Economic Analysis: What to expect of the second semester of 2024?

Melizandro Quirós, economist and executive director of CENFI, shares with us the economic analysis to understand the trends of the real estate market in Costa Rica for the second semester of 2024.

In short, these are the important factors to consider before entering the real estate market in the second semester of this 2024.

Increase in development around free trade zones and co-working spaces.

Considerable growth in the demand for rental housing.

A slight economic deceleration adds pressure to the commercial/industrial segment.

The rise in material costs influences the final value of developments.

Commercial properties are reinventing themselves to stay competitive.

Property prices in the Greater Metropolitan Area (GAM) are relatively high.

• Buyer’s capacity: It remains strong among segments of the population earning between ₡1,450,00 and ₡2,250,00, reflecting a steady demand among individuals with middle to high incomes.
• Financing: There is a lack of financing options for those earning below the mentioned amounts, leading to an increasing demand for rentals.
• Rental trend: The demand for rentals continues to rise in the metropolitan area, indicating a preference for the flexibility and mobility offered by leasing over purchasing.
• Residential construction around Free Trade Zones: Driven by the demand for housing among employees working in these areas who seek to live close to their workplaces.

• Below 10% vacancy rate: The low vacancy rate in the real estate sector indicates a healthy and stable market.
• Moderate rents: Rents are in the process of recovery with moderate adjustments.
• Small or Medium-Sized shopping centers: There is a significant recovery in the occupancy of small or medium-sized shopping centers, indicating renewed demand in this segment.
• Commercial investment: Spaces located in high-economic activity areas show a more solid recovery, possibly benefiting from commercial synergies and increased demand in those strategic locations.
• Adaptation: There is a trend towards the conversion of commercial spaces to meet the new market needs.

• Slow recovery: The recovery of office spaces is slow, with vacancy rates exceeding 10%.
• Contracts: Contracts are becoming more flexible, with grace periods and space swaps, adapting to tenants’ needs.
• Investment: There is investment in office redesign, although this may put pressure on capitalization rates.
• Co-working: Coworking spaces reduce the demand for traditional offices.
• Customer profile: Growing demand from international companies and call center service providers.

• Rental pressure and increased square footage: Low rental prices and slightly larger industrial properties suggest an oversupplied market.
• Inventory: Demand for new spaces and the need to modernize properties to maintain competitiveness.
• Investments outside the GAM: Increased interest in areas like the San Carlos Free Trade Zone and Grecia suggests investment opportunities in regions with less competitiveness.
• Rent differences: Varied rental prices depending on the development of each economic zone, affecting investment decisions.

Exports reached a significant growth in 2023, with a record $18.244 billion. This represents a notable increase of $2.452 billion compared to the previous year.

This is a clear indicator of the dynamism and strength of the national economy, allowing us to position ourselves as an increasingly attractive country for investment.

The market for medical and precision equipment stood out as the absolute leader, reaching 42% of the total exported. Likewise, the agricultural sector positioned itself as the second most important, representing 18% of exports.

The food industry grew by 4%, while the chemical and pharmaceutical industry increased by 13%. Additionally, business services such as call centers or shared services rose to 18%.

This directly influences the potential return on investment in the real estate sector in the medium and long term.

At Nativu #WeAreExperts, we are aware of the changes and projections made by specialists for the second half of this 2024.

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