In the midst of a challenging landscape for the real estate sector in Colombia, intermediate cities emerge as promising destinations for investment. Despite the decline in home sales and the complex economic situation in the country, cities like Bucaramanga, Manizales, Pereira, and Ibagué are experiencing significant growth in the real estate sector, a result of investment in infrastructure and economic development.
As of the end of May, the national real estate sector reported a 70% decrease in home sales compared to the same month the previous year, with Low-Income Housing (VIS) experiencing a 76% drop and Non-VIS a 53% decrease. The non-residential sector has seen a double-digit reduction in construction license applications, closing March with a 25.1% decrease, according to Dane. In the short term, there are no new projects for shopping malls, and real estate funds are currently awaiting opportunities for new investments.
Nationally, the real estate sector has shown positive results, with clear examples such as a 36% increase in occupancy for logistics, a 2.1% rise in corporate rent prices, and a 44% decrease in vacant areas for shopping malls post-pandemic.
However, amidst the current challenges facing Colombia politically and economically, “the country has managed to maintain momentum in the industry due to the good decisions of builders and investors who have avoided increasing inventories, market imbalances, and construction in segments with lower demand,” says Gustavo de la Torre, LATAM Real Estate Director at MTS Consulting + Management.
Intermediate cities garner increased interest due to their growth, rising valuation, and attractiveness for both living and business. According to the results of the 2022 City Competitiveness Index presented by the Private Council of Competitiveness and the University of Rosario, Bucaramanga ranks 5th with a score of 6.26 out of 10, Manizales 6th with 6.21, Pereira 7th with 5.95, and Ibagué 11th with 5.58.
According to Ana María Mejía, LATAM Consulting and Market Intelligence Manager at MTS Consulting + Management, “as the country moves towards economic recovery and the necessary measures are taken, intermediate cities such as Bucaramanga, Manizales, Ibagué and Pereira will emerge as key drivers for real estate development in Colombia. Today they show promising potential for investors, developers and industry players looking to take advantage of opportunities in the market.”
Bucaramanga, known as ” The Beautiful City”, has become an important center for business, medical and technology services, its infrastructure improvements, including the expansion of its road network, the modernization of its airport and the implementation of public transportation projects, have generated a demand for housing, commerce, and offices, as a consequence of the fact that many people are looking for better living, housing, and working conditions outside the country’s main cities.
Manizales, located in the center of the country, has experienced growth in the construction sector; thanks to its strategic position in the coffee-growing region, it has become a central point for transportation, manufacturing, and logistics, which has generated a greater demand for this type of construction. The city has a wide range of educational and health services, as well as a tourist attraction, which has generated a high demand for housing projects and short-stay accommodations.
Pereira has managed to diversify its economy, including tourism, agriculture, and services. This has generated an increase in the demand for commerce, offices, high specification housing and services for senior citizens who, due to its quality of life and climate conditions, have perceived this city as a perfect destination to live. The city entered the Top 10 cities with the largest supply of real estate for sale this year.
Ibagué has also experienced a growth in the development of medium and high housing and office projects, due to its location, climate, diversified economy, low cost of living, it has been attractive for students and young professionals looking to start their independent and working life. The development of the real estate sector in this city has been key to satisfy the constant demand; licenses have grown more than 239% in the last years.
Even with the current difficulties, the Colombian real estate market offers opportunities in different cities to continue its development and contribute to boosting the country’s economy. Without a doubt, the recovery of the construction sector will be fundamental to boost the country’s economic growth. Construction activities contribute 13.5% of the country’s GDP and 7.3% of employment.
