As a follow up to my posting last year on the top 10 reasons to invest in Colombian real estate in 2014, I wanted to refresh the theme for 2015 with some of the events that have transpired over the last year. Even despite the crash in oil prices, the core economic and social fundamentals of Colombia remain intact. The “Colombia story” is one that will continue to play out over the next 5, 10, 20+ years and our astute global investors/clients should find 2015 a fantastic opportunity to invest in Colombian real estate.
So here they are, in no particular order, my top 10 reasons to invest in Colombian real estate in 2015:
The big news story over the last 12-24 months has been the peace process with FARC and in 2015 we’re on the verge of signing a peace agreement with the rebel group for the first time in almost 40 years. The topic is complicated but sooner or later you’ll see defense dollars get turned into road and highway dollars and this country will continue to boom as all kinds of new doors and opportunities open up from the resulting peace process.
Colombia is in a demographic sweet spot. A large, young, educated population means lots of jobs, homes, babies, and taxes that will support this country for the decades to come.
8) A real middle class story – unlike the United States and parts of Europe
Many smart, middle class (estrato ¾) Colombian kids today can get a highly subsidized, top notch education and make more money with a university degree than both of their parents combined. That is how you start a middle class revolution.
7) Real economic growth
Despite the fall in oil prices, Colombia is still poised to have one of the fastest economic growth rates in the region and in the world. You can read the World Bank LATAM regional outlook for 2015 here. Plus, the national highway renewal project that Santos is running could easily add 1.5-2.5 points of real GDP growth for years while providing Colombia with a much needed infrastructure improvement.
6) The US Dollar
For American investors, the abrupt move upward in the US Dollar makes for a unique opportunity to diversify some assets out of dollars and into emerging markets like Colombia. This could last weeks, months, or years, who knows, but the long term fundamentals of Colombia will bring strength back to the Colombian Peso sooner or later – take the long view.
5) Sam Zell likes it
I posted back in November that the legendary real estate investor Sam Zell thinks Colombia is the #1 place in the world to invest. We at Casacol would suggest you don’t do that blindly but Sam
Zell is the kind of guy that real estate investors around the globe listen to when he speaks up.
4) Bubble talk
Some people like to call bubble every time they see new construction. While there’s no doubt that builders anywhere in the world have the possibility to overshoot demand, the cost to rent/buy ratio (like a stock market PE) is not unreasonable across various cities and estratos, just do the math here vs. at home. Plus minimum 30% down payments, strict mortgage approvals and 15-20 year maximum amortization periods make for difficult bubble conditions in Colombia.
Tourism has grown by 10.6% per year (compounded) for the last 10 years. Anyone who thinks this would abate in the next 10 years clearly hasn’t been to Colombia yet. The Wall Street Journal and New York Times talk about travel to Colombia now as if they’ve been doing it all along.
2) Efficient property management
With a sustained boom in business travel, GDP and tourism comes a demand for all types of short, mid and long term lodging. At Casacol our favorite category are short and midterm serviced
apartments to satisfy what I call the “Airbnb generation” – another trend that is just getting started.
1) Stable, high, monthly income production
Regardless of age or nationality, this is what the global investor wants in 2015 – a bankable check every single month without having to think too hard.
This is the opportunity that Colombia offers to the real estate investor in 2015. And at Casacol it would be our pleasure to assist.
Happy house hunting!
Brad Hinkelman – [email protected]
Founder/Owner – Casacol SAS