Wednesday, 8 July 2020

A Buyers Market: Highrise Apartment Availability in Costa Rica On the Rise

Vertical housing options continue to grow and their overall condition is healthy, but sales have slowed since 2018, due to the caution of buyers and financial institutions.

The vertical housing options continue to grow in Costa Rica and their overall condition is healthy, but sales have slowed since 2018, due to the current economic situation that has increased the caution of buyers and financial institutions, which increases the difficulty in selling and the high prices of some housing projects.

Although sales are still on the rise, the number of high rise units available in the Costa Rican market has increased, from 888 to 1,213 between 2017 and 2018, and 1,418 up to June 2019.

Pedro Sanchez, director of Newmark Knight Frank Central America, (NKF), explained that the speed of sales was reduced significantly – in principle – by the environment of economic uncertainty, but added that prices also influence, telling that “… a significant percentage of vertical projects have high prices that limit the number of potential buyers.”

Sánchez pointed out that “… The average availability rate has always been in a range without greater volatility year after year. Currently, San José northeast (65%) and Alajuela (39%) have the highest availability rate, but it is important to mention that they are areas with little product at a general level. Of the most positioned areas and with more inventory, the one with more availability is currently San José east, with 36%.”

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NKF data also show that some areas of the Greater Metropolitan Area (GAM) have average percentages of availability, without being considered an alarm signal by their analysts.

Specialists in the field agree that the projects with the best expectations are those with strategic location, have above-average benefits and those that offer cost management facilities.

Figures show that in the first quarter of 2019 in Costa Rica, 20 environmental impact studies were presented to develop condominiums, apartment buildings, and other housing projects, which add up to a global investment of approximately US$76 million.

In the face of the reduced number of potential buyers with payment capacity, there are developers who offer programs such as rent to buy, where the unit can be rented for a period and the rental payment applied to the purchase. Others have presale offers or longer-term repayments. Good quality amenities has become an industry standard for the attraction of potential buyers.

José Ignacio González, senior market research and consulting analyst at Cushman & Wakefield, recommends mixed-use projects for future housing developments.

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“Mixed-use projects allow people to have to travel less to different places since a single site offers multiple options. The developers, too, have understood the high travel times that people currently have, which has caused them to look for central or strategic locations for new residential projects,” González said.

The value of the location in a project can also be measured by the proximity to public transport, to corporate office complexes, industrial areas, schools, and universities and shopping centers.


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