The Blog

In the following article, an analysis is made of the impact it has had on the Costa Rican real estate sector, the instability in the exchange rate and the uncertainty of what will happen in this sector, using as explained by Jorge Rojas, general manager of Faro Group.

Today, the real estate sector is one of the fastest growing activities in the Costa Rican economy. For this reason, it is interesting to pay particular attention to the instability in the exchange rate and the devaluation of its currency (colon) in so far this year.

There is also a concern in the construction sector, as undoubtedly the increase in the interest rate and devaluation can directly affect this sector since many of the materials used are imported.
Francisco Avilés, general manager at Argo Estrategia explained that:

«The Central Bank has been a little erratic since the beginning of the year in its intervention in the foreign exchange market. This will not necessarily make projects worse, but it did create uncertainty in the buyer. The sector is very dollarized and almost all costs are in dollars and sales are also dollars. In addition, it is not clear the course that will take the colon.

However, this situation could lead to an increase in costs for developing projects and consequently an increase in the price per square meter of construction, although for the moment the prices of these projects remain unchanged, although there is still an Adjustment of prices with importers of the raw material.

The most important thing for the real estate company not to be affected by the changes of the exchange rate is that it makes its projections about these types of policies in time so that they do not affect the projects or the consumers.

Definitely, the value of real estate, both those already built and those in development, as well as the effect on profitability for its holders, will be closely linked to the expectation of cash flow that is expected to generate real estate over time.