Property prices

juanalejo says on Jan 4, 2005, 06:31:

Cali I would tend to think that since Cali still not come out of the depression, it might be in the long run a better investment. Bogota´s prices have hiked quite a bit in the last couple of years, and if the country continues to grow Cali may soon follow. I would take advantage of Cali´s low prices now and especially if you are planning to live there at some point. Cartagena is suddenly beginning to boom, after years of very little construction activity, things are noticeably beginning to pick up, so you might also be right in time.

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viewpoint says on Jan 4, 2005, 07:30:

Real Estate Investing - Colombia Personally I think a home or apartment in Colombia short term is not going to be a good investment if you are using foreign currency to purchase it because of the high level of the Colombian peso (right now). Rents provide very little return on your investment therefore you can only rely on appreciation. I bought an apartment in 1999 when the peso was 1600/US Dollar and although the peso value of the home has increased a little the US dollar value is still less than I paid after 5 1/2 years. Now, the reverse is true for another property bought one year ago when the peso was 2907/US Dollar as it's US Dollar value has sone up about 20%. Rental properties are not a good bang for the buck but in Panama City the rental rates are much higher and property values about equal (or less) for newer properties.

Sometimes it is better economics to be a renter rather than an owner. Medellin is a market where I see used cars holding their value better than apartments. I see better real estate investment opportunities in Panama than Colombia. Better liquidity and return combined with low interest rates and the US Dollar. The central governments own targeted range for their peso was 3100/3200 for the current period.

Buying property in Colombia with the current foreign currency exchange rates is the equivilent of going long the Colombian peso at 2300 peso/US Dollar and I will pass on that. Been there done that and got my ass bitten good. At the current exchange rates vs. foreign currencies I would be going to the bank each day to sell my Colombian pesos buying any major foreign currency because this current peso rally will not last much longer (months maybe but not years).

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Iain says on Jan 4, 2005, 07:45:

juan has a point Thanks for your replies, my wife's family are from Cali with some in the US. I know a good few people in Cali also some who are expats so Cali is the first choice (well definitely for my wife). I don't really want to start a discussion on safety issues like kidnapping as I am well aware of what not to do etc. Really just looking for adviceinformation on the property side of things. If I owned a property and for some reason later on we decided to move on then we would just sell it. Is there anyone on this BB that owns property and rents it out through an agency? If so is it fairly easy to rent out etc?

As I mentioned before we live in Spain and have been here for a few years but I figured if I keep on contracting at the rate I have been then in a few more years I could afford to get out and live in Colombia on x amount of $. I couldn't do it in Europe tho.

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Iain says on Jan 4, 2005, 07:48:

Pounds shillings and ... Euros ! I put US dollars in my post as that is what most of you think in but I actually have about 80% of my savings in British pounds and the rest in Euros. No yanky greenbacks for me.

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Desideria (Moderator) says on Jan 4, 2005, 08:01:

Iain I own a house in Cali, strata 5, near south, and am renting it out through an agency. The house was already tenanted when I bought it and as far as I know the rent has been paid punctually. I chose an inmobiliaria recommended by a friend, signed a contract with them and paid an insurance for utilities. They take 13% of the rent as a comission. Rest of the money is being sent to my bank here (Sweden) four times a year. It's really peanuts, and as an investment, it is not worth the hassle.
Cheers,
Desi

"When shall we three meet again? In thunder, lightning, or in rain?"(First Witch in Macbeth)

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juanalejo says on Jan 4, 2005, 08:09:

Cali I can understand from your post your biggest interest is buying property in Colombia (mostly Cali) and not worrying about profit on your money. Any how since most people buy property as a long term investment I would not worry. Colombia had traditionally been a very good investment for property excluding the 1996-2002 era you always made money on your investment both in pesos and foreign currency. But since you main motive is to link yourself to your wife´s homeland I would definitelly go for Cali as you X ammount of Pounds will get you a much nicer place there than in Bogota. Look for a nice apartment in what Cali people call Unidad or Enclosed Complex which has the most ammenities: pool, gym, etc. I would buy a used apartment which will make your money go further, close to a nice shopping complex. I like South Cali better for wide avenues etc. but North Cali near Chipi Chape center is quite nice also. Letting out through an office is better as you get an insurance for your pay, even if the tenant does not pay. Traditionally you would let your property for 1% a month of the property´s retail price, but since the 1996 recession started it has been around 0.5 to 0.6 %. Hopefully as things get better prices will go back to 1 %. Just make sure you shop for something that is sought after, nice looking area, nice looking place and it should not be difficult to rent. Contracts are normally for a year, with a 3 month notice be either part, if not automatically renewable.

