Medellín’s real estate market has seen steady growth over the past 20 years. Will the trend continue?
Sprawled across the Valle de Aburrá in the Andes, Medellín is known as La Ciudad de Eterna Primavera, or “The City of Eternal Spring.” The northwestern Colombian city enjoys a temperate climate of around 72.5 °F (22.5 °C) year-round.
The capital of the Antioquia department, Medellín is the second most populated city in Colombia with an estimated population of 3.7 million. The city’s residents, or “paisas,” are notorious for being as warm and sunny as the weather.
But beyond natural beauty, warm weather, and friendly locals, Medellín boasts a rich, compelling redemption story that has earned it international attention and acclaim.
Over the last 20 years, Medellín – once the former headquarters of notorious drug lord Pablo Escobar and the world’s “most dangerous city” – has risen like a phoenix from the ashes. Through a focus on security and social and urban innovation, Medellín has transformed itself into one of Latin America’s safest cities and won accolades like “Innovative City of the Year” and “South America’s Silicon Valley”.
Recent years have seen incredible growth for Medellín in terms of tourism, real estate, economy, and beyond – but the city still has big things ahead, predicts Rich Holman, Founder of Primavera Realty.
Find out what to expect in 2019 and beyond with our Medellín real estate forecast for 2019.
Since 2006, tourism across all of Colombia has grown more than 300%, from one million foreign visitors to more than three million in 2017. Within the first seven months of 2018 alone, more than two million visitors entered the country.
Medellín is the country’s third most popular tourist destination behind Colombia’s capital city Bogotá and go-to beach destination Cartagena. The city has enjoyed skyrocketing tourism rates over recent years, seeing an 18% increase from US travelers between January and August of 2018, as compared to the previous year.
During this period, Medellín has been showered with positive press and awards, including the TripAdvisor’s Travellers’ Choice Award for Top Destination on the Rise for South America.
Looking into 2019 and beyond, further tourism growth is forecasted across all of Colombia, with Medellín leading the way along with Cartagena, Bogota and Cali. The city is expected to drive tourism rates with new flights from Spain, Florida, and Mexico City.
In the next few years, Medellín will welcome more than 30 new hotels. The city will continue to market itself through international tourism events like the Colombia Week hosted in New York City in 2018.
As Ana Maria Moreno Gomez, Director of the Medellín Convention & Visitors Bureau, predicted in an interview, “Usually at a worldwide level tourism is about 10% of GDP. For Colombia that number is 3.8%, so we have a lot of room to grow.”
Real estate prices
In Medellín and Colombia, local real estate markets started taking off around 20 years ago. “Prior to 2002 we saw no movement in real estate prices,” notes Holman. “But prices took a big jump in 2003.” That’s when violence rates plummeted under the administration of President Álvaro Uribe, and things began to turn around for Colombia.
Since 2003, real estate rates have risen steadily across the country, with the City of Eternal Spring leading the way. In Medellín, rates have risen at an average of 7-8% per year, says Holman.
Holman notes that the lowest period in terms of real estate appreciation for Medellín was in 2007 and 2008 when the burst of an $8 trillion dollar USD housing bubble in the U.S. gave way to an economic recession. During this period, as prices in the U.S. and Europe plummeted, Medellín real estate values actually went up 3.4%.
Even with rising prices, Medellín properties still represent some of the best real estate bargains in the world. Properties in Medellín go from 25-35% less than high-end properties in Bogotá and Cartagena, and homes in Medellín are among the least expensive per square meter in any major cosmopolitan city in the world, says Holman. According to Holman, properties remain undervalued because of a lingering global misconception of Medellín as a violent place.
As that misconception is dispelled by local marketing efforts, positive international press, and word of mouth, Medellín’s real estate market should continue to flourish.
“Medellín represents an undervalued market with a rapidly expanding economy, growing middle class, and no leverage,” says Holman. “The market still has a ways to go.”
GDP growth in Colombia
Nationwide, Colombia has seen historic economic growth over the last decade. From Latin America’s fifth largest economy in 1990, the country has climbed to the rank of Latin America’s third largest economy with a gross domestic product (GDP) of $309.2 billion USD in 2017.
The Colombian Ministry of Finance predicts the country’s GDP will climb another 3.4% in the coming year. Looking at the next ten years, Colombia’s economic growth is expected to continue at a constant rate due to increasing oil prices, steady private consumer consumption, an expanding middle class, development of an Interstate System, and recovery of non-oil exports, among other reasons.
USD strength against the Colombian peso
The currency exchange of the Colombian peso (COP) against the U.S. dollar is yet another powerful reason to invest in Medellín and all of Colombia. As of March 26, 2019, the Colombian peso traded at COP 3,144 to $1 USD, compared with COP 1,872 to $1 USD eight years ago. And flash forward to May 2022, the COP is trading over 4,000 to $1 USD.
For the modern day USD investor, this means 100% more buying power than investors enjoyed eight years ago.
The bottom line
Real estate prices and tourism rates have been increasing steadily since 2003 across Colombia, but no other city has seen the spectacular growth of Medellín. “We don’t see any reason the trend won’t continue for the next five to ten years,” says Holman.
Want to learn more about Medellín and Colombia investment opportunities? We encourage you to get in touch with our Medellín office at Primavera Realty and speak to one of our residential real estate experts.