Costa Rica’s Electric Train: Why Land Clearing Sets the Schedule

October 13, 2026

Costa Rica’s planned electric passenger train just ran into the oldest problem in infrastructure finance: the land. A feasibility study reported this week counts more than 400 structures sitting inside the railway right-of-way, and the state says most will be demolished without compensation. We use the news as a hook for a transferable lesson: when you underwrite assets near public infrastructure, you are underwriting the sequencing of land, not just the headline project.

What Happened

On October 12, Diario Extra reported that a feasibility study by the railway institute Incofer found more than 400 structures (homes, businesses and other buildings) occupying the right-of-way. The Tico Times ran a headline with the same count the same day.
Under a 1993 decree, the right-of-way extends 6.7 meters on each side of the track on flat ground and 5 meters on slopes. Because the new design needs a second track on each route, the study treats the encroaching structures as needing demolition. Owners are not compensated because the land is state property.
Separately, about 145 properties must be formally expropriated by 2028. The budget is roughly $24 million (about ¢11,000 million), paid by the public works ministry, MOPT. Incofer says the numbers could change if the design is adjusted.
The first construction tender is now expected in October or November 2026. A national planning schedule had pointed to July 2026. Final design is due before July 2028, with construction on the San José–Heredia–Alajuela line from 2028 to mid-2029 and San José–Cartago from mid-2029 to 2031.
Financing was approved earlier: on May 11, 2026 the Legislative Assembly voted 56-0 to ratify two loans totaling about $800 million, $550 million from the Central American Bank for Economic Integration (BCIE) and $250 million from the European Investment Bank. El Financiero reported that land acquisition and expropriation cannot be paid from loan proceeds, and that securing rights-of-way is among the conditions Incofer must meet before first disbursement.
The European Investment Bank contract puts the base cost at $847.8 million and estimates the total could reach $1,040 million with contingencies and pre-operation costs. Any amount above the loans falls to the national budget. The contract requires commercial service by the end of 2031.

Why It Matters for Costa Rica

For allocators the interesting feature is the structure of the funding, not the train. The multilateral loans pay for construction. The land, which is the gating item, is paid from the ordinary budget and has to be cleared first. That is a classic conditions-precedent trap: committed capital sits idle while a differently funded, differently governed workstream sets the schedule.

The lesson transfers directly to private deals. When we review a development or a stabilized asset near a planned corridor, we separate three things that sponsors often blur together: who owns the land cleanly, who pays to clear it, and which funding source can legally be used for that clearing. A pro forma that assumes a station, interchange or road widening will arrive on the announced date is a pro forma that has assumed the answer to all three.

It also changes how we read land-value claims. Parcels adjacent to a corridor can gain from improved access, but a parcel that overlaps a right-of-way, or that depends on an informal occupant on state land, may carry zero legal value in the overlapping strip. Title and survey work should test each parcel against the 1993 right-of-way widths, not against what a broker’s map shows.

Where the Story Is Weaker

The 400-structure figure comes from a feasibility study as relayed by the press, and Incofer itself says it may shrink if the design changes. We have not seen the study. The expropriation budget is also an early estimate, and El Financiero has noted that expropriations can drag through litigation even with a public-interest declaration. Costs on the 145 formal cases could rise.

There is a counterpoint on the positive side too: the loans are approved, the lenders are well-regarded, and the removal of informal occupants from state land is legally simpler than contested private expropriations. The same reporting also flags limited institutional capacity at Incofer and a tight three-year construction window. None of that makes the project unbuildable, but it argues for treating announced dates as aspirations. A 2021 report described a plan to let the future operator develop real estate on railway land to offset subsidies. We have not confirmed that this feature remains in the current design, so we do not underwrite it.

Investor Read-Through

Run a right-of-way overlay on any parcel within roughly a block of the Alajuela and Cartago corridors before relying on a corridor premium. Our read, not a forecast: the premium belongs to clean-title parcels outside the 1993 setbacks.
In sponsor documents, ask which budget pays for land clearing and what happens to the schedule if that budget is late. Make milestone-based capital calls conditional on land delivery, not on announcements.
Haircut any timeline that keys off the first tender. It has already moved from July to a window in October or November 2026, and our read, not a forecast, is that further slippage would not be surprising given the design and expropriation sequence.
Where a deal pairs a small local counterpart contribution with large foreign borrowing, as here (a $47.8 million national share against roughly $800 million of loans), model the counterpart as the binding constraint and size reserves for it.

Data as of October 13, 2026. Figures marked preliminary will be revised. This is general market commentary, not investment advice.