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
Thinking about diving into Colombia’s real estate market? Before you do, it’s crucial to understand the legal steps, tax implications, and cultural nuances involved. Foreign investors often face unique challenges, but with the right guidance, these can be navigated smoothly. We’ve worked closely with local experts and have firsthand experience in this vibrant market. This blog post is designed to give you a clear roadmap, answering the most common questions we receive from international buyers. Our aim is to equip you with the knowledge you need to make informed decisions. If there’s anything you feel we’ve missed or if you need more details, please reach out. Your feedback is invaluable in helping us enhance our guidance for everyone.
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1) Target digital nomad hotspots like Medellín’s Provenza or Bogotá’s Zona G for high-paying foreign tenants seeking short-term leases with premium Wi-Fi and coworking access
Thinking about buying property in Colombia? Consider Medellín’s Provenza or Bogotá’s Zona G.
These areas are buzzing with digital nomads, thanks to Colombia's new digital nomad visa. Medellín alone welcomes about 8,300 digital nomads every month, all eager for short-term rentals with top-notch internet and coworking spaces. This visa, introduced in 2022, is renewable for two years, making it a magnet for remote workers.
Why are these neighborhoods so popular? Reliable internet and a growing number of coworking spaces make them ideal for digital nomads. Provenza and Zona G are at the heart of this trend, offering everything remote workers need to stay connected and productive.
Surveys from platforms like Nomad List consistently highlight Medellín and Bogotá as top spots for digital nomads. Rental yields in these areas are climbing, making them attractive for property investors. The demand for short-term rentals is on the rise, driven by the influx of remote workers.
Colombia's improving infrastructure is another draw. The country has invested in better internet and amenities, which are crucial for attracting digital nomads. This has led to a boom in coworking spaces, especially in hotspots like Provenza and Zona G.
For property buyers, this means a chance to tap into a lucrative market. Higher-paying foreign tenants are seeking short-term leases with premium Wi-Fi and coworking access, making these neighborhoods a smart investment choice.
Sources: Golden Harbors, Finance Colombia, Marketplace, Euronews
2) Opt for simple, durable materials in mid-range areas, as tenants value reliability over luxury, maximizing your renovation budget
In Colombia's mid-range neighborhoods, tenants prioritize basic amenities over luxury finishes.
In areas like Chapinero and Usaquen in Bogotá, renters are more interested in security, public transport access, and nearby grocery stores than in high-end finishes. This insight comes from tenant surveys and feedback from local property managers, who consistently emphasize these priorities.
Rental yields in these neighborhoods are solid, ranging from 4.76% to 8.15%. However, adding luxury finishes doesn't boost these yields significantly, indicating that tenants aren't willing to pay extra for such upgrades. The focus should be on providing basic comfort and reliability instead.
Colombian real estate experts agree that using durable and low-maintenance materials is key. This approach not only meets tenant expectations but also helps stretch renovation budgets further, aligning with the trend of achieving higher returns by avoiding luxury finishes.
Investors in Colombia have found success by focusing on simple, durable materials rather than luxury upgrades. This strategy is supported by market reports and expert opinions, which highlight the importance of meeting tenant needs without overinvesting in unnecessary features.
Sources: Global Property Guide, Arepas del Gringo, Bloomberg Linea
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.
3) Attend real estate fairs or join local clubs in Colombia, as many opportunities aren't listed online
In Colombia, personal interactions remain crucial in the real estate market despite the rise of digital platforms.
While 43% of home buyers start their search online, a significant 86% still rely on real estate agents for guidance. This highlights the importance of personal assistance over digital listings.
In rural areas, the reach of online platforms is limited, making many opportunities invisible online. This is particularly true in less urbanized regions where digital connectivity is lower.
Real estate fairs and local clubs are vital for connecting buyers and sellers. These events, even as they recover from the pandemic, offer a space for networking and discovering hidden opportunities not found online.
Local buyers and sellers often prefer in-person meetings at real estate fairs or through clubs, revealing opportunities hidden from online platforms.
