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Colombia Realty Gazette #08 - First half of 2010 outlook
August 10, 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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QUOTE OF THE MONTH
"Pick battles big enough to matter, small enough to win." - Jonathan Kozol.
1. Time Reduction for getting Building permits, an incentive for Foreign Investors.
Now a citizen does not have to go stop at a window or wait until 100 days to obtain the license for building permits. It can be achieved up to 20 days. The Ministry of Environment, Housing and Territorial Development issued Decree 1469 of 2010, which brings together national standards governing the process for issuing building permits. The decree was issued in order to improve the business climate and encourage investment in the property sector and the reduction of paperwork and legal security on the conditions under which the licenses are granted. Decree 1469 of 2010 includes more than 60 reforms that seek to boost the construction sector, a leader in job creation. With this new standard, Colombia advances the goals of competitiveness, and in the rating of "Doing Business" ranking on the ease of doing business in Colombia, qualifications in which the country had not fared well in the last measurement. Citizens gain by having an easier process and municipal authorities improve their efficiency, so that also may be reduced informality in the construction business and made foreign investment more attractive for large projects both home and office, industry, tourism and trade. See the latest report of Doing business in http://www.doingbusiness.org/subnational/exploreeconomies/colombia-2010.aspx
2. Colombia real estate outlook, First half of 2010.
The BBVA issued a report on Colombian real estate market during the first half of 2010, on which we want to share the most important points:
The real estate sector has entered into a new phase of expansion following the slowdown experienced in 2008 and 2009. For 2010 indicates that demand will continue to grow and that real estate prices will maintain an upward trend, though the rate of increase will be moderate. Although resources created to subsidize a portion of the loan interest rate mortgage from the national government are gone, the housing market continues fairly active. The interest rate is low, four or five points lower than that recorded at the beginning of last year. That means that today you can get a loan with the same interest as when the Government had coverage.
In the first quarter of last year the rate was around 17.5% annual and in previous years, this rate reached 22% , making it difficult for a family get into debt. Today that same annual interest rate is 12.65%, or a monthly rate of 1%, which is very attractive.
The adjustment in housing inventories and the recovery of demand will lead to an increase in residential prices, though at a moderate pace.
Acceleration of economic growth, improvement in the housing affordability indicators and the demand subsidies policy will determine an increase in the sale of homes that should last at least until the beginning of 2011. In the long-term, residential demand will be boosted by demographic factors
Willingness to purchase a home has been on the rise since April 2009. This has materialized into a 68% increase in housing sales over the last 12 months until May 2010.
The need for new homes for coming years is estimated at 350 thousand units per year2. Moreover, the annual number of permits between 2005 and 2010 stood at 118 thousand. This, together with the countryís current housing deficit, estimated at 3.8 million homes in 2005, simply corroborates the huge gap in Colombiaís demand that will continue into the medium-term.
There is greater dynamism in permits for homes, especially as regards VIS (Housing of social interest) projects . Likewise, commercial buildings will continue to adjust downwards due to the huge supply accumulated in previous years and the current reduction in demand.
Developers learned from the lessons left by the crisis of late 90's, and it has led to the consolidation of the pre-sale model, which requires projects to reach a break even point before starting construction. Pre-sale projects in Colombiaís major cities account for over 70% of the total and less than 5% are completed without being sold. Thus, the financial sustainability of the current and ongoing projects is ensured.
The prices of new and used homes showed different trends in 2009. On the one hand, according to the National Planning Departmentís New Home Index, home prices increased 4.8% in real terms, regaining ground from the 0.4% fall recorded in 2008. And on the other hand, prices for used homes slowed with a 5.0% increase in real terms in 2009, as compared to the 10.0% in 2008. For the medium-term, we expect continuity in the upward trend in new and used housing prices due to the decrease of housing stocks and growing demand. Moreover, the rental value as a percentage of the nominal value of the real estate property will become more and more upwardly inflexible due to the greater supply.
Low availability of developed land. Difficulties regarding the mechanisms for controlling land prices and financing the transportation and utilities infrastructure to enable its development.
Another risk factor involves the increased dynamics of housing demand as an investment business. Historically, the purchase of a home as an investment was concentrated in and almost exclusively for the upper class. Recently, however, this practice is on the rise and has become common among the middle-low class housing.
3. For sale in...
https://www.buycolombiarealty.com/valterra-casas-bucaramanga.html (off plan project)
4. BuyColombiaRealty.com updates.
* Take advantage of our traffic by having a link in our site. Quality sites are more Search engine friendly. We have created the link partners page https://www.buycolombiarealty.com/link-partners.html . If you have a high quality website related to Colombia or one niche related topic you think it could be interesting for our visitors, I'll be glad to exchange links with you. Visit our page in https://www.buycolombiarealty.com/link-partners.html
* We have team up with ColombiaRE.com an Internet Marketing and CRM software firm dedicated to the real estate niche growth of Colombia http://www.colombiare.com/en. Through this partnership we will be able to offer innovative services for the Colombian real estate industry with the goal of becoming the #1 source for Real Estate & Business Directory for both Local and Foreign consumers alike. We are open to involve in this venture, strategic and capital partners preferably in the real estate sector, in position to leverage our growth. If you are a interested in becoming part of this, send me an email via my contact form with the subject "investor" https://www.buycolombiarealty.com/contact.html.
5. Haiti people should not be forgotten
Sometimes the rush of the day to day work makes us forget the commitments we have made. We want to give our grain of sand to Haiti's people, and what better than supporting organizations committed to the Haitian cause. A few days ago I received an email from ONE international, with information that left me stunned.
UN Special Envoy to Haiti, President Bill Clinton just announced that 6 months after the earthquake only 10% of pledged funds have been handed over to Haitiís reconstruction commission. We all knew recovery would be a long and hard road, but this is unbelievable.
President Clinton, a well-known friend of Colombia by the way, has vowed to pressure governments and weíd like to show him the world supports his efforts, that we still care about the people of Haiti even when they are not on the news every day.
Please join us in letting governments know they canít make a promise to people in the most devastating of situations and then not deliver on it.
I just signed a petition asking world leaders to deliver the aid they pledged to Haiti as soon as possible.
Please join me by signing the petition here:
ONE members were crucial in cancelling Haitiís debt; I hope youíll join us in taking action to secure Haitiís future.
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