The first half of 2014 has not been very auspicious for construction firms in Costa Rica, at least compared to previous years. According to forecasts by the national Chamber of Construction, economic activity in this sector has been marred by a loss of 10 percent in terms of square meters built. A major issue has been the United States dollar strengthening to approximately 540 colones, although the rise in building costs, labor and inflation are weighing heavily upon this sector.

 

Current projections reported by Guillermo Carazo, president of the Chamber of Construction, indicate that the situation will improve only slightly by the end of 2014. To this end, Mr. Carazo explained his concern in a recent blog post published by the Chamber:

 

“We are very worried because a prolonged slump in this sector could result in the loss of 10,000 jobs.”

 

Mr. Carazo and other leaders of the residential and commercial building sector in Costa Rica have made their concerns known to President Luis Guillermo Solís. Aside from the currency exchange issue, there are other factors impeding overall growth such as inadequate infrastructure, water outages and bureaucracy.

 

The only hope at this point is in residential construction. Demand for new homes is high as evidenced by the recent Expocasa. The introduction of new financing methods such as the 40-year mortgage with no down payment is attracting would-be homeowners, although mortgage underwriting guidelines are still very strict.

 

Residential property pricing in Costa Rica is very uneven, particularly in the smaller housing markets intended for expats and foreigners where speculation and greed prevail; however, new residential construction projects that involve high-rise condominium towers and gated communities are bringing uniformity to residential real estate values.