Colombia is no longer the dangerous and threatening country people used to read about in newspapers or see on TV news. The country is on a direct path to transforming itself into an inviting travel destination for foreigners from around the world. Tourism in Medellin, Bogota, Santa Marta and other cities has grown steadily in recent years. There has also been an increase in foreigners investing in properties and businesses.
Recently, the peso has been dropping against the dollar, this month reaching an all-time low of 3,000 COP to 1 USD. Even with housing prices in middle class neighborhoods increasing by more than 10% in Medellin last year, it still makes sense to invest in Colombia right now.
Entering the real estate market in a different country can be very difficult, for many reasons. The language barrier alone can be an issue, as well as understanding the rules and regulations of the country. Colombia is no different, but that should not scare you away from buying real estate there.
Colombia has been called “the next Brazil,” in a good way. The country contains gold and oil, and produces hydroelectric power. There are many acres of forest, and coffee is grown everywhere. The Colombian population is young, and debt levels are low.
Why investing in Colombia is a good idea
Colombia itself is fantastic. Cities like Medellin are growing progressively, and crime is decreasing. Tourism has increased to the coastal cities, and in the interior of the country as well.
Medellin seems to progress every year, with new transportation systems, security, and new buildings. The best place to purchase property in Medellin is its upper class neighborhood, El Poblado. You can buy a 1000-square-foot condo in a well-constructed building in El Poblado for a very good price. It’s one of the city’s safest and best areas to live and invest in real estate. There are many restaurants and boutique stores in the area, as well as trendy cafes.
The current exchange rate of dollar (or Euro) to peso is very much in the foreign investor’s favor. The high end real estate in Colombian cities like Medellin, Cartagena, and Bogota is still less expensive to foreigners than in other cities around the world. This is a huge opportunity to take advantage of, and it will be worth it in the long run.
Tax law in Colombia makes buying real estate easier than in the past. Declare a Form 4 (Formulario 4) and file a Form 11 (Formulario 11) for your investment with the Colombian Central Bank (Banco de Republica). Afterwards, if you ever have to send money back to your home country, you can do so tax free, rather than paying a 33% capital gains tax like everyone else in Colombia.
Not everyone is aware of the great opportunity presented by investing in Colombia. Because of this, prices remain low. The smart move is to get ahead of everyone and start looking to invest in real estate now. Colombia still has fewer real estate-related web searches per month than Belize, Brazil, Jamaica, or Ecuador.
Gaining the rights to a property is as simple as creating a new Gmail account. You send in your money, register the title (escritura), and you own the property. Colombian property rights are regulated in the same way as in countries like Brazil, Mexico, Italy, and Costa Rica.
The banks in Colombia do not carelessly lend money to people. Typically, lenders require 30% down and a 10-15 year mortgage. Colombians do not believe that your home is an ATM, meaning there is no such thing as a home equity line of credit. As the housing market continues to grow, though, mortgage payments should extend to 20-plus years, and minimum down payments should fall, offering opportunities for long term price gains.
Colombian mortgage interest rates are high, around 12%. If a buyer can only afford to pay for a property with this kind of interest rate, it helps keep a lid on prices. Rates have come down recently, though, and we can expect that trend to continue as the country progresses.
Colombia has had the best-performing housing markets in all of Latin America for the past 10 years. The middle class is growing, with young, talented, and educated individuals helping the market to develop.
Colombia has it all: big modern cities and small colonial towns, two coasts, beautiful beaches, islands, history, amazing weather, food, culture, and the people. Everyone who travels through Colombia can attest that the reason they fell in love with the country was the Colombian people. Plan a trip to Colombia and see for yourself why you should buy real estate in this beautiful country.
If you are looking to buy a home or invest in real estate in Colombia, feel free to contact us today.