Many of our investor clients arrive to our offices with the following question, “How much does a Penthouse cost?” I kind of laugh every time I hear the question because we hear it so often. Obviously the answer is… it depends! And I usually follow up the question with a question of my own, “why do you want a Penthouse?” Here are some common answers:
1) Seems like penthouses are cheap compared to home
2) I think it will be a good investment/rental
3) I don’t have a good reason, I just want a penthouse
At Casacol we have a large porfolio of Penthouse rentals that our clients have acquired over the years. We even have a page dedicated to penthouses for sale in Medellin and also penthouse rentals in Medellin where you can see for yourself what the market has to offer.
Are penthouses really that cheap?
Culturally North Americans and Asians especially have been conditioned to putting a very high premium on the upper/top floor/penthouse property in high rise towers in high density cities. There’s something alluring to being on top, having unobstructed views, outdoor space, few/no neighbours, no one above. I’m also guilty, I live in a 3 level penthouse space and probably wouldn’t be as happy living anywhere else.
Medellin locals? Not so much. Only in the last few years you’ve seen what is called a “prima de altura” or height premium applied to some new developments but even then maybe you see a 5% (or 10% MAX) $/square meter differential in value going from the bottom to the top floor. Not the 30 to 50 to 100 percent premiums that you can often find in other major cities around the world.
This Singapore penthouse is currently a record listing at $72M USD.
So if you come to Medellin shopping for a Penthouse with large premiums in mind, you will be pleasantly surprised to find that the premium here is actually quite minimal. Note that penthouse properties tend to be quite a bit larger than the others in any building so that the sum of all the extra meters naturally makes the price higher, but on a square meter basis you may find Penthouses to be “cheap”.
Do penthouses make for good investments?
At Casacol our most expensive rentals are definitely our penthouse rentals. It’s safe to say that you’ll spend more for a typical penthouse and it will rent for more too. However compared to a daily rental property on a pure ROI basis, penthouses will almost always fall short. If you’re looking for maximum rental ROI, then you probably shouldn’t be looking at penthouse properties or any other monthly rental property for that matter, you should be looking at daily rental investments. The fact is that we don’t have even 1 penthouse property that rents (legally) on a per night basis and any daily rental penthouse you do find is an illegal rental 99% of the time.
But that’s cash flow, what about appreciation? A number of Casacol penthouse owners have purchased with the philosophy that Medellin penthouse properties are undervalued on a global basis and while the short term rental ROI may lag a daily rental, the long term appreciation potential should be better than market. I think as more and more foreign investors enter the market the Medellin real estate market that this may be a very valid investment philosophy indeed. I personally feel the same way.
I don’t care, I just have to have a penthouse.
The purely emotional buyer sometimes only wants a penthouse and isn’t looking at anything else. While we are happy to serve this client profile, I’m even happier if he enters into the investment with a specific goal in mind. If you’re buying to live, so be it, you decide what’s right for your lifestyle and determine a price for that. If you’re not planning on occupying the unit (rental/investment only) then at least do the math on ROI, compare the options on the market and let’s find the one that works best for you.
So what do I have to budget?
In this current market (Sept 2017) I’ve seen some of our clients pick up some fantastically priced true penthouse properties in the $500-700M COP range (about $200-$225k USD). However there’s a lot of competition for these kinds of units, if you aren’t a liquid buyer with local banking then you’re going to lose out.
In the $1,000M-$1,500 COP ($300-$500k USD) range is where you’re eyes will start to widen in awe, but the buyers thin out as well. Properties in this range are often much more negotiable because they are more difficult to sell. This is where some really good values can be had as well.
And in the $2,000M+ COP range, you see another effect start to take place. The buyers are unusually wealthy and sometimes don’t care if they sell or not. We’ve seen properties in this range sit on the market for 1-2 years until the right buyer comes along. Go figure.
If you’ve made it this far in the article and are interested in chatting with us further I suggest you reach out to [email protected] who’s brokered dozens of penthouse properties and is my defacto penthouse specialist. Any local agent/seller who has a penthouse listing calls Juan Pablo first and many times they sell even before they get photographed.
And for penthouse rentals or to better understand the dynamics/economics of penthouse rentals [email protected] is our penthouse property manager who can help renters/investors alike navigate the market. Joanna typically has an occupancy rate of close to 90% on our penthouse rental portfolio, don’t hesistate to reach out.
Thanks for reading and happy Medellin penthouse shopping!
Brad Hinkelman – [email protected]
Founder/Owner – Casacol SAS