The construction sector forecasts that in 2021 investments will increase by 2.1% with respect to what was reported in 2020, a rise that would be explained by the execution of public infrastructure projects.
According to the Economic Report prepared by the Costa Rican Chamber of Construction, the growth of the construction activity will be boosted in 2021 by the recovery of public works.
Due to the suspension of several projects and the political, economic and fiscal situation in Costa Rica, it is expected that the economic activity of the construction industry will close the year in the red and for 2021 a scenario of much uncertainty is predicted.
According to data from the Central Bank of Costa Rica (BCCR), the economic activity of construction began to report negative year-on-year variations since December 2018.
After the UCCAEP in Costa Rica began to negotiate the lifting of the blockades with the self-proclaimed group Rescate Nacional, promoter of the protests, several business chambers distanced themselves from that decision and others have expressed their support.
Given the wave of protests and blockades that have been reported in the country, which arose after it was reported that to access a loan from the International Monetary Fund for $1.75 billion, the government planned to tax financial transactions, raise the tax on the profits of companies and persons, and increase the tax on real estate. The Costa Rican Union of Chambers and Associations of the Private Business Sector (UCCAEP) decided to negotiate the lifting of the blockades.
Faced with increasing chaos in Costa Rica due to demonstrations and blockades, a part of the business sector decided, unilaterally, to negotiate with representatives of the movement that incites to protest, and to reject the official call by the President of the Republic.
Offering more amenities in residential complexes and maintaining the discounts offered in housing fairs for longer are some of the strategies applied by real estate developers in Costa Rica to increase sales of new homes.
According to the most recent figures from the National Institute of Statistics and Censuses (INEC), between the first half of 2018 and the same period in 2019 the number of houses built in Costa Rica fell by 11% from 10,753 to 9,620.
In Costa Rica, businessmen in the sector expect that the depreciation of the local currency against the dollar will raise the price of finished construction materials, which are mostly imported.
According to data from the Central Bank of Costa Rica (BCCR) between August and October of this year, the exchange rate of the Colon against the Dollar had a fast rise, and although in recent days some signs have shown that the depreciation of the local currency has declined, businessmen in the construction sector expect increases in costs.
Building on own land and keeping premiums in a trust are part of the new requirements to be met by companies that market houses and apartments in Costa Rica.
According to representatives of the Ministry of Economy, Industry and Commerce, the new rules that would soon enter into force and seek to regulate term sales in the real estate sector are currently in the consultation process with interested parties.
In Costa Rica, importing companies are against the ArcelorMittal proposal, which consists of raising the steel rod income tax from 1% to 15%.
On November 5th, a public audience was held in which importing companies and ArcelorMittal presented their arguments before the Ministry of Economy, Industry and Commerce (MEIC) regarding the proposal to raise the import tariff on steel rod by 14%.
A bill that is being discussed in the Legislative Assembly proposes establishing a tax of 5% on the net sale price of imported or locally produced cement.
The bill establishes that "...the tax on cement produced within the national territory or imported, will be of five percent (5%) on the net sale price, both in the case of the national producer at the level of the production plantand for the importer at the level of the dispatch or storage site, excluding the corresponding sales or value-added tax, as well as any other tax".
The builders' association has reported that 6.4 million square meters were processed in 2017, 13% less than in 2016.
In a statement from the Costa Rican Chamber of Construction (CCC), the president of the organization, Jorge Arturo González, said that "... 'this slowdown highlights the need to boost private sector investment in construction, which has stopped not only because of political uncertainty, typical of an election year, but also due to excessive procedures, high financing costs, legal uncertainty, low competitiveness in infrastructure and high construction costs, among other things'."Seereport by the CCC (in Spanish).
The Setena plans to amend regulations in order to reduce the timescale for ruling on studies for projects with high environmental impact, to 5 months.
At the moment the National Environmental Technical Secretariat (SETENA) is takes between 6 months and a year to analyze and decide whether or not to grant permission for construction projects with high environmental impacts.
Lack of water is stopping productive development, and at the same time the very same disorderly development is causing shortages in several areas of the country.
EDITORIAL
Lack of water is stopping productive development, and at the same time the very same disorderly development is causing shortages in several areas of the country. The Central Valley is one of the areas already feeling the effects of the lack of infrastructure, as well as well defined plans, - a difficulty in Costa Rica- well executed by public institutions.
The Ministry of Finance is proposing to rise to 5% and 3% the taxes on the transfer of vehicles and buildings, respectively.
The government continues to seek alternatives in light of the possibility of the Legislature not approving the bills introduced to raise revenue. The new proposal is to raise taxes "... on transfer of used motor vehicles, aircraft and boats, to 5%, and the transfer of property to 3%." Today, the sale of a home valued at ¢ 50 million, incurs ¢ 750,000 in transfer taxes. With the reform, they would have to pay ¢1.5 million. 1.5% more. "