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Real estate market in Colombia

Hello

I am planning to move to Colombia and maybe later buy a flat/house/land there.

I know that the Colombian economy is doing good and the prices of real estate have been going up a lot in the last 5 or 10 years or something and that Colombia has been regarded as a business opportunity for many.

Myself i am not interested in making business but i am afraid to buy my house between now and 2020 at a high price and that later the prices will come crashing down because of a market bubble.

so i am asking the question, is it a good time to buy real estate in Colombia?

thank you

I don't think that the Colombian economy is going great.  The government has been lowering interest rates on mortgage rates to try and stimulate the enconomy.  Also the banks have been lowering interest rates on CDT's.

I have observed several newer apartments and homes on the market that have not yet sold after six months.  I would recommend renting something for now.  If the peso starts declining then it may be a good opportunity at a later date.

thanks for the heads up

i was referring to the 4%, 6% and sometimes 8% GDP Annual Growth Rate in the last 10 years that might have influenced the prices of real estate to go up ( i am really not an expert at all, just trying to grasp basic trends, i think these rates meant the economy was booming but know it s slowing down it seems).
https://tradingeconomics.com/colombia/gdp-growth-annual

do you think the price of houses have gone significantly up in the last ten years?

https://d3fy651gv2fhd3.cloudfront.net/charts/colombia-gdp-growth-annual.png?s=cocipiby&v=201707031806v&d1=20070101&d2=20171231

i am starting to think it was a good idea to buy 5 or 10 years ago, but now it s getting risky or stupid. as you said, some houses are not being sold after six months which is really bad i guess and the prices of houses might go down significantly in the coming years then if this  is a trend.

the market should not be the main reason to buy a house in a country or another, but rather where you want to live and enjoy your life... but still, that would stupid to lose your money because of the market. sad :-(

Hi unleashed,
Speaking as someone who just bought here, I think there are a lot of variables to consider. The currency you are using for one. The dollar is strong right now so I made the decision to buy based on capital preservation. I love living here so I feel that I cannot lose. I don't think that there is as much of a property bubble here as in other parts of the world due to strict banking rules and money laundering regulations. Having said that, most of the middle to upper class Colombians I've met, buy property with their savings as an investment, much as Americans did in the 60's, as a means to hedge against inflation or currency depreciation. Also the Colombian economy seems to be closely tied to the price of oil. Gasoline prices here seem to stay the same no matter what a barrel of oil costs, so unlike in the US, low oil prices do not add any stimulus to the economy and fewer state funds put a burden on the government, inhibiting state investment. I am in Medellin. Landstryker

@LandStryker thanks for the feedback

"I don't think that there is as much of a property bubble here as in other parts of the world"
> ok reassuring feedback... will get more feedback from more people before making my mind.

"I love living here so I feel that I cannot lose"
> i am going to Colombia in three weeks for a vacation and will soon find out myself if this country can be my new home :-)

Landstryker :

The currency you are using for one. The dollar is strong right now so I made the decision to buy based on capital preservation.

Interesting point.  Made me look it up!

The Colombia Peso (COP) has lost about 43% of its value relative to the USD over the past five years.  Stated differently, 1 USD bought 1,791 COP five years ago.  Now, 1 USD buys 3,050 COP.  (Got as high as 3,383 in early 2016!)  Not bad if you're bringing in USD and, I would assume to a lesser extent, Canadian Dollars.

The negative (outweighed by the foreign currency exchange) is that Colombia has wild inflation at times - seems to have run between 2% and 9% over the past five years, maybe averaging an annual 4.5% inflation rate, more or less.

