Investment property in Colombia

PURCHASING A SECOND HOUSE IN COLOMBIA

Colombia has a great potential to become one of the favorite destination for retired and financial foreigners by purchasing a second house. A bill seeks to develop this market.

Colombian Government decided to boost second house market, attending private sector’s interests. The objective is to attract retired and financial foreigners and the Colombians who have established their lives abroad, in order that they purchase a house in Colombia to live seasonally, spend vacations, or even to settle permanently in our country.

Through a bill, to be submitted to the Congress in the coming days, and some changes on foreign investment regime, the government plans to grant tax exemptions to investors, developers, and buyers of great housing projects to be built in free zones destined exclusively to this kind of initiatives.

Although, it hasn’t been decided which will be these areas, the Caribbean, Coffee Zone, Antioquia and Santander are shaping up as the most attractive places for development of these projects that it is expected to bring investment and consumptions in complementary sectors of the economy, as it has already happened in Central American countries.

Potentialities and benefits...

More than 78 millions of people born between 1946 and 1964 in developed countries, the baby boomers, have begun to withdraw from labor market and they are looking for an integral lifestyle, easy and uncomplicated, a clean environment and a healthy community, to spend there a holiday season or to live there for a time.

That is, a market where they can purchase a second house. Some countries like Costa Rica, Dominican Republic and Panama, have been attracting and encouraging the investments of these retirees in housing projects through tax exemptions that have increased the flow of foreign investment led to the construction, for several years.

Colombia, as much as Central American countries, has all the potential to develop a second home market and to attract a good percentage of those retired investors and to other financial foreigners. Even, Colombians living abroad for a long time who do not receive income in the country, they become potential customers for this project.

Our country has a good air connection with European countries and United States, and it has a huge tourist potential thanks to diversity of climates and its ecological biodiversity, and it has a housing offer qualitatively and quantitatively competitive. “While in the United States, you paid USD 500.000 in average as an initial quota of a house, with same amount you can buy a luxury property in Colombia” says Eduardo Loaiza, Manager of Camacol Antioquia.

In addition, private and public health services and cosmetic surgery are of a very good quality in the seven major cities, which makes it even more attractive for foreigner investors.

In fact, Colombia has already begun standing out as an important destination at the international level. Claudia Marmolejo, manager of Cartagena and Caribbean Show Room affirms that Colombians living abroad are investing today in a house in their home towns, as well as in tourist cities in the country for their visits o for the day of their return.

“There are projects where these buyers represent 10 to 25% of the sales and it is estimated that percentage of foreigner buyers in cities such as Cartagena reaches to 30%”, Marmolejo says. As per Sergio Mutis, Fedelonjas’s President, Bogotá, Cartagena and Barranquilla are today safer than others Latin American cities. However, much remains to do in areas such as telecommunications.

“We have everything to be a world class destination for the purchase of this kind of housing”, Treasury Minister, Oscar Iván Zuluaga, says. Interest of private sector to make part of these large housing projects is already evident in the tourist cities like Cartagena where constructions started in the stratum 6 of this city amount to 3.134 units, representing an investment around US$489 millions.

“If we can move forward with the bill, the benefits would be visible soon, especially for tourist and construction sectors”, adds the Minister. There will be more demand for restaurants, shopping centers, more jobs for unskilled labor, more entry of foreign Exchange, and more foreign investment, especially in the real state sector. Sergio Mutis affirms that development of this market will extend the positive cycle of the construction sector, creating a new demand which is not associated with the normal cycle of the Colombian economy and Beatriz Uribe, Camacol’s president, adds that, as it is known, construction boom has a positive impact in all the economy.

The Bill
To attract retired and financial foreigners to invest in Colombia, the bill proposes the creation of free zones of second house, in which construction projects of urban-tourist housing will be developed. These include tourism infrastructure, marine, timeshare buildings and hotels among others.

Besides, the areas will be built and managed by national corporate or foreign branches that may no invest less than USD 200 millions in development of this kind of Project and it will be approved by the DIAN, with a previous technical concept of Housing and Commerce Ministery.

As per Mutis, no only the Colombian Caribbean is attractive for this kind of projects “Cities as Bucaramanga and Manizales are ready to accommodate retirees associated with academy, which because the climate and its cultural environment of great university development, could offer them great opportunities of remaining in the surroundings or being invited to conferences.

In tourism, the coffee zone or Bucaramanga –Santander Region – Chicamocha Caynon-Socorro, offer recreational alternatives to local and foreigners with multiple golf courses and very attractive surroundings” he explains. Of course, Bogota cannot be neglected, where 50% of foreigners visiting to Colombia arrived the last year.

Perhaps, the most important tool covered in the bill for development of this market, is the tax exemptions, granted who build and manage the housing projects and those who invest in them. Exemptions to rental, to income received from abroad, possibility of entering house wares, car and other luxury goods to the area, without consider them as an import, are some of the benefits that will be awarded to investors, who must demonstrate a minimum income, which amount will be determined by the DIAN, and they may not perform remunerated activities in the country. In addition, the buyers could acquire the property through a mercantile fiduciary contract, for which reforms to current foreign investment regime must be done.

Camacol’s President affirms that besides of the incentives being granted for builders (see box), it is vital that this policy incorporates the necessary steps to hasten and simplify procedures related with soil management instrumentation and planning and construction licenses.

By this way, Colombia seeks to become one of the most important and attractive real estate investments opportunities as well as a great tourist destination in the Americas, helping Colombian citizens to benefit from foreign investment and allowing the improvement of the development cycle in the construction sector. [Transcribed from www.dinero.com]

For more information on Investing in Colombia.