11 circumstances with a negative impact on property values in Costa Rica

November 15, 2017

There is an amazing number of undesirable conditions that can have a negative impact on your property value in Costa Rica. The time to look at these is before you purchase, Then you still have time to change your decision.

By buying a property in Costa Rica, you will have the advantage that certain negative circumstances don’t exist here – nuclear plants, heavy industry, sinkholes or fracking, just to name a few.

But Costa Rica has its own set of issues. Some of them you get used to after a while. I like William Toles Father’s quote: “You can get used to hanging if you hang long enough.”

You should do all the necessary homework before you close on your property purchase. Knowing the facts will make it easier to walk away from the purchase, rather than trying to revert any of the following 11 circumstances:

  1. Garbage dump or landfill

In Costa Rica,  there are open dumps as well as landfills; open dumpsites are legal here. Both have a huge impact on property value. Unfortunately, it is almost impossible to find out when and where future open garbage dumps and landfills will be created.

They both contaminate the soil, groundwater and drinking water, and generate unhealthy toxic gases. If your property is downwind from an open dumpsite, the smells can be horrible at times. And if your property is on the route of the garbage trucks as they come and go, the foul odors will also influence your property value.

  1. Train tracks

In Costa Rica, the railroad’s right of way is five meters on either side of the railroad track. A property next to the railroad track has a registered easement on the property title.

President Jose María Figueres closed the Costa Rican Railway Institute (INCOFER) in June 1995, prompting many homeowners to incorporate the five-meter right of way on their side of the track into their property by moving their fence or wall. There are several condominiums that have houses built on the five-meter line.

In 2005, passenger trains were reactivated and they service certain areas of the Central Valley.  Therefore, if there is an unused railroad track behind the property you want to buy, there is a risk in doing so. The property value will take a massive blow if and when the train starts running again.

  1. Power lines

Do power lines cause cancer? You will find articles that say there are hundreds of studies that show that EMF pollution will affect your health. Others say they won’t, but that the lines should be buried because they’re ugly.

However, both health and visual concerns are perfectly good reasons for property buyers to say no to an otherwise well-priced and beautiful property.

  1. Waste and recycling warehouse

There are many small warehouses that recycle materials in Costa Rica. Some are located in industrial parks but I have seen quite a few in residential areas. In Costa Rica, a large variety of articles are recycled, such as paper, plastic, cardboard, electronics, metals, batteries, waste oil, toner, tires, adhesive, polymer and asbestos residues, solvents and chemical products, copper, aluminum, cans and many others.

Some of these products are toxic waste and others are a fire hazard. Having a waste and or recycling warehouse in the neighborhood will reduce your property value.

  1. Highway frontage

The Costa Rican government does not build new highways very often, but it does happen. A whopping 32 years passed between the design and inauguration of only 77 kilometers of the famous Highway 27. The highway project between San Carlos and the Central Valley was started 48 years ago and is still not finished.

Nonetheless, you don’t want to have thousands of cars coming by your bedroom window every day. Do your homework about projects and plans in your area.

  1. Airport

Unless you’re deaf, living near an airport can be a noisy situation. Fortunately, we don’t have that many airports in Costa Rica – and even when the government plans a new one, it will take a lifetime to find the financing to build it.

If you don’t know the country well, it is pretty easy to find out where the airports are located. Google has an incredible feature that will show you every airport on national territory when you do a search for airports in Costa Rica.

  1. Hoarders

Having hoarders next door is nothing that you can really plan for. The good thing is that you will notice a hoarder on your first visit. A car wreck sitting up front, tires in the front yard and a backyard full of junk will show you all you need to know.

You might want to peek over the neighbor’s fence before buying; it will save a headache and a lot of money.

  1. Crime

Unless you’re a criminal yourself or want to buy pot close to home, you probably want to stay away from high-crime areas. It is pretty easy to find out if there are many home invasions or other crimes where you want to purchase a property. Be aware that only violent crime will affect property values in Costa Rica.

  1. Volcanoes

Volcanic eruptions will definitely impact property value. Unfortunately, we don’t know when a volcano will erupt. And when it will, is it going to be dust or rocks flying through the air? How much will the homeowner suffer from this eruption?

I once had a client who didn’t want to live close to a volcano. I recommended he should buy a property in Florida but to stay away from Wakulla.

  1. Landslides

When visiting a property you want to buy, look up.  If there is a mountain above the property, you want to check on landslides. A landslide downhill from your property will also affect you. See if the property might need any retainer walls. They can either make a serious dent in your finances or hurt your property value if you don’t build them.

  1. Flooding

There are certain areas in Costa Rica that will flood during the rainy season, every year. Unless you enjoy a wading pool in your living room, do your homework.

How much?

There is no true formula to calculate how much the property value will be reduced due to the above factors. Some real estate agents recommend analyzing properties with similar physical attributes that are not influenced by these circumstances.

I have seen statistics from large U.S. cities that carry the most incredible data, such as a figure that shows housing prices within 0.1 miles of a registered sex offender fall by 4% on average. In Costa Rica, we don’t have statistics like that, so we cannot use them to calculate the effect certain circumstances have on property values.

In my opinion, it is very difficult to appraise a property correctly, as I have stated in another article. It’s impossible to say if there is a 10% or a 25% impact on the value due to some circumstance. So how should you handle this?

You could come up with all kinds of formulas that calculate variables, but you won’t know what the value is until you have a buyer’s agreement to purchase. Start asking the price that your real estate agent recommends. Otherwise, study the market. If the property doesn’t sell, keep lowering your price until you have a serious offer.

Ivo Henfling, a Dutch expat who has lived in Costa Rica since 1980, founded the American-European Real Estate Group in 1999 which was the first functioning MLS with affiliate agents from coast to coast. Ivo Henfling can be reached at (506) 2289-5125 / 8834-4515 or at ivo@american-european.net.

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