The relative stability of real estate compared with other financial assets continues to make it attractive to anyone with money to invest. It’s a given that the number of new residential properties started each month is a critical indicator of any well-regulated economy.
But despite its role as a key global economic driver, real estate markets can vary dramatically from country to country, region to region.
Any number of domestic and external factors can influence prices and returns on investment. This is always a challenging prospect for investors.
But there are times and places where the stars align to create excellent market conditions for those interested in investing in real estate.
Often these situations arise in developing or emerging markets, where economies are typically more dynamic and susceptible to changes.
Colombia, as an emerging market economy, tends to register high levels of economic growth compared to developed market counterparts.
And a key feature of emerging markets is generally a considerably higher birth rate. Colombia, with approximately 50 million people and more than 20 large urban areas, boasts incredible potential in this regard.
In 2021, well over 200,000 new house sales were registered with the Colombian Ministry of Housing.
In addition, Colombia supports people in need of housing through three major programs: VIS, VIP, and Non-VIS.
VIS is for Colombians who earn less than ≈ USD850 per month and do not own another home. The beneficiaries receive a subsidy with which they finance part of the purchase of houses that cannot exceed approximately USD30,000, although in cities with more than 1 million inhabitants the maximum limit is slightly higher.
There is also a priority housing program (VIP) which supports people in extreme poverty.
Finally, the Non-VIS program is present to support any other Colombian in their house purchase, contributing to monthly mortgage instalments for seven years.
All this is to say that government subsidies have stimulated the real estate market, and developers have been happy to oblige this demand by providing the required supply.
For investors from outside the state, assessing opportunity in a new and unfamiliar market can be an obstacle.
Firms such as Pei Asset Management, which offers long-term opportunities through dedicated real estate vehicles, solve this problem for would-be investors.
With over 15 years in the business, the company has a huge portfolio of real estate assets, and doesn’t limit its offering to pre-existing properties.
Assets in the development stage are also included in its prospectus, which helps the company meet its sustainability goals as it pursues LEED certificates for a large proportion of its inventory.
They serve both institutional investors and retail investors, and already count almost 5,000 clients among their investor base.
Such management firms take care of much of the paperwork and bureaucratic headaches associated with overseas investing, offering clients a comprehensive service.
For more information about the Colombian real estate sector, and unique insights from the President of Pei Asset Management and many others in the industry, get your copy of The Business Year: Colombia 2022/23 today!