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With few investors and relatively little capital to work with, developers have long been forced to design innovative ways to finance their projects. For example, up until the mid-2000s, housing […]

With few investors and relatively little capital to work with, developers have long been forced to design innovative ways to finance their projects. For example, up until the mid-2000s, housing developers would undergo a process of pre-selling properties to finance a project, and other segments of the real estate market followed suit. However, in 2008-2009, builders and investors began to own more properties with the intention of renting or offering them to different funds, such as pension managers. This trend has inspired senior investors to enter the country and embark on large-scale projects.

As a reflection of this phenomenon, the number of construction permits issued in 2011 was equivalent to 185% of the average recorded over the past 26 years, with a rise of 33.8% compared to 2010. Projects for high-value housing, which accounted for 57% of the total area of developed space, contributed significantly to the growth, while social housing and commercial construction comprised 22% of the total number of permits issued. New regulatory changes relating to seismic resistance were also established in 2011, driving many developers to apply for different permit types.

Although the vast majority of developments in the country are aimed at providing housing and facilities for local residents, an increasing number of foreign buyers are setting their sights on Colombian property. Of those who buy real estate in Colombia, and especially Bogotá, many are from Venezuela, the US, Mexico, and Chile. Seeing it as a safe and attractive retirement destination, Cartagena on the Caribbean coast has attracted the attention of potential buyers in the US and Europe.


With public and private investment pouring into the housing sector, figures in terms of area, activity, and price-per-sqm are all expected to continue on the up in the medium term. Year-on-year figures demonstrated a 7.7% price increase for new homes and a 7% increase in the price of existing properties in 2012. Bucaramanga and Bogotá registered the highest price-per-sqm increases for new housing at 24.1% and 12.8%, respectively.

As more than 50% of Colombian residents do not own their own homes, experts predict a substantial increase in the demand for housing. In Bogotá, 67% of rental income is sourced from the middle class and high-income groups. As per capita income rises, many renters in these segments could be in the market to purchase property. Currently, Colombia builds around 280,000 homes per year. However, lower-income groups are also in need of better housing. To this end, a law was approved in 2012 to allow the construction of 100,000 “free” homes through 2014. The plan targets the poorest families in regions that suffer from severe supply shortages. According to research carried out by BBVA, site plans for private housing projects will be obliged to earmark at least 10% of the land for the construction of social housing, and 25% for priority-interest housing, in order to guarantee the availability of land for these projects. In the private sector, local developers continue to see success in focusing on the housing market. Although it has been involved in a variety of infrastructure and social interest projects over recent years, Coninsa Ramón H. still relies on the housing segment to support its business. “We continue to do very well in this area—around 40%-50% of our business is dedicated to the development of housing units,” Juan Felipe Hoyos Mejí­a, President of the company, told TBY. The company also manages approximately 5,000 rental properties, citing the stability of the rental sector as an opportunity generator in light of the increasing number of foreign companies seeking accommodation for expatriate employees in cities such as Bogotá and Medellí­n. “The rental sector is expected to grow at about 4%-5% per year over the next couple of years,” Hoyos concluded.


In contrast to the steady housing sector, activity in the commercial segment of the real estate market is rapidly evolving. The modern retail trend based on hypermarkets and shopping malls, as well as the recent signing of trade and investment agreements, is anticipated to result in a structural increase in the demand for commercial space. Since 2009, the launch of new projects for offices in Bogotá and Medellí­n has increased the commercial supply by 25%. Many real estate companies have seen opportunities in the construction of mixed-use developments.

Illustrating the explosion of activity in the sector, the BD Bacatá mixed-use project will become one of the two tallest buildings in Latin America, at 250 meters and with 66 floors. Led by BD Promotores Colombia, the project’s main asset is its modern design. “We never aimed at developing the tallest building,” Venerando Lamelas Fernandez, President of BD Promotores Colombia, explained, adding “We want the citizens of Bogotá, and Colombians in general, to feel the building is theirs, making it a landmark on the skyline of Bogotá.” The project is also likely to revitalize the center of Bogotá, an area that has been overlooked in recent years. With an investment of over $100 million, the developers expect the project to be complete by the end of 2014. Abacus Real Estate is also currently investing in mixed-use projects, such as an office building and hotel that is combined with specialty retail. According to Andrés Alvarado Ortiz, President of the company, “Bogota’s OXO 69 project will feature 45,000 square feet of office space, with a limited service hotel of 100 rooms under the Holiday Inn Express brand.” In an interview with TBY, he explained that the project is going to provide a unique retail area of 7,000 square feet, all located next to the financial district of Bogotá. This area is expected to become the “green corridor” of the city when new public transportation lines are complete. Abacus Real Estate is also developing a Holiday Inn Express in Cartagena and a separate commercial development in Barranquilla.

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