Where Not to Buy

Markets Perhaps Better Avoided

Starting in the early 1980s, Costa Rica began working aggressively to solicit American retirees, even hiring a Madison Avenue ad agency to brand the country as the “world's top overseas retirement haven.” The copywriters did their job. Ask any American about places to retire abroad, and she or he will likely mention Costa Rica. It wasn't a tough sell. Costa Rica is blessed with loads of natural beauty and two coastlines, including one on the Pacific that resembles the best of the southern California coast. Plus, back then, both life and real estate in Costa Rica were cheap. The country instituted a pensionado program of discounts and tax savings for foreign retirees to clinch the deal.

Given the costs, the special benefits, and the beauty of the landscapes all around, retirees didn't mind putting up with San José, which is dirty and crowded and can be unsafe. They were even happy to overlook the country's broken-down infrastructure. What did it matter if the road was unpaved and rutted? Your dream home at the end of it—with the crashing Pacific just beyond your front door—was a bargain.

That was 30 years ago. Costa Rica is a different place today. San José is as unappealing as ever and less safe. The rest of the country is still beautiful but not altogether safe either. Crime has become a big concern for both travelers and foreign retirees. Plus, in 1992, after working so hard the previous decade to woo American and European retirees, ...

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