flurry of activity in the 4Q and going into 2014. These are once again, viable, active markets.
5) The rental market will go from “red hot” to “inferno-surface of the sun-nuclear fusion”. You can’t stop the best press – word of mouth – and events have been set in motion that only bode well for the real estate market here. Although many clients are here looking for a property “to call their own”, we will see more investors and financially savvy buyers entering a market where the requirements for a property is different than those looking for a vacation home for themselves.
Also no need to review this one – The rental market cannot keep up with Supply. Christmas and New Years, are standard to be booked over a year in advance. Most rental homes and hotels were operating at 100% capacity during the high season and were not dramatically affected by the slower tourism seasons from May-August, since the numbers were still high when compared to prior years. In Fact, 2013 marks the first “rainy season” of September and October that nearly every business, restaurant, and shop in Nosara remained OPEN FOR BUSINESS. That is an indication of the transition year 2013 has proven to be.
6) Large scale developers will enter the market in force. Real estate investors have had enough time “sitting on the sidelines” They are ready to act, and act in force. As returns for traditional investments such as stocks, bonds, and commodities dry up and can only offer rates in the 1%-3% range, large scale real estate developers will be looking for the next “big” thing, and its just a matter of time before we see some very special projects going forward here. I do believe that any developer that is willing to put money to work in Nosara will also try to stay true to the ideals and philosophies laid down the by forefathers (and mothers) of the area, and develop properties in line with expectations for the area. Responsible development is the key, as Nosara is a very unique and special area. But, it is ready for a large scale, sustainable development that will provide high quality accommodations to the area, as well as amenities, in a uniform and productive manner.
To this date, no large scape developers are moving forward – maybe this prediction was a bit premature, only time will tell in 2014!