Sources: Promoleaf, YouTube, NAR Realtor
4) Focus on neighborhoods with infrastructure upgrades, like Medellín's new metro lines or Bogotá's TransMilenio expansions, for long-term property value growth
Investing in areas with new infrastructure projects like Medellín's metro lines or Bogotá's TransMilenio can be a smart move.
When cities upgrade their infrastructure, property values often rise. For instance, the TransMilenio expansion in Bogotá has historically boosted property values by 15-20% along its main line. This is largely due to reduced travel times and improved safety, making these areas more attractive.
Medellín's Metrocable is another example, transforming neighborhoods by connecting them to the city center. This has led to increased property and land values as improved transportation makes these areas more accessible and desirable, drawing in new businesses and investments.
Real estate trends show that projects like the expansion of Bogotá's El Dorado Airport are expected to boost property values due to increased demand. Government announcements about upcoming projects, such as the 4G program, indicate further potential for property value increases.
Economic studies back this up, showing that infrastructure improvements often correlate with economic growth and increased property demand. Testimonials from property investors and media coverage also highlight the positive impact of these projects on local real estate markets.
Sources: Privacy Shield, WRI, Business Wire
5) Consider setting up a Colombian corporate entity for potential tax benefits and easier business expansion
Setting up a Colombian corporate entity can be a smart move for property buyers.
In Colombia, corporate entities enjoy a capital gains tax rate of just 15%, which is significantly lower than the individual income tax rates that can soar up to 39%. This means that by opting for a corporate structure, you could save a hefty sum on taxes.
Another perk of going corporate is the easier access to financing. Lenders often view corporate structures as more stable and transparent, making it simpler to secure loans or credit. This can be a game-changer if you're planning to expand your business operations down the line.
The Colombian government sweetens the deal with initiatives like Resolution SDH 650, offering a 1% discount on real estate value under certain conditions. These incentives make establishing a corporate entity even more enticing, as they can cut costs and boost profitability.
Colombia is actively encouraging foreign investment, and setting up a corporate entity aligns perfectly with this trend. The government’s initiatives are designed to make the process smoother and more beneficial for investors.
By choosing a corporate route, you not only gain tax advantages but also position yourself for future business growth in Colombia's dynamic market.
Sources: Dentons, Golden Harbors, Chambers
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6) Expect local notaries to manage most transactions, with non-negotiable fees payable in cash, despite being a small part of the total cost
In Colombia, notaries play a crucial role in property transactions.
Every real estate title transfer must be done through a public document, which means notaries are essential in the process. This legal setup ensures they handle a significant part of the transaction, making them indispensable.
When it comes to fees, they might seem small compared to the overall property cost, but notary fees are fixed and non-negotiable. According to the Superintendencia del Notariado y Registro, these fees are set at 0.3% of the deed value, plus an additional 19% IVA, ensuring uniformity in all transactions.
Interestingly, many expats in Colombia have noted that notary fees are often paid in cash. This reflects the traditional practices still common in the country, where cash transactions are preferred in many areas.
Local notaries are deeply embedded in the legal framework, and their involvement is not just a formality but a legal necessity. They ensure the legality and authenticity of property transactions, providing peace of mind to buyers.
So, if you're considering buying property in Colombia, be prepared for this unique aspect of the process. Understanding the role of notaries can make your transaction smoother and help you navigate the local real estate market with confidence.
Sources: Medellin Advisors, Global Property Guide, Arepas del Gringo
7) Expect to make cash or direct bank deposits for down payments in Colombia, as this cultural norm can speed up closing deals
In Colombia, many property sellers expect down payments in cash or direct bank deposits.
This preference stems from a cultural norm where about 70% of new home sales involve cash payments, especially in social housing. The Colombian Chamber of Construction highlights this trend, which can be a bit surprising for newcomers. If you're looking to buy, understanding this can be a game-changer.
Colombian sellers often list properties at higher prices, anticipating negotiations. This is a cultural norm, and if you manage it well, you can close deals faster. Many foreign buyers find that paying in cash gives them an edge, allowing them to negotiate better prices.
