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How Bogotá´s real estate skyline will transform in the coming years
This time we are happy to introduce Jonathan Castro, a Colombian-American real estate agent based in Bogotá. Jonathan will give us his view about the real estate market in Bogotá, Bogotá´s real estate skyline, and will talk about trends in Colombia.
HalloCasa: “Good evening Jonathan. Thank you very much for taking your time and talk with HalloCasa about the Colombian real estate market. Before digging into the topic itself, could you quickly introduce yourself and give us an overview of your background?”
Jonathan Castro: “Thank you very much for the invitation. I am happy to give potential investors an overview about the real estate market in Bogotá.
Introducing myself, I was born in Florida, USA, where I studied Psychology at the Miami Dade College. In fact, I lived in Miami for about 15 years.
During the last years I was very active in marketing, high end retail, and real estate investments and could gain a broad experience in those fields. The fact that I was in Miami when the real estate boom occurred and when the bubble burst gave me first-hand experience. This was an impressive situation which I will never forget, especially since Florida was hit tremendously.”
HalloCasa: “Great, let us directly stay with that topic. How was that when the bubble crashed?”
The burst of the bubble in Miami
Jonathan Castro: “Oh that was horrible, especially in Florida! Literally, most of the citizens which belonged to the middle class and lower-middle class went bankrupt. And if they did not, their credit rating went down the drain. Personally, I experienced it first-hand. I lived with my parents.
The value of our half-a-million dollar home with bay view and direct ocean access crashed. Within days, the market price decreased to the original price we had bought it from 3 years before at $200,000 USD. And if that was not enough, we had almost sold it a few days before the bubble burst, however, the deal had not been realized. That was definitely a lesson to be learned!”
HalloCasa: “Ok, that sounds like a huge impact. And then, you left Miami and went to Colombia. Why did you go back to Bogotá?”
Moving to Bogotá, Colombia
Jonathan Castro: “That´s a good question. My parents are originally Colombian and they decided to move back to Colombia while I continued my journey in Europe to seek new frontiers and experiences. Less than a year after that I moved back to Bogotá to enjoy being close to my family again. Apart from that, I also saw many great professional opportunities in Colombia.
So, I decided to start my own real estate agency here in Bogotá. The possibility to apply my combined knowledge in a market which is innovating and growing rapidly triggered my interest pretty much. In fact, my expectations were met very quickly after moving back. For example, being multilingual and of Colombian ancestry opened me many doors.”
HalloCasa: “So, you know both the U.S. American and the Colombian real estate markets. With respect to that, what is the biggest difference between the USA and Colombia and between Bogotá and Miami, in particular?”
The real estate market in Colombia
Jonathan Castro: “The biggest difference is that in Colombia the real estate business is right now starting to become organized and institutionalized. Until recently, the real estate market was not accredited by legal regulations.
Now, Bogota´s town halls and “Lonjas”, which are the educational parameters regulated by the state, are working on applying the MLS system which will connect both North American and South American markets making it very easy to purchase overseas.
With respect to similarities, both Miami and Bogotá share a strong investor base. Even though it does not seem obvious, investors´ interests are pretty much alike. Both are looking for attractive fast-growing opportunities with high returns on investments in order to explore and invest in upcoming metropolitan cities.”
HalloCasa: “Ok, so what are, in your opinion, the biggest reasons why investors should buy real estate in Colombia?” (Read also our interview about agriculture and real estate in Cali here)
Jonathan Castro: “In my opinion, it is a very good moment to invest in Colombia. There are two reasons for that. First, property values are steadily increasing nationwide and there are still a lot of untapped opportunities. Secondly, Colombian real estate is still very affordable compared to other countries in Latin America which, in the near future, might become the very opposite.
Also keep in mind Colombia holds a large portion of the clean water and fertile soil left on the planet and a very impressive bio diversity of animals, food, and nature, a true treasure that we must protect in an innovative way.”
HalloCasa: “What formal obstacles must a foreign buyer fear?”
Jonathan Castro: “The biggest formal obstacle I see is the language barrier. Investors might have difficulties to understand the buying process properly and might therefore be afraid to invest. Apart from that, it is still quite a hassle to transfer money to Colombia and bank requirements are higher than in other Latin American countries, such as Panama, for example. This is mainly due to Colombia´s drug history and the fear of money laundry.
But with the right help and once a trustworthy relationship between the investor and the broker has been established, it is less difficult as it might seem in the very beginning.
Another obstacle is the lack of transparency. International investors have basically no access to the Colombian real estate market and don´t know which broker is trustworthy and acts professionally. Therefore, I always recommend to only work with people who have been referred to you by someone that knows that person personally.”
HalloCasa: “Ok, talking about Bogotá in particular, where do you see development needs for Bogota?”
Developments in Bogotá
Jonathan Castro: “Bogotá has a major development need in public transportation and better access roads since more and more people come to the capital for better opportunities.
For example, Bogotá has a bus network which is called “Transmilenio”. It is based on exclusive lanes for particular buses. The idea of the system is a good one, however, it is not enough to facilitate transportation in a town of 9 million inhabitants. More buses and routes are necessary. That´s also one reason why the city is planning to start a metro system which is, in combination with more “Transmilenio” routes, much needed.
Apart from that, streets need to be improved and high quality standards for the construction methods need to be implemented so that follow-up improvements do not need to be conducted.”
HalloCasa: “How do you see Bogotá transform in the coming years?” (Another interview about the life in Bogotá here)
Jonathan Castro: “I see Bogotá transforming and growing upwards very rapidly.
