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Colombia: A South American Jewel

Cartagena Skyscapers

1 December 2014

Improved transparency and transaction processes have brought consumer confidence back to the Colombian real estate market.

One of the best countries to do business in Latin America, according to the World Bank, Colombia is taking its place on the global property market, helped on by increased transparency and improved transaction processes and legal practice.

Forbes ranked Colombia in the Top Ten Hottest Real Estate Markets on Earth in 2013, with prices rising 8.3 percent in 2012. According to the magazine, a 1,100 sq ft apartment in Bocagrande, Cartagena costs USD 368,000 on average.

Situated in northwest South America, bordered by Panama, Venezuela, Brazil, Ecuador and Peru, Colombia is rich in natural resources and this has long been its number one source of income.

The country’s main exports include mineral fuels such as oil and gas, coffee, meat, pulp and paper, and precious stones – Colombia is known as an important global source of emeralds.

Investment and development has also been made in renewable energy, including hydroelectricity, with the country ranking in the top 10 in the 2014 Global Green Economy Index in terms of greening efficiency sectors.

Colombia’s economy is strong, and benefits from good liquidity and growing credit. Its Gross Domestic Product (GDP) as at October 2014 was USD 641.5 billion, according to the International Monetary Fund (IMF), placing it 28th in the world.

Now, the country’s real estate market is garnering global attention, thanks to improved business conditions and investor confidence.

Real estate investment funds and developers, such as US-based Equity International and Paladin; German-sourced capital – Jamestown; domestic firms such as Ospinas; and international shopping centre specialist Sonae Sierra are raising capital and investing or developing in Colombia.

According to JLL’s recent ‘Real Estate Raises the Bar – Data Disclosure and Technology Lift Transparency Levels’ report, Colombia’s improved real estate fortunes are closely linked to its improved reputation in the global market. This, according to JLL, is because Colombia has achieved transparency gains in its regulatory and legal environment. For example, market participants’ expectations for entering into contracts have become much more professionalised and routine. A higher, more ‘international standard’ has developed, with enforceability of contracts being taken quite seriously by participants with the backing of the courts in the major cities of Bogota, Medellin, Bucaramanga and Cali.


Colombia has seen notable improvements in the availability of property market data – especially in the office and industrial sectors, as global real estate investors, brokerages and other services firms have been expanding their presence and activities. In addition, formal RFPs for real estate projects and transaction assignments are now far more commonplace in the primary cities than was the case just two to three years ago.

This greater transparency had led to increased business in the property sector.

“In Colombia the asset types that are growing fastest are middle class housing in all big cities; office in Bogota, Medellin, and Barranquilla; and industrial/logistics in Barranquilla, Bogota, Medellin, and Cali. Colombia is regionally diversified – there are several large cities where investors are discovering opportunities,” said Josh Gelormini, Vice President, Americas Research, JLL.

“One significant factor behind Colombia attracting so much international attention and investment is its strong fiscal management and macroeconomic policies in recent years.”

For 2013, Colombia’s Ministry of Commerce, Industry and Trade reported a record level of FDI of nearly USD 17 billion.

“In recent years, there has been a broad diversity of countries where this increased investment is originating from, including the U.S., Canada, France, Switzerland, India and Japan,” Gelormini added.


Another important set of developments is the ongoing proliferation of Free Trade and other bilateral agreements, with geographies such as the U.S., South Korea and the EU, as well as the stock market merger between Colombia, Peru and Chile. Such agreements have necessitated more uniformity and a standardisation of stock markets, trade regulations, and legal and regulatory frameworks.

This standardisation has led to increased regulatory and enforcement focus over recent years on cracking down on money laundering in order to facilitate transparency in international trade agreements, as well as more stringent legal standards for accounting and contract enforcement, including in real estate transactions.

“Free Trade Agreements have had a profound impact on Colombia’s economy by expanding the market reach of Colombia producers and facilitating more sophisticated imports. The knowledge spill over that this has generated cannot be understated.

“Equally important is the institutional effect of these agreements: they have necessitated more uniformity between, and a standardisation of equity markets, trade regulations and broad legal and regulatory frameworks,” said Gelormini.

One example of how uniformity is benefitting Colombia’s reputation has been an increasing focus in recent years on cracking down on money laundering in order to facilitate transparency in international trade agreements, and to attract increasing amounts of direct investment and trade.

“Strong and credible regulatory institutions combined with open, pro-investment and trade policies are believed to have been a signal to the international community to gain confidence in Colombia’s economy – including its commercial property markets,” Gelormini added.


More information – and higher quality information – is becoming available in the country’s property markets. This importantly includes property market fundamentals data. But what should would-be property investors be aware of if considering purchasing in Colombia?

“It remains critical to highlight here that the level and depth of information that North American and European investors are accustomed to seeing in those markets simply will not be found in Colombia – much as in other markets in Latin America,” explained Gelormini.

Other areas of improvement investors should know about include that conventional practice for transactions involving institutional quality assets has quickly developed into more of an international standard with respect to entering into contracts and their enforceability.

“Still, investors need to be cognisant that investing in the country’s secondary markets – those beyond Bogota, Medellin, Bucaramanga and Cali – and along the Caribbean coast often entails a lower level of transaction processes and legal practice, with more lax standards and irregular enforcement.  Additionally, Colombia has somewhat less widespread adherence to real estate industry professional standards than in some other major Latin American markets, and the commercial property market in Colombia remains – despite growing international interest – generally dominated by locally-based, private investors to date,” Gelormini remarked.

While would-be investors may remain wary of secondary markets Colombia has improved its contract enforceability when doing business.

Additionally, more stringent legal standards for accounting – including those related to real estate transactions and investments – have been implemented.

“On the global stage, Colombia’s standing within the broad regulatory and legal component of real estate transparency is roughly ranked in the middle of the pack – slightly ahead of where the country ranks in overall real estate transparency.  And, of the five main categories of transparency, Colombia’s score within regulatory and legal is second only to its score for the transparency of the transaction process,” Gelormini said.

Colombia has certainly improved its image, and with its Caribbean coast line and close proximity to the U.S., its real estate fortunes look set to continue to grow.