Real estate agents and financial advisors in Colombia stress the importance of cash transactions. They point out that sellers are more likely to finalize deals quickly when they receive cash, cutting down the complexity and time involved with mortgage financing.
For those new to the market, it's crucial to know that cash transactions can significantly speed up the buying process. This is especially true in areas where sellers are eager to close deals without the hassle of bank procedures.
Understanding these cultural nuances can make your property buying experience in Colombia smoother and potentially more rewarding. Being prepared to negotiate and pay in cash can be your ticket to a successful purchase.
Sources: Global Property Guide, Cali Adventurer, Deloitte
8) Hire a bilingual real estate lawyer in Colombia to navigate local customs and legalities, avoiding misinterpretation or hidden clauses
When buying property in Colombia, hiring a bilingual real estate lawyer is essential.
Many foreign investors have faced challenges due to language barriers and unfamiliar local laws. For example, FTI Consulting noted that some large companies struggled with land due diligence in Colombia, where unclear titles are common because of the country's history of land issues.
The Colombian legal system is complex, and understanding local land laws is crucial to avoid disputes. Bilingual lawyers, like those from Holland & Knight's Colombia Practice, offer bilingual and bicultural representation, helping clients navigate these complexities. This is vital because property contracts often contain hidden clauses that can lead to misunderstandings.
Expatriates who have successfully bought property in Colombia often credit bilingual lawyers for their smooth transactions. These lawyers bridge language gaps and provide insights into local customs, which is crucial for foreign buyers, especially in cities like Bogotá and Medellín.
In Colombia, the property market can be tricky, with foreign buyers making up a small percentage. Bilingual lawyers ensure that you understand every detail, from legal frameworks to cultural nuances, making the process much smoother.
For anyone considering buying property in Colombia, having a lawyer who speaks your language and understands the local market is not just helpful—it's a game-changer.
Sources: Holland & Knight, FTI Consulting, Medellin Guru
We made this infographic to show you how property prices in Colombia compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
9) Get a “Certificado de Tradición y Libertad” in Colombia to avoid costly surprises like liens or unresolved inheritance claims before making an offer
In Colombia, property buyers often face unexpected legal issues if they skip checking the property's history before making an offer.
One major headache is discovering outstanding liens on a property. These are debts or legal claims that the new owner might have to handle. The "Certificado de Tradición y Libertad" is your go-to document for this. It provides a detailed history of the property, including any existing liens, so you know exactly what you're getting into.
Another common snag is unresolved inheritance claims. If a property has been passed down through generations, there might be disputes over ownership. These can drag on in court for years, costing you time and money. By getting a "Certificado de Tradición y Libertad," you can spot any inheritance claims that need sorting out before you buy.
Real estate pros and lawyers in Colombia are big on recommending this document as part of the "Estudio de Títulos" process. This step ensures the property is free from legal issues, making your purchase smoother and safer.
Think of the "Certificado de Tradición y Libertad" as your insider's guide to avoiding costly surprises. It’s like having a backstage pass to the property's history, revealing any hidden problems that could come back to haunt you.
Skipping this step is like buying a car without checking under the hood. You wouldn’t want to drive off with a lemon, so why take that risk with a property?
Sources: Valora Analitik, Litigation and Alternative Dispute Resolution in Colombia, Mexico...
10) Consider Bogotá for stable professional tenants due to its cooler climate and business presence, while coastal cities offer higher short-term rental rates but more vacancy risk
Bogotá is a magnet for professional tenants thanks to its thriving business scene and stable economy.
In 2022, Bogotá's economy was a powerhouse, contributing 26.7% of Colombia's GDP with a whopping USD 95 billion. This makes it a major business hub, drawing in companies and professionals who keep the rental market buzzing.
Rental properties in Bogotá enjoy low vacancy rates of about 3% to 5%, especially in neighborhoods with good transport links and amenities. This means there's a healthy demand, and property owners can expect a steady rental income.
On average, residential properties in Bogotá offer a rental yield of around 6%, which is a solid return for investors looking for consistent income.
Meanwhile, coastal cities like Cartagena and Medellín are hotspots for tourists, leading to higher short-term rental rates during peak seasons. However, these cities face more vacancy risks when the tourist crowds thin out.