We are starting to see that already. Bogotá will look like Santiago de Chile in a few years and that’s very exciting, since there are still many projects to be done, not to mention the outskirts of the capital that are still untouched and very affordable. Just to give you some examples that are making headlines worldwide:
- One of the new mega projects is called “Torres Atrio”, located on Calle 26 with Carrera Boyacá (near the airport). Its construction began in January 2015 and it will be one of the first skyscrapers in Bogotá with more than 70 floors and an altitude of 270 meters. It has been designed by the 2007 Pritzker winner, Sir Richard Rogers, who is heading the company “Chaid Neme Cia”. The director of this project is Simon Smithson, who has also participated in other projects and urban planifications in Berlin, New York, and Paris. The project includes a hotel, offices, and residential apartments and will consist of two towers with more than 70 floors, 250,000 square meters which should be finished by the end of 2016 (Source).
- Another mega project which will also contribute to the new center of Bogotá is called “Entre Calles”. It is said that it will be the tallest building in Colombia and in Latin America with 95 floors and 457 meters in altitude, higher than the Empire State Building in New York. It would be located on Carrera 7 with Calle 19. The planification, however, has not been finished yet (Source).
- Finally, there is the first actual skyscraper in Bogotá which is already halfway finished, the “BD Bacata”.
Being the first skyscraper in Bogotá, it has set some boundaries for the next to come. This tower will consist of 67 floors and 240 meters in altitude. It will consist of offices, a luxury hotel, apartments, and a commercial area in the bottom floors. The interesting part of the project is the way it’s being constructed with environmentally friendly materials.
Also, all windows are designed to maximize natural illumination hoping to reduce the usage of electricity by 30%. Natural ventilation designs are implemented to reduce the electrical costs even further. It’s also one of the first buildings to have sustainable systems of water reutilization using stored rain waters and a waste management program. All construction materials are also treated to prevent atmospheric contamination and health related problems (Source).”
HalloCasa: “That sounds like a lot going on in Bogotá, transforming the city massively. Switching to risks, where do you see the greatest ones in the market?”
Jonathan Castro: “I think that this depends mostly on the new laws and regulations assigned by the mayor of Bogotá. Yet, I’m sure it won’t be any major negative changes, since it’s a developing capital city with many large international investors. In addition, we are very close to finally sign the peace treaty with the FARC that has been worked on for so many years. I hope this will allow Colombia to grow even more in all aspects.”
HalloCasa: “Now, we are curious about your point of view concerning a bubble. A lot of people in Bogotá talk about it and opinions diverge. What is your point of view on that?”
Jonathan Castro: “In my opinion, there is a small bubble occurring but nothing compared to the one in the United States which was backed up with empty credits and risky bank loans. One advantage of the current situation is that you can bargain for a greater discount if the payment is mostly in cash, especially with the more expensive properties. Another aspect about it is
that there are some areas that are not worth investing, so a detailed study of the market is a must in order to see positive results in shorter periods of time.
As a conclusion, I do see there is a small bubble in the real estate market. There are a lot of new properties being constructed and until now supply is increasing faster than the demand which is bringing a balance to the market value of the properties. So, we will see how it will result once the new projects across the city will have been finished. However, the fast increase of inhabitants into the city is unlikely to be expected to decline, since Bogota is where all legal procedures are made and which remains the biggest market for best paying jobs in the country.”
HalloCasa: “Several times we have heard that investing in lots on the countryside gives great opportunities with respect to return on investment. What´s your opinion about that?”
Investment opportunities in Colombia
Jonathan Castro: “Lots are the gold mines of Colombia. However, you need to buy the right one, in the right location, for the right amount of money, and you need the permission to construct buildings for commercial and/or housing space on those. If you make the right decision, you can be certain to capitalize.
Especially commercial properties pay the highest prices per square meter and have the highest return on investment in the market. Another interesting strategy is to buy houses with 1 or 2 stories who hold the permission for additional ones. Experienced investors and construction companies convert those houses to 7-8 story buildings and therefore increase the amount of square meters and therefore the return on investment easily.”
HalloCasa: “Great tip, now to our last two questions which we like to ask our interview guests. The first is “What do you love about Colombia the most?”
Jonathan Castro: “What I love about Colombia the most is our rich culture, land, and our history. Not to mention the rich soil where we can grow whatever we please and all the clean drinkable water from the mountains which is still abundant. These things won’t have a price tag on it in the near future.
I also love the Colombian people. I see so much potential in Colombia, so much passion in the people to improve the current situation to make a change in this world. All we need is to work together towards that common goal in order to achieve that.”
HalloCasa: “And if you could change one thing in Colombia, what would that be?”
Jonathan Castro: “If I could change one thing about Colombia, that would be the political system.
For example, Medellin is being regarded as one of the most innovative cities on the planet at the moment. It has a lot of different ways of transportation. It’s incredible if you compare the advancement of Medellin to the rest of Colombia. A few months ago, I visited it myself where I could experience it.
Apart from the regular metro, which the citizens of Bogotá are still waiting for, they recently inaugurated a new way of transportation, the tram. I asked myself “How is it possible that parties in Bogotá have been planning a metro system for over 30 years and nothing has happened, while in Medellin those projects get done in a couple of years? What we need is a political party and a mayor which gets things done as it is in Medellin. This is what must be done all over Colombia not just in one city.” (Read also our interview about the launching a company in Medellin)
HalloCasa: “Thank you very much for all your insights and feedback. In case readers and potential investors are interested to contact you, via which ways could they do so?”
Jonathan Castro: “Sure, readers and investors can contact me via email: email@example.com or skype: jcol11. I am happy to answer any kind of question.”
HalloCasa, the marketplace for international real estate properties, is being founded by a German in Bogotá. HalloCasa´s mission is to build trust for vendors and investors with respect to cross-border real estate transactions.