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How To Smart Invest Overseas

Why Costa Rica’s big picture is catching the attention of big and small investors

In a post economic-crisis world, jittery investors have been viewing traditional markets and investment opportunities with a very cautious eye, with many avoiding the domestic real estate market in the United States altogether. However, in a rapidly evolving world, new markets continue to emerge in parts of the world not previously considered as economic opportunities, and new investment paths are appealing to both to small and large investors.

One investment sector that has emerged from that range of opportunities is overseas real estate, where economic growth in certain markets has attracted foreign investment. However, while certain markets offer investment choices with attractive potential returns, the proof is in the pudding. Every investment opportunity carries risks, and overseas real estate is subject to a myriad of political, geographic and economic factors. In fact, before the numbers even start to be crunched, investors should apply their research skills to understanding the characteristics of the markets they are considering, from the people and culture of a country, to their rights as foreign property owners. After that, issues such as capital gains and property taxes need to be assessed in order to truly understand the investment opportunity that is being presented.

In that context, Costa Rica has emerged as a compelling argument for overseas real estate investors, with the added incentive of being one of the world’s most beautiful natural treasures. With its forgoing of military spending in lieu of education, health and infrastructure, Costa Rica is one of the safest countries in Latin America. Its chosen path has led the country down a road to economic stability and investment growth, and to a reputation as one of the safest emerging real estate markets in the world.

Prior to the economic crisis, real estate investments in Costa Rica were rising by 15-20% annually, and the other side of the crisis has seen the market regain stability. In virgin regions such as Costa Ballena, a narrow stretch of southwestern coastal land, recent development is creating investment opportunities projecting 5-10% annual gains for the foreseeable future. Furthermore, the paradisiacal setting of the Costa Ballena region creates additional revenue potential for with its high market demand for rental properties, which greatly exceeds its supply. Add the fact that Costa Rican property tax rates start as low as 0.25%, and that the country imposes no capital gains tax on property sold, and you can start envisioning a Malibu-style investment for as little as 10% of the cost. Holding costs for land in Costa Rica are also relatively low, particularly in comparison to coastal property in the United States.

On the surface, the numbers are enough to catch the attention of real estate investors, however any decision to invest in a foreign market requires far more than superficial measurements. Beyond the “opportunity” that any investment provides, protecting that investment is an essential part of the equation. Costa Rica offers foreign investors the added security of outright legal ownership of any property they purchase, as opposed to some foreign markets that require that property owned by foreigners be held in trust. The country’s legal system also treats foreign and Costa Rican property owners as equals, which enhances investment security and greatly facilitates the process of buying and selling.

Costa Rica’s commitment to its own political, economic and environmental stability also extends protection to foreign investors through a closely-monitored banking system, which includes the presence of U.S. banks and the acceptance of USD throughout the country. The government’s focus on environmental preservation has also led to strict development standards that have drawn the most experienced international developers to the country. In addition to providing high-quality builds in some of the most breathtaking surroundings in the world, some developers have introduced value-added services designed to provide foreign owners with peace of mind, including landscaping, maintenance and security services.

No investment is without risk, but Costa Rica certainly provides a favorable climate to foreign real estate investors in terms of its ROI, growth potential and stability. Property investments in Costa Rica, and particularly in the Costa Ballena region, also come with views overlooking nature in its purest and most spectacular forms. That can be the icing on the cake.