REAL ESTATE, REAL GAINS
2017 proved to be a pinnacle year for real estate investment, and 2018 is poised to reach even greater heights.
The numbers are in, and 2017 was great year for anyone with investments in Costa Rica's real estate market. Real estate investment funds, also known as real estate investment trusts (REITs), entered the Costa Rican market in 1998 and have since helped to create a robust real estate sector. Confidence in Costa Rica's real estate sector was further solidified most recently by American Tower Company's REIT performance in 4Q2017. Succinctly, the holding group's REIT was upgraded from a “sell” rating to “hold,” indicating expected growth and continued faith in the sector in Costa Rica and the region.
According to Business News America, in the year measured from April 2016 to March 2017, real estate investment funds in Costa Rica spent USD284 million on 32 properties. The average rate of return over this period was 6.1%. By April 2017, total assets managed amounted to USD1.33 billion, representing a 26% YoY increase as measured by securities regulator Superintendencia General De Valores (SUGEVAL).
Two investment funds (SAFI), BCR SAFI and Improsa SAFI, held 133 properties that amounted to over 90% of total investment as of March 2017. Improsa CEO Jaime Ubilia expects the real estate sector to continue progressing, becoming an even more significant pillar of the economy.
On the financial side, investment fund managers and brokers largely focused on commercial real estate as well as office buildings and warehouses. In an exclusive interview with TBY, Carlos Robles, General Manager of commercial real estate services provider Newmark Grubb, revealed that their biggest segments of the brokerage branch are retail, industrial, office space, and land for development. Robles added, “We are also strong in the capital markets and investments side,” which include both private and public real estate funds.
Construction companies and real estate developers are in sync with investors. Several TBY interviews with construction companies and real estate developers in Costa Rica confirm shifts toward mixed-use spaces in all segments, signaling the real estate investment success seen in Costa Rica is likely to continue. Mixed-use projects are on the rise as socio-economic trends move demand toward all-inclusive properties that make the most of limited land.
Beyond segment diversification, investment is diversifying across geography as well. Aldesa, a consulting company and one of the longest-standing companies on the Costa Rica Stock Exchange, has an Income and Surplus Real Estate fund with properties in all seven provinces. Robles noted the increased development and investment opportunities outside of San José, in Guanacaste, and Limon specifically.
Major players in the real estate sector are expecting continued growth within Costa Rica but are also eager to expand regionally. Many are using success in Costa Rica as a launch pad for entering other markets in Latin America such as Panama, Colombia, the Dominican Republic, El Salvador, and Nicaragua.
Acobo Vista's core business are REITs and brokerage services, which started in Costa Rica in 1976. Recently, especially following the 2008 financial crisis, it is seeing both increased interest in non-financial assets from investors as well as strength in regional expansion.
Diego Soto Solera, General Manager of Acobo Vista, shared the company's regional ambitions with TBY: “Hopefully by the second half of 2018, we will be trading in all Central American countries … Our strategy is to cover the Caribbean and Central American regions before moving on to South America.” Totaling almost USD40 million in Central America, Acobo Vista's fund is registered in Panama, El Salvador, and Nicaragua, with plans to be registered in Guatemala and Honduras by the end of 2017 and first half of 2018, respectively.
The indications of a successful 2018 in Costa Rica's real estate market abound, and financiers are well positioned to capitalize on the country's high performance to unlock regional opportunities.
REAL ESTATE, REAL GAINS
TABLE OF CONTENTS
Interview
Yamileth Astorga, President, Costa Rican Institute of Aqueducts and Sewers (AyA)
TBY talks to Yamileth Astorga, President of the Costa Rican Institute of Aqueducts and Sewers (AyA), on the challenges of providing high-quality potable water and working to prevent a water deficit.
read articleInterview
Luis Carlos Delgado Murillo, President, National Supervisory Council for the Financial System (CONASSIF)
TBY talks to Luis Carlos Delgado Murillo, President of the National Supervisory Council for the Financial System (CONASSIF), on the importance of collaboration between the private and public sectors and facilitating new business.
read articleInterview
Minor Rodríguez, General Manager, Coopesa
TBY talks to Minor Rodríguez, General Manager of Coopesa, on being the only self-managing cooperative in the world dedicated to heavy aircraft, the importance of communication, and maintaining a flat and democratic governance structure.
read articleReview
Reaching the Sky
The construction sector in Costa Rica has recovered significantly from a slump in 2016. However, the country has much to accomplish, especially in terms of ensuring new residential projects are inclusive for all income levels and fixing the infrastructure problem.
read articleInterview
Dr. Fernando Llorca Castro, Executive President, Caja Costarricense del Seguro Social
TBY talks to Dr. Fernando Llorca Castro, Executive President of Caja Costarricense del Seguro Social, on the importance of institutional longevity, joining the OECD, and bringing standardized services to every part of the country.
read articleFocus: Education Training
Get the Ball Rolling
One of the main factors that attracts investors to Costa Rica has been its skilled human capital. For this purpose, the government and academia are collaborating to improve programs and better align them to the requirements of several industries.
read articleReview: Education
Class Is In Session
High levels of public investment have made Costa Rica's education system one of the strongest in Latin America, and government leaders are working to improve teacher quality and ensure that the poorest Costa Ricans have access to quality secondary and tertiary schools.
read articleInterview
Marco Robert, General Manager, IMC Interamericana Medios de Comunicación
TBY talks to Marco Robert, General Manager of IMC Interamericana Medios de Comunicación, on the importance of articulating a clear philosophy, the industry's biggest weaknesses, and the ideal advertising setup.
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