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viewpoint says on Jan 4, 2005, 08:44:

Juan Good post as it puts the return you can expect (on average) for a real estate investment. 0.5 to 0.6% annualizes out to 6% to 7.2% less of course real estate taxes and maintenance and some vacancy factor. I guess what I am saying is that I wouldn't rush to buy an aptos or home now in Colombia as an investment if I was using "foreign currency" to purchase the home because of the current currency exchanges rates. A US$20,000 to $30,000 investment will not result in that big of hit (in dollar terms) but in percentages it will be big. Maybe I have been on the wrong side of some of these currency moves too many times. I am not going into a lot of detail but the last currency move (during the 4 month period of 8/04 and 12/04) against the US dollar cost me some money and pain on another transaction due to my own failure not to hedge myself or immediately convert my source funds to Colombian pesos.

It's not a good feeling to negoiate a price when the peso is 2700 per US Dollar and pay for 60% of it (using US dollars as the sources funds) within months when the peso is 2385 to the US dollar. Can't point the finger at anyone but myself.

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Desideria (Moderator) says on Jan 4, 2005, 08:52:

I didn't buy the house for investment purposes either, but because I intend to live in it. The rent I'm getting is around 0,5 % of the value of the house, and the yearly property taxes around $800 000 Col. pesos. Since the house is not new (built in the 1960s), there's constant repair work done, especially roofing.The fees banks are charging me to convert the pesos into dollars, then sending them to my bank converting them into Swedish crowns eats up the rest of it.
However, I'm really looking forward to traveling to Cali in six months or so, to take over the house from the agency, changing the floors, the plumbing, putting a new roof on it...
Cheers,
Desi
(I might be needing some advice from atrevido about where to get the cheapest and best building material:)

"When shall we three meet again? In thunder, lightning, or in rain?"(First Witch in Macbeth)

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viewpoint says on Jan 4, 2005, 09:46:

gringoinbogota Yes the advice is so good that it has cost me in the high five figures during the past four months just following my previous advice. jajajaja

I think my advice might be worth what everyone's paying for it !!jajaja

COP: NO CORRELATION WHATSOEVER W/ REGION / USD. WITH CENTRAL BANK OUT
THE MKT,
COP RALLYING ANOTHER 15PESOS. RANGE TODAY WAS 2300/2340. WE SAW DECENT
OFFSHORE BUYING (OUTRIGHT AND TES RELATED) / LOCAL SELLING. MKT CLOSING
AROUND
2320 LVL.

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Gomezman5 says on Jan 4, 2005, 10:12:

Great thread--- I only visit family when I go to Colombia. So, I stay with them.
I did consider purchasing on the north side, but I have a friend who always talks me out of it. Ironically he own a lot of investment property. Apparently, the rental prices are very attractive now. I think the most important issue is, do you plan on staying there for the long term (in excess of 2 years). If not, I would not recommend buying under any circumstances. There are cost involves with they buying, selling, and maintnance of a home, that unless you are getting a steal of a price---it will be more trouble and perhaps more expensive, depending on the economy and the exchange rate at the time you conver back to pounds.

Desi's point above pretty much is indicative of my sentiments.

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Iain says on Jan 4, 2005, 10:22:

Thanks for all your comments, this is exactly the type of info I'm looking for. If we do buy an apt it would certainly be a newer one most likely part of a complex. It would not really be viewed as an investment and we would be in it for the long term so we would be looking at trying to make a fast buck as such. Also the rental money would not be sent to myself as we would just leave it in a bank account over there.

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Iain says on Jan 4, 2005, 10:22:

Thanks for all your comments, this is exactly the type of info I'm looking for. If we do buy an apt it would certainly be a newer one most likely part of a complex. It would not really be viewed as an investment and we would be in it for the long term so we would not be looking at trying to make a fast buck as such. Also the rental money would not be sent to myself as we would just leave it in a bank account over there.

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Lionheart says on Jan 4, 2005, 13:02:

Cali is good choice for the future I have beed comparing the major cities for a year now, my main observations were based on high-tech potential, since that is my field. From watching companies being founded and/or growing at a good rate currently companies in Cali are leading by far. There seems to be a good potential for Cali to become a Silicon Valley in the future. When? Hard to say, but normally after a certain time a boom starts. This is one of the reasons I chose Cali as my destination, when it goes boom (in the positive sense), I want to be there.

