Authored by the expert who managed and guided the team behind the Colombia Property Pack
Everything you need to know before buying real estate is included in our Colombia Property Pack
Why is Colombia emerging as a prime destination for property investment in 2025? Is it the attractive rental yields, the thriving tourism sector, or the competitive affordability compared to other international markets? These are common questions we encounter, given our close collaboration with developers, real estate agents, and investors like you. With the growing interest in this vibrant market, we've compiled our insights into a comprehensive article for everyone to benefit from.
Our aim is to present a compelling case for investing in Colombia's real estate market, drawing from our firsthand experience and in-depth market knowledge.
If you feel we've overlooked an important aspect or wish to learn more, please reach out to us (we respond very quickly). Your feedback enhances the quality of our content.
Lastly, please remember that this is not financial or investment advice. Real estate investment involves inherent risks, and market conditions can change unexpectedly. We strongly recommend conducting thorough research and consulting with a qualified financial advisor before making any investment decisions.
1) In Colombia, you’ll get better returns thanks to tax incentives for foreign investors
Colombia is rolling out the red carpet for foreign real estate investors with attractive tax incentives.
One of the key perks is a reduced income tax rate of 20% for companies operating in Free Trade Zones, a significant drop from the usual 34% elsewhere in the country. This means more money stays in your pocket, boosting the profitability of your investment.
For those eyeing construction projects, there's more good news. Certain projects, like new hotels, enjoy exemptions from Value-Added Tax (VAT) on construction materials. In larger municipalities, these projects benefit from a fixed 9% income tax for the first decade, and in smaller towns, this extends to 20 years, slashing development costs and enhancing returns.
Another sweetener is Resolution SDH 650, which offers a 1% discount on real estate value if you meet specific conditions. This makes the initial investment even more appealing for foreign buyers.
Colombia's strategy is clearly working, as seen in the surge of foreign investment, especially in hotspots like Cartagena. The city has witnessed a record number of non-resident tourists in 2023, and the trend is expected to continue with more international visitors in 2024.
These incentives are not just numbers on paper; they are driving real growth and making Colombia a prime destination for savvy investors looking to maximize their returns.
Sources: Golden Harbors, Invest in Colombia
2) With improved security from the peace agreement, more areas in Colombia are now appealing for real estate investment
The peace agreement in Colombia has made the country much safer and more attractive for real estate investment.
In 2023, the number of violent incidents between security forces and armed groups, like the ELN, dropped dramatically from 67 events in 2022 to just 11. This significant reduction in violence has created a more secure environment, encouraging investors to consider Colombia as a viable option for property investment.
Foreign investment in Colombia saw a 1.5% increase in 2023, with a notable portion flowing into sectors beyond mining and energy, such as real estate. This trend is fueled by Colombia's stable economic growth and low inflation, making it an appealing destination for international investors, especially those from North America and Europe.
In cities like MedellĂn and Cartagena, property values have been on the rise. The urban population is expected to grow, which will likely drive up demand for housing and push property prices even higher. Foreign buyers are particularly drawn to historic Colombian homes, with areas like Cartagena seeing significant interest and price increases.
Cartagena, known for its rich history and stunning architecture, has become a hotspot for international buyers. The demand for properties in these heritage areas is increasing, leading to a noticeable rise in property values. This trend highlights the growing appeal of Colombia's unique cultural and historical offerings.
With the peace agreement fostering a safer environment and economic stability attracting foreign investment, Colombia is becoming a prime location for real estate opportunities. The combination of reduced violence and economic growth is making the country an increasingly attractive option for those looking to invest in property.
Sources: ACLED, Expat Group
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.
3) With a favorable exchange rate, Colombia offers affordable property investments for foreign buyers
The Colombian peso's favorable exchange rate is making property investments more appealing for foreign buyers.
In 2023, the exchange rate hovered around 1 USD = 4,323.28 COP, meaning your dollars stretch further in Colombia. This depreciation of the peso against the dollar allows you to get more bang for your buck when buying property.
Take Bogotá, for instance. In its upper-middle-class neighborhoods, property prices range from COP 5 million to COP 8 million per square meter. In dollar terms, that's about USD 1,132 to USD 1,811, which is quite a bargain compared to other major Latin American cities.
