Building a Luxury Villa in Arenal, Costa Rica: 9.5-Month Timeline and $1.3M Breakdown

Costa Rica Developers Diary – Villa Xanadu Arenal Luxury 5 bedroom Villa 2025

Project Snapshot

Project start: September 2024
Design completed: November 2024
Permits approved: February 2025
Construction start: March 1, 2025
Construction completed: December 11, 2025 (9.5 months)
First guests: December 20, 2025
Total timeline: 16 months

Total investment: $1.3M

• Design & project management: $100K
• Land: $200K
• Construction: $900K
• Furniture & FF&E: $100K

Finished project: https://www.xanaduarenal.com/

Why Arenal, Why Now?

Having co-owned Costa Rica’s largest luxury travel company for over 18 years, I’ve watched Arenal and La Fortuna evolve from a $10-a-night backpacker destination into a world-class luxury experience—where top resorts command $3,000+ per night. Historically, when this shift happens at the beach, luxury villas follow quickly.

Arenal was different.

Despite clear demand—five-bedroom villas at The Springs Resort renting for $5,000+ per night—there was virtually no luxury villa stock. A combination of limited real estate activity and Costa Rica’s long-standing bias toward beach homes kept developers away.

That gap caught our attention.

The Data That Validated Our Arenal Investment

Our business is grounded in tourism and vacation-rental data. When we analyzed hotel performance, rental supply, occupancy, and ADRs in Arenal, the results were striking: average vacation-rental occupancy exceeded 80%, outperforming many beach markets, yet rates lagged far behind luxury hotels.

That mismatch signaled opportunity—and became the catalyst for Villa Xanadu.

According to market data at that time, Costa Rica’s vacation rental market ADR reached $289 (Dec 2023), with occupancy hitting 60.60% in February 2024 Investing Costa Rica. In Arenal specifically, the limited supply of luxury villas meant we could position ourselves to capture premium rates while benefiting from consistent year-round demand driven by the region’s eco-tourism appeal.

Land, Architecture & Concept

The land came first—and conveniently, we already had it. Years earlier, I’d purchased four acres across four lots at the foot of the Arenal Volcano: jungle-wrapped, 10 minutes from town, and perfectly positioned for privacy and views.

Choosing the Right Architect for Costa Rica Villa Development

Next came design. We invited three of our top architects to bid and ultimately selected Studio Anonima, led by Juan Diego Cárdenas.

We knew the villa had to deliver:

• True five-bedroom parity (no “best room” arguments)
• Large, social interior spaces
• A strong emphasis on outdoor living and experience

The result: a sunken outdoor lounge, BBQ dining area, jacuzzi, pool with a slide, expansive social zones, and seamless indoor-outdoor flow.

Design took several months as we carefully studied sun paths, rain direction (La Fortuna is famous for sideways rain), and shade coverage—ensuring guests could enjoy the outdoors year-round. Architecturally, we avoided beach-style modernism, opting instead for dark woods, softer interior tones, and a green pool that blends into the jungle.

Construction Costs in Costa Rica: $1.3M Budget Breakdown

Once construction documents were finalized—down to light switches and outlet placement (yes, I’m obsessive)—we moved into permitting and competitive bidding. We bid the project with three builders, having seen cost spreads of up to 50% on similar projects.

Competitive Bidding Results

Final bids ranged from $900K to $1.2M. We selected Eje Constructivo, a trusted partner with whom we’ve delivered many homes.

We also value-engineered the project further, freeing up capital to upgrade the kitchen and furniture—areas that directly impact guest experience and revenue.

The core team:

• On-site Engineer: Ronald
• Project Manager: Sofia (Belong Costa Rica)
• Interior Designer: Sarahy Flores (integrated from day one)

This structure mattered. Ronald focused on daily execution, while Sofia managed timelines, dependencies, and forward planning—seeing 4–8 weeks ahead instead of just what was happening on site.

Building in La Fortuna: How We Achieved a 9.5-Month Timeline

We broke ground in March 2025. The common refrain? “No way it’s done before Christmas.”

Costa Rica has a reputation for late, over-budget builds—but this is what we do for a living. Our contracts included strict completion clauses, penalties for delays, and bonuses for early delivery.

Weather Challenges in Arenal’s Unique Climate

Weather was our biggest challenge. Arenal sits on the continental divide between the Pacific and Caribbean, meaning rain can come at any time, from any direction. Pouring foundations and concrete during heavy rain isn’t advisable, so timing mattered. When we could push, we did. When we had to wait, we stayed patient—and made up time with weekend work.

Subcontractor Coordination or How to Succeed Where Most Projects Fail

The other major challenge was subcontractor coordination: windows, doors, kitchens, plastering—each task dependent on the previous one. This is where projects typically slip. Without strong project management, one missed measurement cascades into weeks of delays. Sofia’s oversight was critical in preventing that domino effect.

According to industry data, building a house in Costa Rica typically takes between eight months and a year (Arquitectos JH), with high-end luxury homes requiring approximately two and a half years—one year for design and approvals, and 18 months for construction (Sarcoarchitects). Our 9.5-month construction phase puts us well ahead of standard timelines.

On-Time Delivery Result

Villa Xanadu was completed on time, welcomed its first guests within days, and stands as one of the most efficient—and frankly enjoyable—builds we’ve ever done.

