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
Are you considering investing in Colombian real estate? Do you know the legal requirements for foreigners buying property in Colombia? What are the current market trends and potential pitfalls you should be aware of?
We will lay down recent insights, providing you with a comprehensive guide to navigate the Colombian property market in 2025. Here, no guesswork, we rely only on solid data to ensure your investment is informed and secure.
Actually, we know this market inside and out. We keep tabs on it regularly, and all our discoveries are reflected in the most recent version of the Colombia Property Pack
This article gives you valuable insights, but remember, it’s not and will never be investment advice. We pull data from a range of sources to provide you with the most accurate picture possible, yet we can’t guarantee complete accuracy. Markets are difficult to predict. Make sure to do your own research and consult a professional before making any financial moves. Any risks or losses are your own responsibility.
1) You can capitalize on Medellín’s Provenza and Bogotá’s Zona G, attracting high-paying foreign tenants
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
3) You may skip luxury finishes in mid-range Colombian neighborhoods
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
3) You will discover hidden gems by meeting locals at real estate fairs and clubs, as they rarely rely on digital listings alone
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) You gain a strategic edge by targeting neighborhoods with new metro lines in Medellín or TransMilenio expansions in Bogotá
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) You can unlock tax benefits by setting up a Colombian corporate entity instead of buying as an individual
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) You must know local notaries dominate the transaction process, and their fees, though minor, are non-negotiable and cash-only!
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) You must know that paying in cash or direct deposit is key in Colombia, mastering this norm speeds up your real estate 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) You must hire a bilingual real estate lawyer to dodge hidden clauses and misinterpretations
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
Everything you need to know is included in our Pack for Colombia
9) You must secure a "Certificado de Tradición y Libertad" to avoid costly surprises
In Colombia, property buyers often face unexpected legal issues if they skip checking the property's history before making an offer.
One major pitfall is discovering outstanding liens, which are debts or legal claims that could become the new owner's responsibility. To avoid this, it's essential to get a "Certificado de Tradición y Libertad," a document that reveals the property's history, including any existing liens. This is part of the "Estudio de Títulos" process, ensuring the seller truly owns the property and that there are no hidden debts.
Another headache for buyers is unresolved inheritance claims. These disputes can drag on for years, sometimes taking 6 to 10 years to resolve in Colombian courts. By obtaining a property title report, buyers can spot these issues early and steer clear of lengthy legal battles.
In Colombia, the real estate market can be tricky, with inheritance disputes being a common issue. These disputes not only delay the buying process but can also lead to unexpected costs. A property title report helps identify such problems, saving buyers from potential headaches.
For those looking to invest in Colombian real estate, understanding the importance of a "Certificado de Tradición y Libertad" is crucial. This document is a safeguard, ensuring that the property is free from legal entanglements and that the seller has the right to sell.
Skipping this step can lead to costly surprises, like discovering that the property has unresolved legal claims or debts. By being proactive and obtaining the necessary documentation, buyers can protect themselves from these common pitfalls.
Sources: Valora Analitik, The Latinvestor, Litigation and Alternative Dispute Resolution in Colombia, Mexico...
10) You will discover Bogotá lures stable tenants, while coastal properties promise high short-term rates but risk vacancies
Bogotá is a magnet for professional tenants thanks to its thriving business scene and robust 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%, showing a strong demand, especially in well-connected neighborhoods with plenty of amenities. This stability is a dream for investors looking for steady rental income.
Meanwhile, coastal cities like Cartagena and Medellín are hotspots for tourists, which means higher short-term rental rates. But beware, this demand is seasonal, leading to fluctuations and higher vacancy risks when the tourists leave.
The rental scene in these coastal areas is more unpredictable, with significant seasonal variations that can affect your rental income. It's a trade-off between potentially higher earnings and the risk of empty properties during off-peak times.
Sources: The Latinvestor, Invest in Bogotá, Statista
11) You unlock massive potential by investing in Colombia's second-tier cities like Pereira or Bucaramanga
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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An increasing number of foreign investors are showing interest in Colombia. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.
12) You will discover that buying apartments in estrato 3 or 4 guarantees stable tenants, unlike estrato 5 or 6 with demanding renters
Buying an apartment in estrato 3 or 4 can lead to more stable, long-term tenants.
In these areas, tenant turnover rates are lower because the economic conditions are more stable and the communities are tighter-knit. For instance, tenants in estrato 3 typically stay for 2-3 years, while those in estrato 5 often move after just 1-2 years. This is because people in higher estratos, like 5 and 6, are always on the lookout for luxury amenities and tend to move more frequently.
Rental yields are another factor to consider. In estrato 3 and 4, yields are generally 8-10%, which is higher than the 6-8% seen in estrato 5. This is largely due to lower vacancy rates and fewer rent negotiations in the lower estratos. Tenants here are usually more content with their living conditions and less inclined to haggle over rent.
In estrato 5 and 6, tenants often expect more luxurious amenities and are more likely to negotiate rent, which can lead to higher vacancy rates and lower rental yields. This makes estrato 3 and 4 more appealing for those looking for a steady income from their property investment.
Understanding these dynamics can be crucial for making a smart investment. If you're looking for a property that offers a stable rental income, estrato 3 and 4 might be your best bet. The communities in these areas are generally more cohesive, which contributes to longer tenancy periods and less hassle for landlords.
Sources: Global Property Guide, Golden Harbors, The Latinvestor
13) You will discover that small penthouses or top-floor units without elevators, though harder to sell, yield higher rents
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
14) You will discover that heritage properties in Cartagena or Santa Marta offer higher tourist rental returns than modern apartments
Heritage properties in Cartagena and Santa Marta offer a unique charm that modern apartments just can't match.
These properties often boast colonial-era designs and are sometimes nestled in UNESCO World Heritage-listed areas, making them a magnet for tourists craving an authentic experience. The strict preservation rules might make renovations tricky, but they also ensure the historical integrity that tourists love.
Even though the renovation process can be a bit of a hassle, the payoff is a property that truly stands out. It appeals to travelers who are willing to pay more for that genuine touch of history. In fact, tourist surveys from recent years show a clear preference for staying in these heritage gems.
This preference translates into higher occupancy rates and longer rental periods, which can mean more rental income for you. Plus, the scarcity of heritage properties compared to modern apartments only adds to their demand, further boosting their rental potential.
Insider tip: In Cartagena and Santa Marta, heritage properties often command higher rental returns from tourists than their modern counterparts. This is because tourists are drawn to the authentic experience these properties offer, making them willing to pay a premium.
So, if you're considering investing in property in these areas, heritage properties might just be your best bet for a lucrative return. They offer a unique blend of charm and profitability that modern apartments can't quite compete with.
Sources: Global Property Guide, Luxury Lifestyle Awards, Medellin Advisors
Everything you need to know is included in our Property Investment Pack for Colombia
15) You will captivate high-paying renters by using local, handcrafted furniture, of authentic Colombian style
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