Why Real Estate in Bogotá is still a steal
First of all, buying real estate in Bogotá is not the first, tenth or even fiftieth most popular investment. And that’s already a great argument for it — but it goes far beyond that. It’s not just because the global public perception of Bogotá is still very much affected by the idea of drug cartels and violent guerilla taking over the streets of Colombia’s capital — which couldn’t be further from the truth, by the way.
One of the main arguments is actually the strong US Dollar. You see, right now, one US Dollar buys more or less 3,000 Colombian Pesos — whereas about two years ago one US Dollar would only buy 2,000 Pesos. The Euro is also enjoying more or less the same proportional extra valuation in Colombian Pesos. This means that, as I write these words, if you’re buying from a USD or EUR position in Colombia, you can currently take advantage of a 50% local currency devaluation that won’t last for long — and see your property double in price when the Colombian Peso goes back to its average valuation.
The second argument is that you should forget about assessing it from the perspective of the local reality, according to which there is a bubble in apartments in ‘estrato 6’, which is where the wealthier people live in Bogotá. The objective truth is that this is not a bubble — not by any means. First of all, you can’t get a bank loan to buy an apartment in Bogotá without making a down payment of at least 30% and often 40% of the apartment price — which keeps the real estate market from getting into a bubble, since you need to actually have capital to buy property. Secondly, Colombian banks don’t give loans away all that easily — in fact, it can be challenging to get a loan for an apartment. Again, this keeps the market from over-heating. Thirdly, Bogotá has a structural housing deficit — which means that, even with all the building activity that you see throughout the city, there aren’t yet enough homes for everyone. The city keeps growing and, as more and more people keep coming into Bogotá to look for the many opportunities it offers, there is still a lack of existing apartments to meet the needs and demands of those who live in Colombia’s capital.
The third argument is that, unlike what happened in Brazil a few years ago, buying Colombian property isn’t the next great international trend. Not yet. People haven’t still realized the opportunity it presents, large international funds haven’t yet led that investment trend, and ads for apartments for sale in Bogotá can’t yet be found on US or European main newspapers and magazines. In fact, in Bogotá, and despite the enormous growth of tourism by foreigners visiting the city, buying apartments to rent them on Airbnb is not even a trend. Not yet.
Think about it. Right now, you can buy a beautiful and comfortable 2-bedroom apartment in a luxury ‘estrato 6’ neighborhood, such as Santa Bárbara, with all the amenities, conveniences and safety you should ask for, for only $100,000. You can rent it for $700 per month or more, with a minimum yield of 8.4%. Let’s just say that you can’t do that in most of the world’s largest capitals.
This means that, once a wave of international buyers does start forming, their hot money will suddenly send real estate prices in Bogotá to the moon. Buy low, sell high, that’s hopefully what life has taught you — and Bogotá is the place to put that lesson into practice.