Cartagena has some, if not all, of the most expensive real estate in Colombia and perhaps South America. Cartagena vacation rentals and luxury homes can exceed USD 450,000 for an apartment (not such a big one either). These costly homes are going up each day and I think the market is already saturated. Surely nobody in their right mind would consider this kind of real estate as an investment! Just how much higher can prices grow to make such an investment worth while? We mustn't forget about the monthly building administration costs either, which can go up to and over USD 200 a month. By the way that is over $2000 a year! That surely eats into your investment.

Would you buy a stock if it cost you $2000 a year just for the pleasure of owning it? Of course you wouldn't, then why would you want to buy into a holiday home with such high up-keep costs?

As I have said, and I believe I have made the point quite clear, Cartagena is VERY expensive. However, if you are looking for investments in real estate interesting properties can be found ... if you look hard enough.

I want to tell you about a personal experience that happened with us last month (July 2009). We managed to find a small 3 bedroom apartment in a middle-low class lot that had a price of 40,000,000 pesos (20,000 USD). After negotiations we managed to get the price down to 37,000,000 pesos (18,500 USD) and placed a "For Rent" sign in the window. No ad in the local paper, just the sign in the kitchen window. We were getting on average of 5 calls a day from people wanting to rent the apartment. Even after removing the sign we were getting a couple of calls a day! We were able to rent the apartment for 450,000 pesos a month (225 USD) with no trouble whatsoever. That is more than 1% return on investment.

We are now negotiating a second apartment in the same complex and a re currently talking to an architect who is interested in renting it for 1,000,000 a month USD 500). Needless to say we are very interested. There are many gems like this available that won't eat into your saving and can give you a very healthy return. If you want to live in a luxury apartment then buy one, but don't buy one here as an investment. Cartagena vacation homes can be found to fit your budget, just son't stop looking.

When will the bubble burst?

I am a foreigher living in Cartagena and almost every day I can found driving past some of the most expensive real estate in Latin America. I often speak to my wife, or more exactly thin out aloud, and ask who actually has the money for these properties? Or, Who in their right mind would actually buy one?

You see, Cartagena is a lovely place. I live here and am very happy, we've got it all: sun, sea, nature and a laid back lifestyle, but all thgis comes at a price. I don't actually live in downtown Cartagena, but a short drive away along the beach. Here for instance land prices tend to double in value every 2-3 years (buy now or it will soon be too late). In my area (Boquilla/Manzanillo) there are numerous up-scale resort developments currently being built, very nice too. But the prices are really high! Over US$400,000 for an 1800 square feet apartment! You do also get a balcony for that price. How about US$350,000 for a 1600 square feet house? In my modest opinion, these prices are fine if you actually want to live here, but I honestly can't see these prices rising much higher in the near future, and you can forget about using this kind of real estate as a rental property -- you'll never get a monthly 1% + return on your investment. By the way, not to boast, but if you buy something right you can almost get a 2% monthly ROI here in Cartagena.

So many apartments, houses, 5 star hotels and boutique resorts are going up I just wonder when the bubble will burst? Don't the builders know that there is a recession in Europe and USA, and millions of COlombians were hit by a nation wide pyramid scam just recently. So, in short, there isn't a lot of money going around -- but these places keep on going up.

Just thinking out loud to anyone who wants to listen. What do you people think?
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    Nicholas Webb is one of the partners of Balin Ltda a Colombian company dealing in "direct" real estate investments. Balin currently owns real estate (properties and land) in Bogotá and Cartagena. We love it here and wouldn't change, but foreigners do need to tread lightly before throwing money around buying land or property. We hope to offer a little help.


    August 2009
    July 2009
    June 2009


    Cartagena Real Estate
    Holiday Homes
    Rental Property
    Vacation Homes