Has the Pandemic Exacerbated Gentrification in the Coasts of Costa Rica?

In February 2019, before Covid-19, the Financial Times reported that American property buyers were flocking to prime homes in Costa Rica that back then cost “a fraction” of others in the Caribbean. Property prices in Guanacaste, the coastal province where most foreigners buy, were lower than in the pre-financial crisis peak of 2008.

Fast-forward three years, crossed by the first pandemic in a century, and the same British newspaper tells a whole other story. Sources from the real estate sector of the country, who are used to doing business mostly with Americans and Europeans, were cited in March 2022 saying that they saw prices double in six months in 2021.

In 2019, it was pretty clear that expats were spending much less living in Costa Rica than back home, as was mentioned by the Financial Times. But now, prices are rising for everyone: from foreigners to locals. “Rising prices are even causing some recent immigrants to reconsider their moves,” said the newspaper a couple of months ago.

The migration boom Costa Rica has experienced in the times of Covid-19 was not expected at all, and some of its effects can be troubling. Foreigners flocking to buy here sometimes “have big cars and a big air-conditioned house,” which collides with difficult life conditions many locals of the areas that are becoming more popular face.

“Locals are seeing no public spending on infrastructure, and have begun to complain,” a real estate source told the Financial Times. Areas such as Nosara and Santa Teresa, in Guanacaste, are becoming full of foreigners taking long-term rentals. The digital nomads trend is partly responsible for this, but not the only one.

“It’s becoming a problem for locals. These areas are becoming a bubble, like New York and LA, and it’s not sustainable at all for nationals or locals,” some other source said. There is “rising tension” between locals and “some divided communities of foreigners who don’t integrate well,” she added.

Is Costa Rica suffering gentrification?

The Merriam-Webster dictionary defines gentrification as “a process in which a poor area (as of a city) experiences an influx of middle-class or wealthy people who renovate and rebuild homes and businesses and which often results in an increase in property values and the displacement of earlier, usually poorer residents.”

Although gentrification has many meanings, we’re using this one to try to answer the question of if Costa Rica is suffering gentrification as an effect of the pandemic-related migratory shift the whole world has been experiencing. According to what the Financial Times and others have described, a gentrification-like process is likely to going on.

Guanacaste is certainly becoming the favorite destination of foreign real estate investors and expats looking for a second home, or maybe looking to relocate to a Tropical country like ours. Research by the Ranfer-Networking firm published in November 2021 showed that Guanacaste is the country’s hottest spot for this.

The beaches of Celeste, Nosara and Palmitas, all of them in Guanacaste, were identified by the study as the hottest ones. Flamingo and Avellanas, in the same province, are attracting more visitors each month. And the Nicoya Peninsula, with places such as Santa Elena and Carrillo, is also booming in this sense.

“This situation means that the scarce availability of land that remains is obtained at the price of gold, in many cases,” La República newspaper reported. Not only for real estate — rentals and hotels are so expensive that Costa Ricans often joke that only the wealthy travel to Guanacaste, while the rest travel overseas, since most of the time it is cheaper to go to another country.

“The pandemic has brought a new kind of tourist to Costa Rica, and I don’t think the country was ready for it,” the CEO and founder of startup incubator Slidebean, Jose Cayasso, said recently in a video where he travels to Nosara to see the effect digital nomads are having in the local community.

Cayasso quickly finds out that there are no places to rent in Nosara anymore. Housing prices have driven up and the essence he remembered from the place has suddenly transformed into something else. He interviews a young digital nomad who just bought land in the wealthy part of Nosara, and shows how poor locals live on the other side.

“This newfound popularity [of Nosara] may just destroy the very essence of what brought people here in the first place,” you can hear in the video, which you can watch below.

By reading these articles, hearing these stories, seeing these type of videos, and actually listening to what both locals and foreigners who are in the area have to say, one could conclude that some parts of Guanacaste fit in the above mentioned definition of gentrification. Sadly, there are no official reports or databases to confirm this properly.

Is this a new thing?

Although the pandemic clearly changed migration trends to Costa Rica, there are things going on in Guanacaste that are not brand-new. Back in the 80s, Costa Rican authorities and businessmen decided to shift the economic focus of this province from cattle and agriculture to tourism and real estate.

“Historically, the province of Guanacaste was linked to cattle ranching, with a prominent presence of US citizens who bought land, and to agriculture for export, mainly sugar cane and rice,” an investigation from 2019 reads. However, the fall in the price of meat in the decade of 1980 meant that livestock activities declined.

Because of this, “authorities of the province and local businessmen saw in tourism an alternative that, in addition, could benefit from the economic links that had been built for decades with North American investment.” Nevertheless, another study from 2016 found out that this had terrible effects for some local communities.

“In countries such as Costa Rica, coastal communities have been pressured by the processes of territorial reorganization promoted by the State and which have favored their displacement from the first coastline for the benefit of tourism-residential investments,” the second mentioned investigation says.

“The way in which the territorial planning plans for the maritime-coastal zone of Costa Rica have been carried out in recent years, through regulatory plans […] are an example of how the State acts in favor of large businessmen against coastal populations,” the study added. Call it gentrification or not, wherever this happens problems arise.

“The growth of tourism [in Guanacaste] caused land prices to rise and displacement processes of the local population, especially along the coastline, dedicated to fishing activities. This has given rise to various conflicts over land, water and against the destruction of ecosystems,” the investigation found out.

It is no surprise that Guanacaste, as well as other coastal provinces, is one of the regions with lowest participation in the Costa Rican elections. These places were promised development and prosperity, but with the years they kind of found out that it was development and prosperity for a few at the expense of locals and nature.

This is not to say that Guanacaste is becoming a nightmare. But it is changing, and fast. And it seems that no one expected this to happen, so there wasn’t really a plan for when so many foreigners decided to come and invest and live here. Authorities should definitely try to put order to make things better and easier both for locals and visitors.

We are gathering more information on this subject and talking to locals and foreigners in Guanacaste and other coastal regions of Costa Rica that might be affected by gentrification. If you have some comments or suggestions for further articles about this, please reach out to us. We would love to hear your opinion.