Main Factors that influence the total construction cost in Costa Rica

By September 28, 2013construction

Here is a list of the main factors which influence the total construction cost and also the future costs running the property. Most of them are obvious but perhaps its still helpful to list them and also explain some of the local issues which might be not so obvious. We often see that future owners come with expectations which they bring from their home country and forget about the fact that Costa Rica has its own sort of issues especially with the infrastructure. Other factors which are perhaps big ones in the USA like real estate taxes are at least so far not the main factors influencing total costs to the future home owner.

Property & Infrastructure

  • Location of property: The further away from paved roads and the further up a steep mountain you are the higher the costs will be. But the climate gets better, breezes get better, and you are away from the highway which benefits from the noise but also from local petty thieves which usually not venture up steep mountains.
  • Road quality: The longer and steeper your road is the higher the costs will be to maintain it. In Costa Rica usually the owners along a road are maintaining the road even if its a public road. Only in very few instances usually if ICE has something to maintain up a hill they will repair a road.
  • Gradient and drainage of land: Steep hill side building will always be more expensive than building on flat land. We built most of our houses on stilts so we touch the land as little as possible – still the foundation cost will be higher than on flat land. Special retaining walls or drainage can be very expensive so its very important to keep that in mind when buying a property. Usually the cheaper lots are the very steep ones and a considerable amount of money has to be invested to retain the house or driveway. Those costs can rival the construction costs for the whole house.
  • Distance of transporting electric to building site: Another novelty in Costa Rica is that usually the developer or owner has to bring electricity up those mountains or closer to the building site. After they are built and paid for ICE takes them over and connects them to the grid. ICE only connects from the last post to the meter box which has to be a couple meters from the last post. The meter box and all connection material has to be installed by the home owner. So if your driveway is long you might have to bring in more posts or bring underground cables in if you don’t want to see those posts. Both options obviously are time consuming and expensive.
  • Distance of transporting water to building site: Same as with the electricity or the roads the developer or home owner has to bring water to the site in rural areas where there is no public AIA water system in place. But even if there is a water system in place usually you cannot rely on it. So either you will need your own well – best option but expensive – or you can connect to a well maintained system in your community. Hard to believe in the tropical rain forest with 13ft of rainfall a year we have water shortages in some areas from January to April or the dry months. So having a reliable water source is essential. You can always make electricity with solar or hydro or buy a better 4×4 if your road is bad but a water shortage is a real problem.

Engineers & Architects

  • Quality, training and design philosophy of Engineers and Architects: We worked in the past with several designers, architects and engineers from the US and from Costa Rica. We had the luck to work on one project with some really amazing  design professionals from New York and we learned a lot working closely with them for over a year. While we where very impressed by those professionals I have to say we are not impressed by the local ones. Please see the separate blog post here for more information on that subject.

Quality of construction

  • Type of Construction and materials used: Obviously the materials used influence the total but they also will influence the cost of future maintenance and upkeep. Also the combination and weight of materials have a big influence since a heavy building will need stronger and heavier foundations and might need more retaining walls.
  • Size of construction: An underestimated factor is the size of the overall construction which goes back to the design and the architect. Especially in tropical construction usually the indoor areas can be much smaller if the place is well designed. More space can be designated to covered porches since more time can be enjoyed outdoors.

Future costs operating the property

  • Infrastructure costs: As already mentioned above the upkeep costs for roads, electricity and the water system are very important factors in Costa Rica. But also the cost for basic internet service can be quite high depending on your location and type of connection available.
  • Local taxes: Taxes are at least so far not a huge factor but since the country and especially the local municipalities need money taxes are increasing. Especially taxes geared to the richer foreigners are going up every year. Some owners for beach front concessions already received new evaluations for their property and tax bills for several thousand dollars for a small parcel near the ocean. Also a couple years ago a luxury tax got introduced for higher end villas all over the country. For sure more of the same will come.