In 2022, Colombia experienced significant and unforeseen events, leading to substantial changes in daily life. Key factors include an inevitable recession, a substantial increase in interest rates by approximately 500 percentage points, historically high public debt, inflation reaching 13.12%, the dollar approaching 5,000 pesos, and the introduction of a tax reform. These variables are expected to have a profound impact on the economic outlook and, specifically, on various sectors under analysis.

The real estate and construction markets faced constant uncertainty and an important recovery process after the pandemic, which is expected to maintain the same trend in 2023 in many aspects to be mentioned:

Corporate Sector: This sector will show in 2023 a trend in the recovery in prices that, which have been seen rising since the second half of the previous year, but not reaching the same pre-pandemic levels, this mainly motivated by the low availability in other aspects by high specification buildings. We will see a notable drop in the licensing of new projects, which will affect the decrease of inventory in the future, most of the new inventory will be part of stages of existing projects, and in addition to the above factors, we will notice an increase of used supply in spaces for sale.

Industrial Sector: This sector is expected to continue with low levels of availability and very stable but rising prices, due to the low supply of inventory in the sector and the high demand for industrial space requirements. This 2023 will be marked by BTS (Built to Suit) constructions and by the trend of high direct and indirect costs that construction has been facing; in addition to all of the above, we will see the impact that the tax reform will have on free trade zones.

Commercial Sector: By 2023, this sector will continue to generate strategies to attract more customers and have an effective reconversion, reforming designs and opening spaces for family activities and generation of experiences. We will have a decrease in the availability of areas, as a consequence of the low levels of construction developments and therefore the increase in rental and sales prices. We do not foresee any construction developments in the short term, only expansions or new stages of existing projects. The challenge of this sector will be focused on innovation, attracting new brands that generate impact on visitors, entertainment, tied to the convergence of physical and online stores, and omnichannel.

The real estate sector is one of the few that has been able to take advantage of the different impacts of the aforementioned events; therefore, investments in this sector have been resilient to the impact of inflation and demand, positioning it as one of the safest markets due to its long-term profitability.

Despite these indicators, we are optimistic about the market’s rearrangement and adjustment, always hand in hand with innovation and creativity in the proposal of new businesses.

Gustavo de la Torre Muñoz – Real Estate Director LATAM

Ana María Mejía Ruiz – LATAM Consulting and Market Intelligence Manager at MTS Consulting + Management