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Everything you need to know is included in our Colombia Property Pack
Are you thinking of investing in property in Colombia? Are you questioning whether it's wiser to make a purchase now or hold off until next year?
Different individuals have different perspectives on market timing. The Colombian real estate agent you consulted might advise you that now is the opportune time to buy property, while your childhood friend from Bogotá may suggest exercising more patience before making a decision.
At TheLatinvestor, when we create articles or update our pack of documents related to the real estate market in Colombia, we facts and data that are backed by evidence, not just opinions or rumors.
We've done extensive research on official reports and government website statistics, resulting in a comprehensive database. Here's what we've learned, which can provide valuable insights for your decision-making process regarding real estate purchase in Colombia.
We hope this article proves valuable to you.
How is the property market in Colombia now?
Colombia is, today, a relatively stable country
Neutral
Stability is a necessary condition when investing in real estate because it reduces risks and provides a secure investment landscape. It is an information you need as a foreigner looking to buy real estate in Colombia.
In today's context, Colombia can be regarded as a country that has achieved stability to some extent. The last Fragile State Index reported for this country is 75.6, which is a respectable number.
Colombia's relative stability today can be attributed to the 2016 peace agreement with the Revolutionary Armed Forces of Colombia (FARC), which significantly reduced armed conflict and violence in the country. Additionally, sustained economic growth driven by sectors like oil, mining, and agriculture has bolstered the country's development and resilience.
Let's analyze other data now to assess whether it's a favorable time to purchase property in this country.
Colombia will see substantial development
Positive
Second thing to do before buying a property: determine if the country's economy is in good shape.
Based on the IMF's outlook, Colombia is likely to finish 2024 with a growth rate of 1.1%, which is promising. As for 2025, the experts say 2.5%.
The pace will even accelerate since Colombia's economy is expected to increase by 11% during the next 5 years, resulting in an average GDP growth rate of 2.2%.
The expected sustainable growth rate in Colombia indicates a stable and expanding economy, which can lead to increased demand for real estate as more people and businesses seek properties. This growth can drive property values up over time, making it a potentially profitable investment for real estate investors.
On top of that, there are other indicators to pay attention to.
Colombian business owners have a neutral outlook towards market conditions
Neutral
The GDP growth is a valuable measure, but may not fully account for business community expectations. Thankfully, in Colombia there is a designated metric that is regularly reported. It's not the case for every country, so we're lucky.
The Business Consumer Index (BCI) is a metric that evaluates how confident business leaders feel about the present and future economic conditions. It's determined by conducting surveys and assessments.
According to the Fedesarrollo's data, the latest Business Confidence Index value is -1 for Colombia. For interpretation, it's quite low.
There hasn't been significant change, considering that the BCI score, 12 months ago, registered at 4.
A minimal level of confidence among local businesses in Colombia can result in a sluggish property market with limited investment and growth. The potential for property appreciation may be constrained, and buyers might encounter difficulties in finding available properties and motivated sellers.However, it is important to acknowledge that this minimal confidence level alone does not directly impact growth. History has demonstrated many instances where a low Business Confidence Index was followed by subsequent growth. Therefore, it is essential for us to consider a broader range of data points to gain a more comprehensive understanding.
House prices are increasing without interruption in Colombia
Positive
Colombia's home prices have increased by 37.9% in 5 years according to Dane, Colombia.
It means that if you had bought a hacienda in Cartagena for $625,000 five years ago, then it would now be worth around $862,000.
Nowadays, we can observe a relentless surge in house prices, with continuous increases observed across the real estate market.
It's definitely a green flag for whoever wants to invest in the Colombian property market. However, you might want to wait for the next market correction, so you can get better prices.
You can find a more detailed analysis of the real estate prices in our property pack for Colombia.
Everything you need to know is included in our Colombia Property Pack
Colombia's population is growing and getting richer
Positive
Before you buy a property in a country, think about population growth and GDP per capita, because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Colombia, the average GDP per capita has changed by 8.5% over the last 5 years. It's a good number. Furthermore, the Colombian population is growing (+7% in 5 years).
This means that, if you purchase a penthouse in Cartagena and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, the demand for rentals is expected to increase in Colombian cities such as Bogotá, Medellín, or Cartagena in 2025.
Rental yields are average in Colombia
Neutral
It's time to analyze the rental yields..
It represents the annual rental income generated by a property divided by its purchase price or market value. For instance, if a property in Colombia is purchased for 500,000,000 COP and generates 30,000,000 COP in annual rental income, the rental yield would be 6%.
According to Numbeo, rental properties in Colombia offer gross rental yields ranging from 3.3% and 6.0%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Colombia.
It means that your income potential is relatively moderate.
Everything you need to know is included in our Colombia Property Pack
In Colombia, inflation is projected to remain minimal
Neutral
Simply put, inflation is the general increase in the cost of living.
It's when your usual cup of Juan Valdez coffee costs 4,500 Colombian pesos instead of 4,000 Colombian pesos a couple of years ago.
If you're considering investing in a property, high inflation can bring you several advantages:
- Property values tend to increase over time, leading to potential capital appreciation.
- Inflation can result in higher rental rates, thereby increasing the cash flow from the property.
- Inflation reduces the real value of debt, making mortgage payments more affordable.
- Real estate can act as a hedge against inflation, preserving the value of the investment.
- Diversifying into real estate provides stability during inflationary periods.
As per the IMF's forecasts, over the next 5 years, Colombia will have an inflation rate of 1.0%, which gives us an average yearly increase of 0.2%.
This data means that Colombia is expected to have near-zero inflation then. Unfortunately, buying a property now may not lead to significant price increases or high profits in the future.
Is it a good time to buy real estate in Colombia then?
Time to conclude !
2025 is shaping up to be a promising year to invest in property in Colombia, thanks to the country's relative stability. Over the next five years, Colombia's economy is expected to grow by 11%, which translates to an average GDP growth rate of 2.2%. This kind of economic expansion is a good indicator of a stable and thriving economy. As the economy grows, more people and businesses will be looking for properties, which can drive up demand and, consequently, property values. This makes it an attractive time for real estate investors to consider buying property in Colombia.
Another reason to consider investing in Colombian real estate is the continuous increase in house prices. As the population grows and becomes wealthier, the demand for housing naturally rises. This trend suggests that property values will continue to appreciate, offering a potentially profitable opportunity for those who invest now. The growing population and increasing wealth mean that more people will be looking to buy or rent homes, further boosting the real estate market.
Rental properties in Colombia also present a compelling investment opportunity. According to Numbeo, rental yields in Colombia range from 3.3% to 6.0%. These yields are quite attractive for investors looking to generate income from their properties. With a growing population and economy, the demand for rental properties is likely to remain strong, ensuring a steady stream of rental income for property owners.
Lastly, Colombia's inflation is projected to remain minimal, which is great news for potential property buyers. Low inflation means that the purchasing power of your money is preserved, and the cost of living remains stable. This economic environment is conducive to making long-term investments, such as buying property. With all these factors combined, 2025 seems like an opportune time to invest in Colombian real estate, offering both stability and potential for growth.
We wish this article has been of help!. If you need to know more, you can check our our pack of documents related to the real estate market in Colombia.
-Will real estate prices go up in Colombia?
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.