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Everything you need to know before buying real estate is included in our Colombia Property Pack
Colombia's rental yields average 7.03% gross across major cities as of September 2025, making it one of Latin America's most attractive markets for property investment.
Bogotá leads with yields ranging from 6% to 9.47%, while Medellín offers 5.93% to 8.36%, and coastal cities like Cartagena provide 3.56% to 7.5%. Net yields typically run 1.5-2% lower after accounting for operating expenses, taxes, and vacancy periods. The Colombian property market benefits from low transaction costs, no foreign ownership restrictions, and strong rental demand from digital nomads and professionals.
If you want to go deeper, you can check our pack of documents related to the real estate market in Colombia, based on reliable facts and data, not opinions or rumors.
Colombian rental yields range from 5.9% to 8.25% across major cities, with Bogotá offering the highest returns and strongest rental demand.
Property investors can expect net yields of 4-6% after all expenses, with smaller properties typically delivering higher returns than larger units.
| City | Gross Yield Range | Average Gross Yield | Estimated Net Yield |
|---|---|---|---|
| Bogotá | 6.0% - 9.47% | 8.25% | 6.0% - 7.5% |
| Medellín | 5.93% - 8.36% | 7.78% | 5.5% - 6.8% |
| Cali | 4.84% - 9.94% | 7.31% | 5.0% - 8.0% |
| Cartagena | 3.56% - 7.5% | 5.71% | 3.5% - 5.7% |
| Barranquilla | 6.65% - 7.71% | 7.0% | 5.0% - 6.0% |
How do we define rental yield calculations in Colombia?
Rental yield calculations in Colombia follow standard real estate investment formulas adapted for local market conditions.
Top-line rent represents the maximum potential annual rental income before any deductions for vacancies or expenses. For long-term rentals, this equals monthly rent multiplied by 12 months. For short-term rentals, it's the advertised nightly rate multiplied by 365 days, assuming 100% occupancy.
Gross yield equals annual rental income divided by total property acquisition cost, multiplied by 100 to get the percentage. Total acquisition cost includes purchase price plus closing fees (typically 1.5-3%), notary/registration costs, agent commissions, and initial furnishing expenses. Colombian properties often require COP 15-30 million in setup costs for rental-ready condition.
Net yield accounts for all operating expenses and represents actual cash flow return. This includes HOA/administration fees (COP 200,000-800,000 monthly), utilities, maintenance, property management, vacancy allowances, and taxes. Net yields typically run 1.5-2.5 percentage points below gross yields in Colombian markets.
Colombian rental yields are calculated using current market exchange rates, typically 4,200-4,800 COP per USD as of September 2025.
What are current property prices per square meter by city in Colombia?
Property prices per square meter vary significantly across Colombian cities and neighborhoods as of September 2025.
Bogotá leads in pricing with properties averaging COP 4,500,000-6,500,000 per square meter ($1,000-$1,500 USD) in premium areas like Chapinero and Zona Rosa. Mid-tier neighborhoods like Teusaquillo range from COP 3,500,000-4,500,000 per square meter. Typical unit sizes range from 45-80 square meters for apartments, with 60-70 square meters being most common for investment properties.
Medellín's El Poblado commands COP 6,000,000-8,000,000 per square meter ($1,400-$1,900 USD), making it the most expensive neighborhood in the city. Laureles averages COP 5,500,000-6,500,000 per square meter, while emerging areas like Envigado range from COP 4,000,000-5,500,000 per square meter. Standard apartment sizes run 50-85 square meters.
Cartagena's Bocagrande and El Laguito see prices of COP 4,500,000-7,000,000 per square meter ($1,100-$1,600 USD) for beachfront properties. Getsemaní, the gentrifying historic quarter, ranges from COP 3,500,000-5,000,000 per square meter. Typical units span 55-75 square meters for apartments.
Cali offers more affordable options with Ciudad Jardín averaging COP 3,500,000-4,500,000 per square meter and other quality neighborhoods ranging from COP 2,500,000-3,500,000 per square meter. Apartment sizes typically range from 60-90 square meters.
What are total acquisition costs for Colombian properties?
Total acquisition costs in Colombia extend well beyond the purchase price and require careful budgeting for successful investment returns.
Purchase closing costs typically add 1.5-3% to the property price, including notary fees (0.3-0.5%), registration costs (0.3-0.5%), and legal fees (0.5-1%). Agent commissions range from 3-5% of purchase price, usually split between buyer and seller. These costs mean a COP 400 million property incurs approximately COP 15-25 million in transaction expenses.
Furnishing and setup costs vary dramatically by rental strategy. Basic long-term rental furnishing requires COP 15-25 million for a 60-square-meter apartment, including appliances, furniture, and utilities setup. Short-term rental properties demand COP 30-50 million for complete furnishing to tourist standards, including linens, kitchen equipment, and decorative items.