That success came down to leadership, structure, and team alignment.

Five Key Lessons for Building Luxury Villas in Costa Rica

1. Your project is only as strong as your team.
   Especially the Project Manager. You need one clear point of accountability—one “throat to choke.” Foremen and engineers are vital, but they’re often too deep in daily execution to lead the full project timeline.

The separation of roles proved essential: Ronald (engineer) managed day-to-day construction quality, while Sofia (PM) orchestrated the bigger picture—ordering materials weeks in advance, coordinating subcontractors, and preventing the cascading delays that plague most builds.

1. Expect delays—plan for them.
   Build in buffer time and break the project into phases. If you only stare at the finish line, you’ll burn out.

Only 25% of construction projects in Costa Rica meet their original deadlines (Arquitectos JH). We built our schedule with weather buffers and contingency windows, allowing us to absorb setbacks without derailing the overall timeline.

1. Hold weekly meetings—no excuses.
   Even when there’s “nothing to discuss.” Getting stakeholders in the same room creates momentum and accountability.

Our weekly meetings kept everyone aligned on dependencies, upcoming material deliveries, and potential bottlenecks. This prevented surprises and allowed the team to solve problems before they became delays.

1. Bring in a dedicated finish crew.
   Builders build. Finish crews finesse. Fine painting, furniture installs, wall hangings—these details define the final product.

We brought in specialized teams for final touches rather than asking our construction crew to handle finesse work. The result: professional-grade finishes that meet luxury vacation rental standards.

1. Enjoy the process.
   It should be hard. Anything worth doing usually is.

Arenal Luxury Vacation Rental Performance and ROI Potential

Villa Xanadu opened December 20, 2025, proving market demand for luxury inventory in Arenal. The vacation rental opportunity here is substantial.

Arenal’s Vacation Rental Market in Recent Year and 2026 Estimate

La Fortuna draws over 1.5 million visitors each year, yet luxury villa supply remains limited compared to beach destinations(ICT). Costa Rica welcomed 1,209,835 million tourists in the first four months of 2025, an 11.93% increase compared to the same period in 2024, this upward trend has continued into January 2026, reinforcing sustained growth in demand for inland and nature-focused destinations such as La Fortuna.

For vacation rental investments in Costa Rica, investors should expect a net return of 4%-6% (ROI) on average, with properties within walking distance to attractions or with premium views achieving 65% occupancy in high-performing markets. In Costa Rica’s Central Pacific vacation market, a Cap Rate between 6% and 9% is generally considered healthy for a turnkey vacation rental.

However, investors strategically choosing locations in underserved luxury markets can achieve returns over 10% per annum (Investing Costa Rica). Arenal’s combination of high occupancy rates and limited luxury supply positions properties like Villa Xanadu to capture premium positioning.

Frequently Asked Questions About Building in Costa Rica

How long does it take to build a luxury villa in Costa Rica?

Standard luxury builds require 12-24 months. Our 9.5-month construction timeline was exceptional due to strong project management. Expect 8-12 months minimum for well-managed projects with experienced teams.

What does it cost per square foot to build in Costa Rica?

The starting price for custom home construction is approximately $120 per square foot ($1,200 per square meter) Ticonstru, though luxury homes with premium finishes can reach $242 per square foot when including all services. Location significantly impacts costs, with tourist destinations like Guanacaste reaching $1,220 per square meter.

Is Arenal a good investment for vacation rentals?

Data shows Arenal vacation rentals achieve 80%+ occupancy with limited luxury villa inventory. The market gap between hotel rates ($3,000+/night at top resorts) and available villa stock creates opportunity for premium-positioned properties.

What are the biggest challenges building in La Fortuna/Arenal?

Weather unpredictability due to Arenal’s position on the continental divide, subcontractor coordination, and maintaining timeline discipline. Success requires experienced project management and weather-aware scheduling.

How do I find reliable builders in Costa Rica?

Get competitive bids from minimum three builders, check references on completed projects, visit their work in person, and ensure clear contract terms with completion clauses and penalties for delays. Expect bid spreads of 30-50% for identical scopes.

Final Thoughts: Arenal’s Luxury Villa Opportunity

Villa Xanadu demonstrates that efficient, on-budget luxury development in Costa Rica is achievable with the right team structure and project management discipline. The Arenal market offers compelling opportunities for developers and investors willing to serve the luxury segment in an underserved but high-demand destination.

The key success factors:

• Strategic market selection (supply-demand gap analysis)
• Separated PM and engineering roles (forward planning vs. execution)
• Competitive bidding (we saved $300K through this process)
• Buffer planning (weather and dependency management)
• Value engineering (upgrading guest-facing elements)

Costa Rica’s reputation for construction delays isn’t inevitable—it’s the result of inadequate planning and accountability structures. With disciplined project management, realistic buffers, and clear contractual incentives, you can deliver exceptional results on time and on budget.

Explore Villa Xanadu: www.xanaduarenal.com
Development Consultation: Contact Belong Costa Rica for Arenal investment opportunities

Richard Bexon is the CEO and founder of Belong Costa Rica, with over 18 years of experience in Costa Rica’s luxury tourism and real estate development sectors. He specializes in vacation rental property development and investment strategy throughout Costa Rica’s emerging markets.