Colombia's government is also rolling out the welcome mat for foreign investors. They've set up policies that let foreigners own property without any red tape, making it easier to dive into the market. This, along with the favorable exchange rates, is drawing more international interest.
Real estate agencies are buzzing with activity as more foreign buyers look to capitalize on these opportunities. The combination of affordable prices and a supportive legal framework is a win-win for investors.
So, if you're considering a property investment, Colombia's current economic climate and government incentives make it a compelling choice.
Sources: USD to COP Exchange Rate History for 2023, Real Estate Market in Colombia Review 2024, Colombia Residential Real Estate Market Analysis 2024
4) Urbanization in Colombia is driving up demand for homes in major cities
Colombia's urban population has surged, with 82.35% of people now living in cities by 2023.
Many Colombians are flocking to bustling cities like Bogotá, MedellĂn, and Cali, driven by the need for safety and better job opportunities due to the country's long-standing armed conflict. These cities are becoming vibrant hubs, attracting those seeking a fresh start.
The Colombian government is actively working on urban development, recognizing the urgent need for more housing in these growing cities. Their policies aim to tackle the housing shortage and enhance living conditions, making city life more appealing.
With a rising middle class, there's a noticeable shift towards properties that offer modern amenities and convenience. This demographic is eager to invest in homes that match their lifestyle aspirations, further boosting the demand for urban residences.
Colombia's urbanization trend is reshaping its real estate market, with major cities experiencing a significant increase in residential property demand. This shift is transforming urban landscapes and creating new opportunities for potential buyers.
Sources: Trading Economics, Urbanet, Statista
One of our partners sent us this video where an investor details how real estate investments in Cali offer strong yields, showcasing a case study of an entire building purchased at a low cost and renovated for profit.
5) With tourism booming, Colombia offers great opportunities for short-term rental investments in popular areas
Colombia's tourism boom is reshaping the landscape for short-term rental investments in its most popular areas.
In 2023, Colombia welcomed nearly 5.9 million international tourists, a 23.5% jump from the previous year. This upward trend is expected to continue into 2024, with a projected 24% increase in tourist arrivals in the first half of the year compared to the same period in 2023.
The short-term rental market is thriving, with active listings skyrocketing from 73,090 in January 2021 to 123,640 by September 2023. This surge reflects the high demand for short-term stays, as occupancy rates hit 35% in January 2023. Colombia is now the third-highest earner in Latin America from short-term rentals, boasting a 19.6% growth in 2023.
Government initiatives are fueling this growth, with $25 million USD invested in projects like infrastructure improvements and the promotion of nature and cultural tourism. The expansion of low-cost airlines has made Colombia more accessible, drawing in more international visitors.
Infrastructure developments, such as the Bogotá Metro Line 2, are set to improve mobility and air quality, making neighborhoods like Chapinero and Usaquén prime spots for short-term rental investments.
These changes are creating a vibrant environment for investors looking to capitalize on Colombia's tourism surge, with the potential for lucrative returns in the short-term rental market.
Sources: Medellin Advisors, Finance Colombia, Travel Pulse, Invest in Colombia
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6) International buyers are drawn to the country's vibrant cities and rich cultural heritage for unique property opportunities
Colombia's rich culture and lively cities are drawing in international buyers looking for unique properties.
In 2023, Cartagena saw a record-breaking influx of nearly 5.9 million non-resident tourists, signaling a strong comeback from the pandemic. This trend is set to continue, with a predicted 24% rise in international tourists for the first half of 2024.
The Colombian real estate market is thriving, with projections reaching USD 2.12 trillion by 2024. This boom is fueled by foreign investors who are attracted to Colombia's political and economic stability.
Cartagena, in particular, is experiencing a surge in tourism and infrastructure development, which is expected to further boost property values. The city's charm is evident in the growing communities of US and Canadian expatriates.
Many expats are buying local properties, seeing them as solid investments. In Cartagena's historic center, property values have soared, with some experiencing price hikes of up to 300% to 600% over a few years.
These trends highlight Cartagena's allure, making it a hotspot for international buyers seeking unique and culturally rich properties.