Property condition assessments often reveal additional costs. Older Colombian properties may need COP 10-30 million in renovations for modern rental standards. New construction typically requires minimal additional investment beyond furnishing. Budget an extra 5-10% of purchase price for unexpected improvements and initial maintenance.
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What rental rates can properties achieve in Colombian cities?
Colombian rental markets offer strong income potential across both long-term and short-term strategies as of September 2025.
| City/Neighborhood | Long-term Monthly Rent (1BR) | Short-term Nightly Rate | Typical Occupancy |
|---|---|---|---|
| Bogotá - Chapinero | COP 1,800,000-2,500,000 | $45-$65 USD | 85-90% |
| Medellín - El Poblado | COP 1,500,000-2,200,000 | $40-$60 USD | 80-85% |
| Cartagena - Bocagrande | COP 1,800,000-3,000,000 | $50-$80 USD | 70-75% |
| Cali - Ciudad Jardín | COP 1,200,000-1,800,000 | $35-$50 USD | 75-80% |
| Medellín - Laureles | COP 1,300,000-1,900,000 | $35-$55 USD | 80-85% |
Long-term rentals typically achieve 95-98% occupancy rates with stable tenants, while short-term rentals average 70-85% occupancy depending on location and management quality. Coastal areas like Cartagena experience seasonal fluctuations, with peak season (December-March) achieving 85-95% occupancy and low season (April-November) dropping to 60-75%.
Premium properties in business districts command rent premiums of 20-40% above neighborhood averages. Properties near universities, hospitals, or metro stations also achieve premium pricing. Short-term rentals in tourist zones can earn 150-200% of long-term rental rates when factoring in occupancy.
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Who are the main tenant profiles in Colombian cities?
Colombian rental markets cater to diverse tenant profiles with distinct preferences and willingness to pay premium rates.
Digital nomads and remote workers represent the fastest-growing segment, particularly in Medellín and Bogotá. They typically seek 1-3 month stays, prefer furnished properties with high-speed internet, and pay 20-30% premiums for co-working spaces, gym access, and modern amenities. This group drives strong demand in El Poblado, Laureles, and Chapinero neighborhoods.
Local professionals and families form the stable long-term rental base, preferring 1-2 year leases in well-connected neighborhoods. They prioritize proximity to business districts, schools, and public transportation. This segment typically occupies 60-80 square meter apartments and pays market rates without significant premiums.
University students create consistent demand near major institutions like Universidad Nacional in Bogotá and EAFIT in Medellín. They prefer smaller, affordable units and often share larger apartments. Student housing commands lower per-square-meter rates but maintains high occupancy and low turnover costs.
Expatriate executives and international assignees seek premium furnished accommodations with security, parking, and amenities. They pay 30-50% premiums for turnkey solutions in prestigious neighborhoods. This segment prefers buildings with 24-hour security, pools, gyms, and concierge services.
Tourists and vacation renters drive short-term demand in coastal areas and tourist districts. They prioritize location, amenities, and unique experiences, often paying premium rates for beach access, historic charm, or city views.
What are typical operating expenses for rental properties?
Operating expenses significantly impact net rental yields and require comprehensive budgeting for accurate return calculations.
HOA/administration fees vary dramatically by building quality and amenities. Basic buildings charge COP 200,000-400,000 monthly, while luxury properties with pools, gyms, and security demand COP 600,000-1,200,000 monthly. These fees cover common area maintenance, security, utilities for shared spaces, and building management.
Utilities depend on property size and tenant arrangement. Landlord-paid utilities typically run COP 150,000-300,000 monthly for electricity, water, gas, and internet. Many landlords pass utility costs to tenants, reducing this expense category. Property taxes range from 0.4-1.2% of cadastral value annually, typically COP 800,000-3,000,000 per year for investment properties.
Property management fees range from 8-12% of rental income for long-term rentals and 15-25% for short-term rentals. Professional management includes tenant screening, rent collection, maintenance coordination, and legal compliance. Self-management eliminates this cost but requires local presence and Spanish language skills.
Maintenance and repairs average 1-3% of property value annually, or COP 4-12 million for a COP 400 million property. This includes routine maintenance, appliance repairs, painting, and occasional major repairs. Coastal properties require higher maintenance budgets due to humidity and salt air exposure.
Insurance costs COP 300,000-800,000 annually for comprehensive coverage including fire, theft, and liability protection. Vacancy allowances should account for 5-15% income loss depending on location and rental strategy.
How do Colombian taxes affect rental income and yields?
Colombian tax treatment of rental income varies significantly between residents and non-residents, substantially impacting net yields.
