First American Realty Medellin Strategic Allied Our brand PM&C INGENIERIA S.A.S recently in a publication of The New York Times:
Medellin’s property market still suffers from lingering images of “the drug days,” Mr. Holman said. “It takes some time to get rid of the stereotypes.” The recent public rejection of a peace treaty with the Revolutionary Armed Forces of Colombia, or FARC, has had little impact on Medellin, beyond perpetuating the perception of turmoil, agents said.
As a result of that perception, Medellin homes sell at a steep discount compared to those in Bogotá and Cartagena, Mr. Holman said. High-end properties in Medellin are priced at about $190 a square foot; those in Bogotá are around $318 a square foot.
But sales in Medellin have been steadily increasing in recent years, and prices have risen an average of 7 percent a year since 2003, Mr. Holman said.
This year the local market is on pace to sell more than 74,000 homes, a record number, the Real Estate Association of Medellin reported a few weeks ago. Prices in the area rose 8 percent in 2015, according to the association’s data.
The market has been aided by an improving economy, a growing middle class and increasing tourism, agents said.
The property market “is booming,” said Brad Hinkelman, the owner of Casacol Medellin, a real estate agency. “Colombia is a classic emerging market economy.”
The affluent neighborhood of El Poblado, adjacent to Envigado, is the most popular area for foreign buyers, agents say. Prices in some areas of El Poblado have risen more than 15 percent in the last year, Mr. Hinkelman said. And “there is very little new construction coming on to the market in the most coveted area of the city,” he added.
The second most popular area in Medellin for sales and rentals by foreigners is Envigado, agents say. It is seen as an alternative to the higher-priced central neighborhoods, said Mr. Hinkelman, who lives in Envigado: “If you are trying to get more for your money, you go to Envigado.”
Medellin neighborhoods are rated by the government on a scale of one to six based on social and economic conditions, with six signifying the wealthiest neighborhoods and one the poorest. (The ratings are used to determine property taxes, utility fees and other charges.)
Most parts of El Poblado are rated six, while Envigado ranks between two and five, depending on the area, Mr. Holman said. This house is in a neighborhood rated five.
WHO BUYS IN MEDELLIN
The domestic market is driving home sales in Medellin, which is a popular vacation and second-home destination. “A lot of investors from Bogotá are coming to Medellin,” Mr. Hinkelman said. “There is huge rental demand.”
The number of foreign buyers in Medellin is also growing, especially with the strength of the dollar against the Colombian peso, agents say. But international buyers still make up less than 5 percent of the market, Mr. Hinkelman said.
There are no restrictions on foreigners buying property in Colombia. Agents recommend hiring a lawyer to handle the paperwork and research the title.
And while regulations are strict and there is a lot of paperwork, “Colombia protects ownership,” said Diana Pizano, a partner in the Medellin law firm of Colombia Legal Partners.
Down payments are usually 10 percent to 20 percent of the purchase price. Colombia does not use escrow accounts, but the purchase agreement is “legally binding to the parties and enforceable,” Ms. Pizano said. If there are no problems with funding or the title deed, deals can close within 45 days of an accepted offer, she said.
The majority of transactions are all-cash. Even for locals, mortgages are very expensive, with interest rates of around 12 percent, Mr. Holman said, and they usually require 30 to 40 percent down payments.