Millions of people visit Colombia every year with many thousands choosing to make a new life in the country. Prices for houses and apartments in the major cities are growing and look set to continue to do so.
Purchasing property can allow you to settle long-term in the country, secure a stake in a rising property market and generate substantial return on investment by renting property. There is potentially a lot of money to be made but also significant challenges and potential pitfalls.
I have lived and worked in Medellin, Colombia for around 15 years. I will outline why it is such an exciting opportunity but also try to explain why you need to take care and that it isn’t for everyone.
Pros of Buying a Property in Colombia
Prices are affordable whether you are buying to create a new life or as an investment, prices are generally very affordable although vary across the country and depending on the area of the city.
To give an indication, prices per square meter in Bogota are around 3,000,000 COP (US$737.18) and 9,000,000 COP (US$2,211) or from 4,000,000 (US$982.90) to 10,000,000 (US$2,457) in Cartagena while in Santa Marta (US$614 – US$1,720) or Popayan (US$368 – US$1,105) prices are much cheaper.
Medellin is around 2,500,000 COP (US$614) to 7,500,000 COP (US$1,843) while Cali is between 2,000,000 COP (US$491) and 6,000,000 (US$1,474).
There is also a wide range of prices within cities and even within neighborhoods. For example, the lowest price per meter in Poblado is around 3,650,000 COP (US$897) while the highest is around 10,270,000 (US$2,524).
The average price is highest in Poblado (US$1,162) while Envigado is second with US$1,041, although prices in Envigado range widely between US$461 to US$2,160.
Buy to let is very lucrative with high rent and demand over 40% of Colombians rent their accommodation on a long-term basis and there are millions of visitors looking for short or mid-term rental options.
The average rental price in Poblado, Medellin’s most expensive neighborhood, is 69,000 COP (US$17) per meter. With the average rental apartment 121 meters in that area of town, average rental prices are 8,349,000 COP (US$2,051). This amount can be even higher if furnished or much higher for a short-term basis.
Prices to buy apartments vary quite significantly. New buildings with 24-hour security and amenities such as pools are the most sought-after. Prices for buildings of over 15 years of age can drop off quite significantly and can offer a good investment opportunity, depending on who the target market is for rentals.
In the first months of 2023 rental prices in the Bolivariana area of Laureles have risen by up to 81% and in El Diamante 2 (Poblado) prices are up 33%. Rental prices have dropped 16% in parts of Buenos Aires and 11% in San Javier 1.
Mortgage rates are generally prohibitively high in Colombia. This means there is greater restraint in terms of cost of purchasing property while demand for rental options remains high. This is heightened by the rise in tourism and the number of foreigners moving to live and work in the city.
Buying and renting in Colombia is a great investment option. The price of buying apartments in sought-after locations is expected to continue to rise.
There have also been significant improvements to safety and infrastructure beyond Poblado, Envigado and Laureles which I expect to also result in a sustained rise in prices. With the growing population and many being priced out of Poblado, the demand in new up-and-coming areas will increase.
With the right research and local advice, there are many opportunities in the city.
Property investment comes with an immediate 3-year migrant visa
Anyone who invests 350,000,000 COP (a little less than US$90,000) will immediately be eligible for a 3-year M-10 migrant visa. This visa can be renewed as long as you still own the property and after 5 years you will be eligible for residency.
You cannot be outside of the country for more than 6 consecutive months to retain the visa. After 10 years you will also be eligible for citizenship.
The exchange rate continues to be favorable
While the USD to COP exchange rate isn’t at the level it was in 2022 when it was almost 5,000 COP to 1 USD, it continues to be a positive for foreign visitors. If you look back 5 years it was less than 3,000 COP to the dollar and it is now consistently around 4,000 COP.
If you have foreign currency savings or earn money from sources abroad, Colombia will still feel very cheap compared to what you are used to in Europe or the US. While prices of property have risen in Colombia, you will still generally feel you are getting a great deal on investments in most areas of the country.
Most apartments have 24-hour security and great amenities
In the more expensive areas of the country, a large share of the apartments come with security guards, swimming pools, a gym, communal spaces and well maintained gardens. While all this does come with an additional annual charge it also adds value to the property, improves the experience and gives peace of mind in terms of security.
The round-the-clock security helps protect your property and also is useful in terms of collecting packages, deliveries and providing any assistance you need.
Colombia is becoming a more popular destination every year
Since I moved to Colombia tourism in the country has more than doubled and the number of visitors is expected to continue to increase. While security continues to be an issue in the country, the international perception has changed completely. Visitors still need to take care but more and more people consider Colombia as an attractive and viable vacation option.
This pushes up demand for short-term rentals and will support the continued increase in property prices.
