Tourism and FDI Will Drive the Central American Real Estate Sector in 2025

by | Feb 5, 2025 | FDI Latin America

Foreign Direct Investment Will Promote the Development of Sustainable and Technologically Advanced Projects in the Region

The Central American real estate sector is gearing up for a year of transformation in 2025, driven by three key factors: sustained tourism growth, the influx of foreign investment, and implementing government policies favorable to the sector’s development.

Danny Quirós, Market Research Director at Newmark Central America, the world’s leading commercial real estate consultancy, highlights the crucial role that Foreign Direct Investment (FDI) will play in this transformation.

“FDI will be a key catalyst for Central American real estate sector development in 2025. Foreign capital will finance major commercial, hospitality, and residential infrastructure projects and facilitate the transfer of advanced technology and knowledge. International investors are introducing modern construction methods and technologies that optimize processes and contribute to creating greener and more efficient projects,” explains Quirós.

Additionally, investments in tourism infrastructure—such as luxury hotels and vacation rental developments—will attract more tourists. This will stimulate the local economy and increase the demand for tourism-related real estate, including rental properties and second homes.

Dynamism in the Industrial Sector

Quirós predicts that the region will continue to establish itself as a strategic hub for advanced manufacturing and logistics operations in the industrial sector.

“Advanced manufacturing has a promising future, especially in automotive, medical devices, and electronics industries. Companies are optimizing their supply chains, and the region is becoming a crucial center for producing medical and automotive components,” he notes.

The expert points out that the rise of e-commerce is reshaping logistics infrastructure needs. “The demand for e-commerce and logistics centers is evolving rapidly. Advances in automation and artificial intelligence drive investments in technologically equipped industrial properties, with developers adapting their designs to include sustainable and innovative features.”

“In Costa Rica, the submarkets of Alajuela, Cartago, and the southern part of San José, as well as the northwest of the Greater Metropolitan Area (GAM), remain attractive for industrial development. Panama is experiencing significant growth in the Eastern and Reverted Areas, with promising prospects in the Northern Periphery. In Guatemala, Villa Nueva and Escuintla are consolidating as natural growth hubs,” Quirós details.

Transformation in Retail

Regarding the retail sector, Quirós highlights a significant shift toward more sophisticated shopping experiences.

“Retail spaces are undergoing a fundamental transformation, integrating hybrid experiences that blend physical and digital elements. Shopping malls are evolving into experiential destinations where consumers can socialize, enjoy entertainment, and participate in community events.”

“We are also seeing growth in pop-up store models, which offer brands flexibility to test new markets without long-term commitments. Integrating Artificial Intelligence (AI) and data analytics enables more personalized experiences, tailoring offers and recommendations based on consumer behavior,” he adds.

Evolution of the Office Market

Regarding the office market, Quirós notes, “The current availability rate reflects a market that remains favorable for tenants. Although there is a continuous absorption of space, the occupancy pace has not outpaced the introduction of new supply, a pattern likely to persist throughout 2025.”

“Prices will remain stable, influenced by a significant stock of second-generation offices that offer more flexible leasing conditions. Flexible workspaces have established themselves as an agile solution for both startups and large corporations looking to optimize operational costs and enhance productivity,” Quirós explains.

In Costa Rica, the west of San José, Sabana, and Heredia continue to offer the best opportunities for office development. In Panama, the Reverted Areas and Santa María present the most favorable conditions for business growth. In Guatemala, Zone 10, Zone 9, and peripheral areas such as Cayalá will be the submarkets with the greatest development opportunities in the short term.

Although the trend toward hybrid work is expected to continue declining, as observed throughout 2024, this shift should not impact users’ preference for environments that promote flexibility and efficiency. Companies will continue to assess ways to maximize productivity and retain talent, with flexible spaces remaining an effective solution to these needs.

In Guatemala, the growth of the services sector, particularly in business process outsourcing (BPO) and technology, will continue to drive demand for office and commercial spaces, providing local developers unique opportunities to plan projects that meet the sector’s increasing needs.

Sustainability and Technology

Looking to the future, Quirós emphasizes the crucial role of sustainability and technology in the Central American real estate sector.

“Developers increasingly focus on eco-friendly designs, using sustainable materials and renewable energy sources. Energy efficiency and carbon footprint reduction are priorities for multinational tenants, enhancing the appeal of properties and lowering operational costs.”

Real estate developments are beginning to integrate solutions such as home automation, smart building management systems (BMS), and digital platforms that enable enhanced supervision and efficiency. These advances facilitate the creation of more comfortable, secure, and efficient living and working environments.

Moreover, local authorities and international organizations are trying to incentivize these practices through subsidies and regulations that support investment in green technologies. As awareness and accessibility to these technologies grow, more countries in the region will adopt them at a faster pace.

Additionally, developers leverage AI to analyze user data and preferences, designing buildings that maximize functionality and energy efficiency, making projects more attractive and sustainable for occupants. AI also introduces tools that enhance user experiences, from apps that streamline service management to real-time space customization platforms.

“The integration of Artificial Intelligence is revolutionizing the Central American real estate sector, enabling the creation of more adaptive and optimized spaces. From automating operational processes to supply chain management, AI reduces project cycles and costs while improving the end-user experience,” Quirós concludes.