Hi SawMan,
I am no economist but I think averaging 4-5% inflation in a developing country would indicate growth more than a serious problem as long as it doesn't spiral up into double digits. Wages don't seem rise here as quickly so eventually demand should drop and inflation self correct. My guess is that there is a bit of a dual system here where luxury goods take up a large portion of that inflation rate. Haven't been here long enough to know for sure though. Landstryker

No property bubble or even close in most parts of Colombia right now. The issue with properties not selling quickly has got a great deal to do with sellers looking to sell themselves, instead of through professional and experienced agencies, plus pricing properties at random, ridiculous and silly numbers. It has nothing to do, again for the most part, with supply demand factors. Also, certain Colombia markets, Medellín, Bogotá and to a lesser extent Cartagena, have a very concentrated "desirable geographic zone" that is driving up prices to goofy levels, in some submarkets. Perfectly great areas go undersold and these micro areas see too much demand, not enough supply. But, again, it is micro submarkets, not the broader market. This trend is especially true where a heavy influx of expat funds have accumulated, since they tend to have a very myopic view of where is a desirable location to live. All depends on what you are looking for and how flexible you are, but if you are purchasing with foreign currency, exchanged for Colombian Pesos, odds are good you can get yourself a good deal today, if you know where and how to shop.

I do not know if the Colombian real estate market qualifies as a "bubble", however, looking at the real estate market of Cartagena, i can definitely tell you that a correction will come at some point

The numbers just don't add up. Prices are ridiculous and disconnected by a mile from the real economy. As a comparison, Cartagena prices are higher than Nice in France, or Miami, and what you get i basically a shack with third world public infrastructure and services

Average income income in Cartagena is $400 per month..

Plus, the economy doesn't look good for the coming years beside tourism and there is a great deal of political uncertainty remaining with the FARC deal. The taxes are aslo extremely high; one of the highest reates in the world and the government is broke and looking for money

I would definitely stay away from Colombia's real estate unless i find a smoking deal way below replacement costs in an exceptional location

cedricgopnik :

I do not know if the Colombian real estate market qualifies as a "bubble", however, looking at the real estate market of Cartagena, i can definitely tell you that a correction will come at some point.

Dear Cedric,

Welcome to the Colombia forums of expat.com ....

Yes, there is no one real-estate market in Colombia.

There are hundreds -- and hundreds (or more) sub-markets within geographically distinct markets.

Based on your Cartagena analysis, while prices there are above "true market" value, there are deals for brand-new homes in Coffee Zone cities in the range of $20,000 to $30,000 US.

cccmedia in Depto. de Nariño

cedricgopnik :

there is a great deal of political uncertainty remaining with the FARC deal. The taxes are also extremely high; one of the highest rates in the world and the government is broke and looking for money.

I would definitely stay away from Colombia's real estate unless I find a smoking deal way below replacement costs in an exceptional location.

Good for you, Cedric, :top:  for throwing a barrel of cold water at newly-arriving Expats who show up here with rose-colored glasses.

Besides the FARC deal, there are other troublesome groups such as ELN to deal with in the "era of peace" transition that Colombia has initiated.  Violent acts including the assassinations of community leaders have occurred this year (2017), according to detailed reporting by colombiareports.com ....  Intercity driving is unsafe in many areas at night, as those of us who have survived moto night-rider attacks can attest.

At present, the dollar is strong vs. the peso and has been .. but the currency rate could turn around and bite a new home-owner in a couple of years, decimating his home's value in dollar-terms when and if the peso rebounds.

New arrivals who follow certain guidelines can avoid the more violent aspects of life in Colombia.  But, buy a home here as a new Expat?

Only if you're a gambler.  Or you find that "smoking deal" in an exceptional location.

In any case, rent -- don't buy or build -- in your first full year in La República.

-- cccmedia in Depto. de Nariño near the Ecuador border

Cartagena has many real estate submarkets. The old historic district center is overvalued, because of simple supply and demand factors, combined with the difficulty of accommodating that demand with new construction in a historic area. A typical challenge for desirable historic districts globally. Certain very desirable oceanfront properties are also overvalued. However, I would argue that it is inaccurate to slam the entire Cartagena market as overvalued. More so, I certainly do not see Cartagena bearing the same prices as Miami or Nice, not for comparable product. You may pay the same, but your money will buy more in Cartagena. As Warren Buffett quipped in discerning price v. value, "Price is what you pay, value is what you get."

HGQ2112 :

You may pay the same, but your money will buy more in Cartagena. As Warren Buffett quipped in discerning price v. value, "Price is what you pay, value is what you get."

"It's not what you pay, it's what you receive."

     --  Author/lecturer/presentation expert Robert Panté

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