As a result of the crisis, the unemployment rate of commercial premises in Costa Rica rose from 8.81% to 9.86%, and the average price per square meter fell by 3%.
It is estimated that 20% of the stores located in the country's malls will not be able to open after the most critical phases of the covid-19 outbreak are overcome, according to Colliers' figures.
Arguing that a complete report on the financial situation of the companies owning the development was not presented, the Costa Rican Tourism Institute decided to cancel the concession of the Monte del Barco project, in the Papagayo Tourist Pole.
Aldesa Fondos de Inversión reported that Inversiones Monte del Barco S.A. and Inversiones GODA S.A., companies owning the tourism development, were notified last July 4th, but the concessionary companies will proceed to file in time and form, the appeal for replacement or revocation before the Board of Directors of the Costa Rican Tourism Institute.
In Costa Rica new investment funds for development projects are a good alternative to remedy the serious deficiencies in public infrastructure affecting the country.
From a report by Fitch Ratings Central America:
Fitch Ratings - San Jose - (August 24, 2016): The rules on investment funds in Costa Rica incorporate the concept of Investment Funds for Development Projects (FDP) as an alternative to expand financing options (via placement of shares from an FDP).This type of fund can be used in public and private infrastructure projects, as well as in real estate developments (whether they are residential or commercial ones), among other projects.
Through a real estate development fund, $40 million will be raised from the local market to build an office building for the four superintendencies of financial markets.
The state run BN Funds is the manager of Fondo de Inversión de Desarrollo Inmobiliario de Infraestructura Pública -1, created by the Central Bank of Costa Rica to attract the necessary funds to construct a building to house the offices of the regulators of pensions, insurance, securities and financial institutions.
Initial expectations for the placement of shares in real estate funds worth $2 million was far surpassed, with a total of $9 million in the first year.
Laprensa.com.ni reports that "... the success of the FII is based on the fact that these pay a better percentage for the investment (from 6.5 to 8 percent a year), much more than is usually paid by the financial system on savings, but also offers fewer levels of risk for investors.
Investment Fund Managers in Costa Rica are looking to market their securities across Central America.
Some of these companies have many years experience in foreign markets and other started this year in 2013. For example the two funds belonging to Improsa SAFI have been authorized in Panama since 2009, while others such as Interbolsa, resumed this year the work of internationalization in all countries.
The crisis of 2008 halted the development of the ambitious project in the Gulf of Papagayo tourist hub, and solutions are being sought to maintain it.
The project is owned by Monte del Barco Real Estate Fund, administered by Aldesa Investment Funds.
There is need to resolve the financial situation of the project in order to continue with its development, so solutions have emerged such as the purchase of lots by the same investors in the Fund, which so far has not been successful, and the transfer of part the land to a group of providers in exchange for building the basic infrastructure so as to enable the project to continue.
Despite the international financial crisis, assets have grown by 8% in 2010 and the number of investors increased 10% to 33.432 customer accounts.
Among other options, stock funds won over many investors reappearing as an investment option with over 200 investors. Also open Growth Funds increased 12%, Megafunds with an 11% increase and Money Markets with 12%.
Costa Rican financial group Interbolsa is looking for a partner to invest in its main asset, Interbolsa Sociedad Administradora de Fondos de Inversión.
50% of Interbolsa’s portfolio is composed of Real Estate Investment Trusts, considered the group’s key assets.
Interbolsa’s CEO, Danilo Montero, told Elfinancierocr.com that “they have been considering this possibility since last year, but there is nothing concrete yet”.
In Costa Rica, investment funds grew 16% in 2009, in spite of losing almost 10% of their investors.
During the past financial crisis, the Costa Rican market turned out to be more stable than international markets, making it a relatively safer place for storing capital. Because of this, assets managed by investment funds grew to $2.48 billion.
However, the crisis affected small local investors, who were forced to abandon their investment funds.
The decrease in the minimum asset level in Real Estate Funds to $5m encourages the undertaking of smaller real estate development projects.
The measure adopted by the Superintendence of the Stock Market hopes to adapt the rules to the current financial and economic crisis to promote investment, especially in the construction sector.
Article 75 of the General Regulation of Administrative Agencies and Investment Funds currently says the following: "Net minimum assets - the property investment funds should have a net minimum assets of $5 million or the equivalent in Costa Rican Colones at the exchange rate used by the Central Bank of Costa Rica. This net assets is applicable for all new funds that are set up.:
The Real Estate Development Funds have recorded an increase in their net assets of 539% from January to first half of September.
The number of investors has increased by 270%. This important increase is due to greater familiarity with the Funds in the market, according to various companies (called Safi in Spanish) that manage the Funds.
For example, at the end of 2007 there were only two funds, today there are six providing loans.
Business centers in Costa Rica are being sought by several funds operating in the country, because they see these real estate investments as good opportunities for a high return on investment.
For example, the Fondo de Inversión Popular Inmobiliario (Fimpo) is putting up 13.5 million dollars to buy the Paseo de Las Flores Business Center in Heredia.
Changes in the regulations that govern Costa Rican investment funds have received a mixed reaction.
According to the financial markets regulator, Sugeval, the aim of the changes is to clarify various aspects of the existing rules, which date from 2006, on the basis of practical experience.
The changes include new rules on the certification of fund managers, the updating of prospectuses, and a broadening of the scope of real-estate funds.
Real-estate development funds are a novelty in Costa Rica's financial markets and they have been slow to take off.
Although the market regulator, Sugeval, has authorized 13 projects to far, only one is actually under construction.
Market specialists say that investors are wary of any new concept, but some complain that the system involves too much red tape.