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Favorable changes in the economic and political structures in Colombia have attracted real estate investors like KIT Capital. The opportunity for significant returns on investment exists in a real estate market that mirrors the favorable boom years in the United States market before 2008.
A Strong Economic Climate
The Colombian economy has been bolstered by a 9 percent increase in production in 2010 and a 3.5 percent growth rate in gross domestic product. HSBC bank recently named Colombia to its list of emerging market nations at the same time that Standard & Poor improved the country’s credit rating.
Forecasts of continued growth in the Colombian economy should result in improved international and domestic demand for the country’s goods and services. Investors like KIT Captial see this as creating opportunities for investments in real estate and a demand for capital infusions from expanding local industries.
Improved Stability and Security
Years of political instability and dominance by drug cartels damaged Colombia’s international reputation as a safe locale for foreign investors. A commitment by the national government to improving conditions within the country has earned Colombia the designation as one of the top reforming nations in South America.
A revitalized economy and improved domestic security allow foreign investors to look past the concerns of previous years. Colombia offers investors access to a consumer market drawn from the world’s 23rd most populated country. It also stands out as the second largest Spanish-speaking population in the world.
In the 1990s, the Colombian government began a program of relaxation of restrictions and controls over foreign investments in the country. As a result, foreign investors enjoy the ability to conduct business within the country under the same rules applicable to domestic companies.
Foreign concerns over legal stability within the country were addressed by the Colombian legislature in 2005 with passage of a legal stability contracts act. Under this law, investors may enter into a contract with the government to guarantee that the laws applying to a particular type of investment will remain in effect for between 3 and 20 years, depending on the investment type and the amount of money involved. The law is applicable to most manufacturing and service industries, railroad development, petroleum and mining and utility services.
Real Estate Development
Economic growth within the country has been accompanied by increased interest from foreign investors, who are looking into real estate in Cartegena, Santa Marta, Medellin and Bogota. These particular areas have been identified as offering the greatest opportunity for investors to find and develop properties that remain undervalued even as the country rebounds from its historically troubled past.
For example, KIT Capital, led by one of its founding partners, Kaleil Isaza Tuzman, has been aggressively pursuing properties for acquisition and development in the coastal city of Santa Marta and in sections of Cartagena and Guaduas. Investors are attracted both by the potential these real estate markets offer and the new investor-friendly climate promoted by the current post-civil war government.
A Bright Investment Future
Colombia’s transformation into one of the prime emerging markets with great potential for investors has been a slow process. The willingness of the government to relax regulations and controls over privately funded businesses and enterprises so they can freely compete in an open marketplace has turned Colombia into a prime target for investors.