Colombian residents pay income tax on rental income using progressive rates ranging from 19-39% as of 2025. Residents can deduct legitimate rental expenses including property management, maintenance, HOA fees, property taxes, insurance, and depreciation. The effective tax rate on rental income typically ranges from 15-25% after deductions for most investors.
Non-resident property owners face a flat 35% withholding tax on gross rental income with limited deduction opportunities. This dramatically reduces net yields for foreign investors without Colombian residency. Non-residents cannot deduct operating expenses, making the effective tax burden significantly higher than for residents.
Capital gains taxes apply at 10% for properties held over two years, calculated on inflation-adjusted gains. Properties sold within two years face income tax treatment at higher rates. The cadastral value assessment increases by 3% annually as of 2025, impacting property tax calculations.
Property transfer taxes add 1-1.5% to acquisition costs, while annual property taxes range from 0.4-1.2% of cadastral value. Municipal taxes vary by location, with Bogotá and Medellín typically charging higher rates than smaller cities. Some municipalities offer tax incentives for new construction or affordable housing developments.
Foreign investors should strongly consider establishing Colombian residency to access favorable tax treatment and significantly improve net rental yields.
What financing options exist for property purchases in Colombia?
Colombian mortgage financing remains challenging for foreign buyers but several options exist for qualified applicants as of September 2025.
Traditional bank mortgages require Colombian residency, local credit history, and Colombian-sourced income verification. Major banks like Bancolombia (10.79%), AV Villas (10.37%), and Davivienda (11.29%) offer the most competitive rates for qualified foreign residents. Loan-to-value ratios typically range from 50-70%, requiring substantial down payments of 30-50%.
Mortgage terms typically span 10-15 years for foreign borrowers, with some banks extending to 20 years for exceptional cases. Monthly payments on a COP 300 million mortgage at 11% interest over 15 years would equal approximately COP 3,400,000. Banks require debt-to-income ratios below 30% and demonstrated local employment for at least 6-24 months.
Developer financing offers alternative options for new construction purchases. Many developers provide payment plans allowing 20-30% down payment, followed by monthly payments during construction (18-24 months), with final payment of 30-50% at completion. This option doesn't require bank qualification but offers limited leverage.
Most foreign buyers choose cash purchases or leverage financing from their home countries through home equity loans, business credit, or self-directed retirement accounts. US banks won't finance Colombian properties directly, but personal loans or securities-backed lending may provide capital at lower rates than Colombian mortgages.
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We did some research and made this infographic to help you quickly compare rental yields of the major cities in Colombia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
What are typical vacancy rates across Colombian markets?
Vacancy rates in Colombian rental markets vary significantly by city, property type, and rental strategy, directly impacting investor returns.
Long-term rental vacancy rates remain relatively low across major cities. Bogotá averages 5-8% vacancy rates in quality neighborhoods, with premium areas like Chapinero and Zona Rosa achieving 3-5% vacancy. Medellín's established neighborhoods like El Poblado and Laureles maintain 4-7% vacancy rates, while emerging areas may experience 8-12% vacancy during market transitions.
Short-term rental vacancy shows greater volatility and seasonal patterns. Cartagena experiences 15-25% vacancy during low season (April-November) but drops to 5-10% during peak tourist months (December-March). Medellín's short-term market maintains steadier 15-20% average vacancy due to consistent business travel and digital nomad demand.
Property type significantly affects vacancy rates. Smaller, well-located units (45-65 square meters) typically achieve lower vacancy than larger properties due to broader tenant appeal and affordability. Properties in buildings with amenities like pools, gyms, and security experience 2-4 percentage points lower vacancy than basic buildings.
A ±10% change in occupancy dramatically impacts yields. For a property generating 7% gross yield at 90% occupancy, dropping to 80% occupancy reduces the effective yield to 6.2%. Conversely, improving from 85% to 95% occupancy increases effective yield from 6.0% to 6.7%. Location, property management quality, and market positioning are crucial for maintaining high occupancy rates.
Can you provide example rental yield calculations for Colombian properties?
