Last December I spent a week relaxing in Manuel Antonio, Costa Rica. Manuel Antonio is just north of the Southern Zone. As a reader of these dispatches, you know that Costa Rica’s Southern Zone runs south of Dominical to the border with Panama. It’s an area of deserted sandy beaches and virgin rainforest. Prices stayed low here because this area was difficult to get to. With the opening of the new coastal highway that’s changed. It’s now accessible…but it remains affordable…for now at least.
Here in Manuel Antonio real estate prices are high. Sellers ask $700,000 – $800,000 for a two-bedroom, two-bath condo…or $1.5 million for high-end penthouses.
Multi-million dollar homes nestle in the rich green hills overlooking the dolphin- and whale-rich Pacific. Nature is everywhere…howler monkeys…brightly colored birds and butterflies…and the sunsets are among the most dramatic that I have seen.
I see the appeal. I really like it here, and I had a great vacation. We chased dolphins, whales and sunsets by boat. Our guide got monkey families, snakes, and orange and green frogs in the sights of her telescope. The beaches in the national park are amazing. At night we could choose from a great variety of top quality restaurants.
This isn’t the type of early-in real estate market I look for though. The 1/13th fractional units attached to the hotel I stayed in were priced at $150,000 and up. (You would share ownership and use of your condo with 12 other owners). The big opportunity here passed a decade ago. Those who got early-in made a killing.
That’s why I’m focused farther down the coast in the newly accessible Southern Zone.
I did spot an opportunity in Manuel Antonio that might appeal to a small number of our readers. Tourism here is strong…and high-end. High-end rentals can stay full up to 70% of the time. Homes typically rent for $100 per bedroom per night.
That means a six-bedroom home can rent at $600 per night. A home that could generate this type of rental income would have set you back $3 million three years ago. Today, if you have $1.4 million (and maybe a lot less if you have a deeply distressed seller) to spend you’re in the game. There are some amazing homes on the market.
One that I saw was truly Balinese-style. In fact, it was built in Bali, taken apart and then put back together on an amazing plot overlooking the ocean. I saw other homes where you could generate a reasonable rental income or consider converting them to a guest house or B&B. As with other locations where North Americans bought in the peak of the U.S. housing bubble, opportunities come along where prices are dropped substantially and quickly if the seller needs a quick sale to shore up finances back home.
Today, you can buy for 50% or less of peak prices—but rental occupancy and rates are now back at peak levels.