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Iain says on Jan 4, 2005, 14:33:

Cali is good choice for the future Lionheart, Thats an interesting observation from you about the technical side etc. I have been in IT for 8 years (since graduating from university) and currently have been contracting for 4 years doing J2EE. Before that I worked in the US for 3 years where I met my wife before returning to Europe. I guess you are in IT also or something pretty close to it? It would certainly be something to consider as I'm sure there must be a pool of talent there.

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Lionheart says on Jan 4, 2005, 14:50:

Cali Hi-Tech I have been in the IT field for quite a while, mainly in the software industry since '77 ... when the microprocessor got invented. I am now internationalization engineer and globalization consultant, so the Colombian market is pristine for that kind of work, wanting to expand beyond its borders. You can send me a PM for the more technical details of what I have found.

Bogota seems to be the more banking and insurance oriented city, and Medellin is definitely more production oriented. Cali is more relaxed and isn't the real hard-working center, but it reminds me a lot of Silicon Vally CA or Austin TX, another hi-tech center. Maybe this mix of work and fun is the basis for the creative work required in the hi-tech business .... one reason I love it.

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Iain says on Jan 4, 2005, 15:04:

Silicon Vally CA I worked there for 3 years doing Java, I was a European on an H1b visa which are usualy 99% held by Indians. Had a great time there and I was lucky enough to never have more than a 15 minute commute against the traffic flow to work! I prefer Spain tho.

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viewpoint says on Jan 4, 2005, 15:06:

Lionheart - Cali NOT Cali is not the city of your Hi-Tech dreams. You would have to be in Medellin with the Paisa people and their manufacturing, engineering and production abilities. They have the best productive labor force in Colombia.

You need not look any further than the difference between Cali's municipal utility EmCali and Medellin's municipal utility EPM. Militant labor groups, mismanagement and corruption drove EmCali into the ground while EPM has prospered.

With the current attitude that Colombias central government has about technology Colombia should be your last choice. You first need to change the thinking at the highest levels of government but Medellin is where things get built at the least cost in Colombia. For all practical purposes the americas has lost the IT field to asia anyway.

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Lionheart says on Jan 4, 2005, 15:43:

viewpoint There is a huge difference between production/engineering as you see in Medellin and what Iain and I are talking about. Call it think-tank mentality. I could write a whitepaper on my findings to prove my point. Yes, you are correct that currently Medellin is the better choice for a solid job market. But the sheer numbers of small software companies grouping together as a force in Cali cannot be ignored. Neither Medellin nor Bogota show this development.

Your observations about the industry losing the IT field to Asia is only partially right. Do to the rise of costs in the USA and the reduced numbers of H1-visas most of the USA's core software development has gone to Asia, with China and Viet-Nam quickly becoming the major force in front of India now. On the other side Europe has gotten fed up with US supremacy and have allocated their resources in Europe, also having cheap development in the East now.

Currently main software development in Latin America is being taken over by Spanish companies, but they are encountering some hard resistance. Number one problem is that the Spaniards do not have good development background, more administrative power in controling the Spanish/Portuguese markets. Talking with Colombian companies I feel their strong desire to stay independent, inviting knowledge to come to them to be able to become a serious international force. This is unique amongst all Latin American countries. Panama is US controlled, Chile is Spanish controlled, other countries are nowhere near that technological advancement. The Colombians I have talked to are very adamant about their position. Only other nation with good development background is Brazil.

Bottom line, Colombia and Cali are a good bet for anybody in core software development, especially with multi-lingual capabilities.

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viewpoint says on Jan 4, 2005, 16:02:

Lionheart One thing for sure is that Colombia has the most potential of any central or south american country if they could just get their act together. I feel sorry for the working class people as they deserve better from their central government.

Don't get me wrong the current president is a good strong leader but he and his administration need to move Colombia into the 21st century instead of driving (steering) the car by looking in the rear view mirror. He has made remarketable progress during the past three years but they have to implement some changes that encourage business investment and foreign immigration along the lines that Panama has done.

Chile is a great country with a good credit history and rating (the highest and best in Latin America). Panama could be a great manufacturing and development country because of the canal and shipping but it lacks the educated productive manpower as compared to Medellin (or Colombia). Construction labor productivity is lower in Panama than Colombia combined with higher labor costs.

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