Real-world examples demonstrate how rental yields translate from gross to net returns across different Colombian markets and strategies.
| Property Example | Purchase + Setup Cost | Annual Gross Rent | Gross Yield | Annual Expenses | Net Yield |
|---|---|---|---|---|---|
| Bogotá 1BR Chapinero | COP 320M ($75k) | COP 26M ($6,100) | 8.1% | COP 8M ($1,900) | 5.6% |
| Medellín 2BR El Poblado | COP 400M ($94k) | COP 30M ($7,100) | 7.5% | COP 10M ($2,400) | 5.0% |
| Cartagena 1BR Bocagrande | COP 350M ($82k) | COP 22M ($5,200) | 6.3% | COP 9M ($2,100) | 3.7% |
| Cali 2BR Ciudad Jardín | COP 280M ($66k) | COP 20M ($4,700) | 7.1% | COP 6M ($1,400) | 5.0% |
| Medellín Studio Laureles STR | COP 200M ($47k) | COP 18M ($4,200) | 9.0% | COP 8M ($1,900) | 5.0% |
These examples assume 85-90% occupancy for long-term rentals and 75-80% for short-term rentals. Expenses include HOA fees, property management, maintenance, taxes, insurance, and vacancy allowances. Short-term rentals show higher gross yields but also higher operating expenses due to management complexity and platform fees.
The Bogotá example demonstrates strong performance in the capital's competitive market, while the Cartagena coastal property shows lower net yields due to higher seasonality and operating costs. Medellín properties offer balanced risk-return profiles with consistent demand from both local and international tenants.
How have Colombian rental yields changed over recent years?
Colombian rental yield trends reflect evolving market dynamics, currency fluctuations, and changing investor preferences over the past five years.
Five years ago (2020), Colombian rental yields averaged 8-10% gross across major cities, supported by lower property prices and stable rental demand. The COVID-19 pandemic initially disrupted markets, causing temporary yield compression in tourist areas like Cartagena while business districts remained relatively stable.
One year ago (2024), gross yields averaged 7.24% nationally compared to 7.03% in Q2 2025, showing modest compression as property prices appreciated faster than rental growth. Bogotá yields have remained strongest, benefiting from consistent demand from government workers, multinational companies, and educational institutions.
Property price appreciation has outpaced rental growth in most markets. Medellín prices increased 6.14% year-over-year in Q2 2025, while rental rates grew approximately 4-5% annually. This trend compresses yields for new investors while benefiting existing property owners through capital appreciation.
Future yield forecasts suggest continued modest compression over the next 1-3 years as Colombia's economy grows and property markets mature. However, rental demand from digital nomads, expatriates, and Colombia's growing middle class should support rental growth of 3-5% annually. Five-year projections indicate yields stabilizing around 6-8% gross as the market reaches greater maturity and international recognition.
Currency depreciation affects USD-based returns. The Colombian peso has weakened from approximately 3,500 COP/USD in 2020 to 4,200-4,800 COP/USD in 2025, reducing USD returns for foreign investors despite stable local currency yields.
Which Colombian markets offer the best risk-adjusted yields today?
As of September 2025, specific combinations of location, property type, and size deliver optimal risk-adjusted returns for different investor profiles.
Bogotá's Teusaquillo and Kennedy neighborhoods offer exceptional value due to upcoming metro line expansion. Properties near planned stations trade at 15-20% discounts to established areas while offering similar rental yields of 7-9%. One-bedroom apartments of 50-65 square meters in these areas provide strong tenant demand from young professionals and government workers.
Medellín's Laureles district balances yield and appreciation potential better than premium El Poblado. Laureles delivers 6.5-8% gross yields with lower entry costs and steady rental demand from both locals and expatriates. The neighborhood offers excellent amenities, security, and transportation access without El Poblado's premium pricing.
Emerging secondary cities like Pereira and Manizales offer higher yields (7-9%) with lower competition and entry costs. These markets benefit from coffee region tourism, university populations, and growing business activity. Risk factors include smaller rental pools and less liquidity for exit strategies.
Compared to regional markets, Colombian yields exceed most Latin American alternatives. Mexico City averages 5-6% gross yields, Buenos Aires offers 6-7%, while Santiago provides 4-5%. Colombian markets offer superior yields with growing economic stability and government support for foreign investment.
For optimal risk-adjusted returns, focus on Bogotá and Medellín properties in the COP 250-400 million range ($60,000-$95,000 USD), targeting 1-2 bedroom units in neighborhoods with strong transportation links and mixed-use development. These properties offer the best combination of yield, liquidity, and appreciation potential in the current market environment.
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Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Colombian rental yields offer attractive returns ranging from 5.9% to 8.25% gross across major cities, with net yields typically 1.5-2.5 percentage points lower after expenses.
Success requires careful market selection, with Bogotá and Medellín offering the best combination of yield, stability, and growth potential for international investors in 2025.
Sources
- Global Property Guide - Colombia Rental Yields
- TheLatinvestor - Colombia Property Investment 2025
- Global Property Guide - Colombia Market Analysis
- TheLatinvestor - Medellín Market Data
- TheLatinvestor - Colombia Mortgage Guide
- Global Property Guide - Colombia Taxes
- Alejandro Broker - Colombia Mortgage Rates 2025
- The Wandering Investor - Medellín Rental Yields