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Colombia Realty Gazette #09 - New investment opportunities
October 05, 2010
Your link to the real estate market in Colombia
The newsletter for the international community with information about the Colombian Real Estate Market and all related issues.
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1. CIVETS: The new Buzzword
If there's anything the financial industry loves, it's a good acronym. For a long time, the BRICs was the hot acronym in town. It has been 10 years ago since Goldman Sachs economist Jim O'Neill coined the term BRIC to refer to the economies of Brazil, Russia, India and China, as a group of countries to expect a high growth potential and valuation of their assets. Now O'Neill has come up with a new string of pronounceable letters: the CIVETS. CIVETS, which in Spanish translates as Civeta, a small cat-like mammal, refers to some of the economies (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa) expected to be the world's hottest markets in the decade to come. They have the potential to generate the same kind of windfall wealth as the BRIC markets of Brazil, Russia, India and China did over the last 10 years.
O'Neill's thesis is that growth is now spreading beyond the BRICs, whose stock markets have been pretty heavily explored at least by institutional investors, and that the CIVETS economies are the next chunky economies where growth seems likely and there is money to be made.
Is not a coincidence Colombia is at the head of the Group. Among all the CIVETS countries, Colombia is the one with the best perspectives. Political stability, low inflation rate, GDP versus population, a decent debt level and increase in foreign investment (FDI has risen 250 percent). Its stock index is up 15 percent this year, and 35 percent (versus Brazil's 14 percent) over the decade.
Analysts realize that Colombia is certainly big enough to be worth considering. In a world in which resources prices are likely to trend upwards because of Chinese and Indian demand, the country's agricultural and natural-resources orientation is a plus. What's more, If the U.S. Congress ever actually ratify the U.S.-Colombia Free Trade Agreement (signed all the way back in November 2006), there should be a further boost to the Columbian market. Frank Holmes, CEO of U.S. Global Investors, wrote recently that it has become extremely easy for foreigners to invest in and develop the country. He notes that the country now ranks high on a global competitiveness survey for business sophistication, market size, and strength of investor protection.
But What about the property market?
A sample is that currently construction index in terms of number of licenses approved for construction projects is adjusting moderately, slowing the pace that came since late 2009.
Real estate in Colombia is becoming more and more value - a luxury apartment in the capital is more expensive than its comparable cities such as Miami, and Certainly foreign investment flow will likely increase demand and prices of properties, as it's already happening in some cities. However, we are still below international averages. We also learned from our own experience that speculation is the mother of all evils, and real estate industry's players learned it's better a low but steady return instead of a roller coaster of high returns and thundering falls.
Likewise Colombia offers a number of interesting small real estate markets in intermediate cities of the country, therefore it is ever-important to monitor the wider housing market, naturally, detailed due diligence is required upon looking at any property or piece of land.
The world has clear that C is from Colombia and it deserves the first letter. You will hear voices calling "bubbles" and "saturated market." but these are the risks that come with being the head of the animal.
2. New improvements in foreign Investment regulation.
The Central bank -Banco de la Republica- released on August 31st 2010, adjustments to its Circular DCIN-83, the instructive document which regulates procedures for foreign exchange transactions. In relation to the buying and selling of real estate with foreign currency, basically it confirms the elimination of Form No. 11 as a requirement to registration as foreign investment. With Form. No. 4 or No. 5, the registration is made automatically by the intermediary bank in Colombia.
Also the new government, through its Finance Ministry, plans to submit to Congress a project that will include some changes to the current foreign investment regime in the country. These adjustments will reduce the formalities for registration of foreign investments to the Bank of the Republic by 70% and will contribute even more to buy from outside projects under construction or completed in Colombia. The changes that had already been implemented since the last amendment to Decree 2080 of 2000 in July 2009, will be incentives for capital funds interested in investing in both the capital markets and in real estate.
We look forward to inform you about the new changes highlighting benefits it will bring for real estate investors.
3. Issuing title certificates in Colombia now available Online.
A couple of months ago the Superintendencia de Notariado y Registro, the government office in charge of the title recording of properties, announced the service of issuing titles certificates online. But only recently the feature is actually working in major Colombian cities and other 60 municipalities around the country. However, these are good and bad news. The good news is that property owners, buyers and investors of Bogotá, Barranquilla, Medellín, Cali, Bucaramanga, Cartagena, Santa Marta among others cities, will have access to the history of any property over which they have their registration number.
People will save time and money, avoiding going to those offices and the unbearable long queues it used to be there.
In theory, if you are in New York and you have a house in Bucaramanga, you can request online the title cretificate and paying the same $12,000 pesos you pay at local Register's offices. Bad news is that apparently government webmasters forgot two simple internet rules: Globalization and credit card payments!
The payment system is only available through local banks. So if you are a foreigner or a Colombian living abroad, you can't use the system unless you have registered an online savings or checking account in a Colombian bank.
4. BCR updates - New developers
We always look to offer to our customer quality projects from experienced and solid developers in most attractive markets in Colombia. We welcome these new developers interested in offering their projects to the international market, using the marketing services of BuyColombiaRealty.com.
Barranquilla and Cartagena
In Cartagena they offer Brisas del Mar a beach front condominium project under construction. One value added service the company offers is direct financing up to 60% of the value of the property.
For more information on these and any other properties in Colombia, send me your inquiries using the contact form at BuyColombiaRealty.com.
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