As well as short-term visitors, there has also been a steady increase of foreigners settling in the country. Millions of Venezuelans have crossed the border but there is also immigration on the rise from all over the world. There are now over 20,000 people moving from the US to settle in Colombia.
These numbers continue to grow. Initially, this is impacting on rental demand and prices but as people settle they will also look to buy, raising the value of property.
Cons of Buying a Property in Colombia
Security issues
Colombia is much safer than it once was but security is, of course, still an issue and something to be considered.
Most foreign visitors will invest in developed, wealthy neighborhoods with buildings managed by administrators and with 24-hour security. This will provide protection from organized crime in the more expensive parts of town.
It is unlikely that this will impact you but many business owners, small or large, have extortion payments factored into their accounts. Bus drivers know they have to pay when passing through certain areas, and bars will expect to have to pay a substantial “vacuna” (literally vaccine in English) to “protect” their business.
If you decide you want to own property in some of the less secure or expensive neighborhoods then you may need to become acquainted with those who manage local security, tax, and administration, which is often not the police or state.
I don’t say this to worry you, if you are buying an apartment within a closed complex this won’t need to be a concern but it is useful to understand the broader context. Organized crime remains an important force in major cities across Colombia, and street crime is a daily concern for people.
I adore this place and thankfully I have not faced these issues but you do have to be smart when investing large amounts of money in the country.
Navigating complex regulations and paperwork in Spanish
Colombian bureaucracy is always a challenge and is particularly substantial when buying property. This is a country which seemingly has a notary on every corner which you have to visit for even the most basic administrative task.
You need to arrange things such as a Certificado de Tradición y Libertad (Certificate of Tradition and Liberty), Paz y Salvo Predial, Paz y Salvo de Valorización, Promesa de Compraventa (Sales Agreement) and an Escritura Pública (Public Deed).
There is a lot involved and a failure to comply with the terms of the process can be costly and delay things significantly. You will need an experienced real estate attorney and ideally one who speaks English or has a good translator.
It can also be more difficult to negotiate terms in some instances if you are a foreigner or don’t speak the language. This is a high-value transaction and sellers may push up the price if they think you may not follow through, don’t understand current valuations, or are a bit naive.
Market instability
As outlined above, things are looking promising now but what goes up must inevitably to some extent also come down. Rental price demand and prices are rising at a much faster rate than the cost of purchasing property.
Mortgages are expensive in Colombia and with the rising cost of living for those earning pesos, a lot of locals feel buying apartments is overly expensive at the moment. Of course, there are many very wealthy Colombians who continue to invest and a growing number of foreigners looking to settle in the country but that does limit who you could sell to when the time comes.
This takes away some of the security in your investment. You can try to ride the wave of investment in the most popular areas of the city or take risks in other up and coming neighborhoods. The sharp rise in prices in the most sought after zones could be short-lived while your attempt to pick the next Poblado could go wrong, then selling is tough.
When I first got to Medellin Parque Lleras was the most sophisticated, sought after and in-demand area of the city. With bars, clubs, restaurants and some of the most expensive hotels, it was the place to be seen. Today that is the place to avoid, notorious for drugs, theft, and prostitution.
Provenza, three streets up the hill, is now the most important destination in Poblado.
Investment can be hugely lucrative but there are also many ways you can get it wrong and demand can suddenly drop.
Political change and new policies
I believe this has been overstated but many Colombians and foreign investors have expressed concern about the impact of political change. In 2022 the country elected leftist candidate Gustavo Petro, a former Marxist guerrilla who campaigned for progressive reform in the country.
While there have been issues, he hasn’t crashed the economy or implemented the more dramatic changes his biggest critics warned of. Many insisted that the election of Petro would bring Venezuelan style Castro-Chavista chaos and a war on private property.
This most definitely has not occurred with Petro taking a fairly cautious approach and facing political restraint from parliament. As of yet, there is no reason for foreign investors to be alarmed and while there have been some bumps on the road, the economy remains fairly stable
That said, after decades of enthusiastic governmental support for the free market and largely unrestrained capitalism, the left is now a political force in the country. There is no need to panic as of yet with the current administration but pessimistic commentators will give grave warnings of what is to come.
I don’t really buy into this but it is something to be aware of and monitor.
Conclusion: Should You Buy A Property In Colombia?
There are definitely significant opportunities to make money in Colombia and benefits to owning property.
Demand and prices in the rental market rises every month in the most sought after areas. Owning property means you are shielded from this and you can make it work in your favor if you want to rent out your property.
The high cost of mortgages limits competition to buy but the rising rental costs and influx of foreign investment make doing so more attractive.
It is definitely something that could work well for you if you are prepared to face the significant headaches involved and you have immediate access to the funds required.