While the short-term rental market in these coastal areas can be lucrative, the risk of vacancy is notably higher compared to the more stable market in Bogotá.
Sources: Invest in Bogotá, Statista
11) Consider second-tier cities like Pereira or Bucaramanga for lower-cost investments, as their steady growth boosts property values
Consider investing in second-tier cities like Pereira and Bucaramanga for a smart property move.
These cities are quietly on the rise, with Bucaramanga's population growing steadily at 1.16% in 2024. This consistent growth is a sign of their potential, even if they aren't expanding as fast as the big players.
Infrastructure is a big deal here. Bucaramanga is part of the Autopista del Mar 1 project, which cuts travel times and boosts connectivity. Meanwhile, Pereira is reaping the benefits of the 4G road development program, making it easier to get around and more appealing for investors.
Compared to Bogotá or Medellín, investing in these cities is more budget-friendly. Lower initial property costs in Pereira and Bucaramanga mean you can get in on the ground floor and watch your investment grow as demand rises.
Plus, the government is on your side with incentives and policies that support regional development. This creates a favorable environment for investment, making these cities even more attractive.
So, if you're looking to invest, these second-tier cities offer a promising opportunity with their steady growth and strategic developments.
Sources: Macrotrends, Oxford Business Group, World Bank Group
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12) Target young tenants for small penthouses or top-floor units without elevators
In Colombia, especially in cities like Bogotá and Medellín, younger tenants crave properties with stunning views and privacy.
In 2023 and 2024, this trend became clear as more young people were willing to pay extra for the right location and views. For instance, in Bogotá, the average monthly rent for retail real estate hit around 109,700 Colombian pesos per square meter in the second quarter of 2024. This shows how much value they place on aesthetics and privacy.
Surveys consistently show that younger tenants in cities like Cali and Medellín prioritize aesthetics over convenience. They are drawn to properties with scenic views, and top-floor units are particularly appealing. These units offer the privacy and beauty that young renters are willing to pay a premium for.
Real estate reports from 2023 and 2024 reveal that rental yields for top-floor units are often higher than those on lower floors. This is because young tenants are ready to pay more for the unique features these units offer, like panoramic views and increased privacy.
Property managers and landlords in Colombia have shared that top-floor units perform strongly in the rental market. Their firsthand insights highlight how these units are perceived by younger tenants and how they contribute to higher rental income.
You'll find that small penthouses or top-floor units without elevators, though harder to sell, yield better rents if you cater to younger tenants who value views and privacy over convenience.
Sources: Statista, Golden Harbors, Global Property Guide
13) Furnish apartments with local, handcrafted décor to attract premium short-term renters seeking an authentic Colombian experience
Colombia is seeing a surge in demand for authentic travel experiences.
Travelers are flocking to Colombia, eager to dive into its rich culture through community-based tourism. This trend is a boon for small towns, offering them new economic opportunities that big cities like Bogotá can't provide. Visitors are not just passing through; they want to connect with the heart of Colombia.
The short-term rental market in Colombia is booming, with a 19.6% growth in 2023. This isn't just about finding a place to sleep; tourists are on the hunt for stays that offer a genuine taste of Colombian life. They're willing to pay more for accommodations that promise a cultural immersion, making their trips more meaningful.
Properties that showcase local, handcrafted furniture and décor are getting rave reviews. Guests love these authentic touches, which make their stays unforgettable. This is evident in the glowing feedback on platforms like Airbnb, where higher ratings often go to homes with a local flair.
Social media and travel blogs are buzzing with images of Colombian interiors, sparking even more interest. These platforms are powerful tools, spreading the word about the unique experiences awaiting in Colombia. It's clear that authentic Colombian style is a hot commodity among travelers.
For property owners, investing in local craftsmanship isn't just about aesthetics; it's a smart business move. By offering a slice of Colombian culture, they can attract premium short-term renters who are eager to pay extra for an authentic experience. This strategy not only boosts income but also supports local artisans, creating a win-win situation.
Sources: Uncover Colombia, PriceLabs, Safely
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.