Sources: Golden Harbors, Colombia Real Estate Forecasts
7) The strategic location boosts real estate demand by making it a hub for international business
Colombia's strategic location has made it a hub for international business, significantly boosting real estate demand.
Thanks to its position as a gateway between North and South America, Colombia is a prime spot for international trade and business activities. Cities like Bogotá, MedellĂn, and Cartagena are bustling commercial hubs, offering easy access to various markets. This makes Colombia particularly appealing to international investors looking for a foothold in the region.
The U.S.-Colombia Trade Promotion Agreement has been a game-changer, eliminating tariffs on many U.S. exports and promoting trade and investment between the two countries. This has led to a surge in multinational companies eyeing Colombia as a strategic location for their regional offices.
Colombia isn't just resting on its laurels; it's investing heavily in infrastructure projects like ports and highways. These improvements have boosted connectivity and made business operations smoother. Add to that the government incentives for foreign investors in real estate, and you've got a recipe for a booming property market.
In cities like Bogotá and MedellĂn, property values are on the rise, reflecting the growing demand. This trend is a clear indicator of Colombia's increasing allure for those looking to diversify their investments. The country's strategic location and business-friendly environment are key drivers of this real estate surge.
Sources: Trade.gov, USTR, Golden Harbors
8) With new roads and public transport, the country’s infrastructure boost is raising property values
Colombia's infrastructure is rapidly improving, and it's making a big splash in the property market.
Thanks to heavy government investment, new roads and public transport systems are popping up all over the country. This isn't just about getting from A to B faster; it's part of a grand plan to make Colombia more connected and accessible. By 2023, many road projects were already 75% complete, and cities like MedellĂn are reaping the rewards with new metro and tunnel projects.
MedellĂn's cable car projects are a game-changer, especially for hillside areas. These projects are not only making these neighborhoods more accessible but also boosting their property values. It's like turning hidden gems into hot spots for potential buyers. The improved transport links are making these areas more attractive, and people are taking notice.
Meanwhile, Cartagena is seeing a surge in property prices, thanks to a mix of better infrastructure, increased tourism, and foreign investment. The city's charm is drawing international tourists and investors, and property values are climbing as a result. It's a win-win situation for those looking to invest in Colombian real estate.
Surveys show that properties near new transport facilities are in high demand, especially among the growing middle class. This trend is a testament to how infrastructure improvements are reshaping the property landscape. People want convenience, and they're willing to pay for it.
Colombia's infrastructure boom is not just about roads and railways; it's about creating opportunities and enhancing lifestyles. As the country continues to develop, property values are expected to rise, making it an exciting time for potential buyers.
Sources: Trade Commissioner Service, Financial Times
We have made this infographic to give you a quick and clear snapshot of the property market in Colombia. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
9) Colombia’s varied climate and geography make it a top choice for retirees and expats looking for homes
Colombia's diverse climate and geography are drawing in retirees and expatriates, boosting demand for homes.
Colombia is now seen as one of the top five most affordable places to live, making it a favorite for those seeking natural beauty and cultural richness without breaking the bank. The country's varied landscapes, from lush rainforests to stunning beaches, offer something for everyone, whether you prefer the cool mountain air or the warmth of the coast.
Recent changes in Colombia's visa programs in 2023 and 2024 have made it easier for foreigners to settle, especially those with modest retirement incomes. Now, retirees can live comfortably in Colombia on about $900 a month, enjoying a lifestyle that might be out of reach elsewhere. This has opened up opportunities for many to experience the vibrant culture and friendly communities.
Urban areas like Bogotá, MedellĂn, and Cartagena are seeing a real estate boom, fueled by urbanization and foreign investment. These cities have become expat hotspots, with a growing demand for housing driven by economic growth and a rising middle class. The lively city life, combined with affordable living, makes these areas particularly appealing.
Living costs in Colombia remain low, with retirees spending between $1,000 and $2,000 a month on essentials like utilities and healthcare. Rent is much cheaper than in the U.S., allowing retirees to stretch their savings further while enjoying a high quality of life. This affordability is a key factor in the increasing interest from international buyers.
Sources: Golden Harbors, SmartAsset, International Living
From this video, we realize that Colombia is a top retirement destination due to its affordable housing and pleasant climate, attracting many expatriates and retirees.
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.