Greetings from Bogota, Colombia

[Juan Diego]

Hey my name is Juan and Im from Bogota, Colombia. I found de BP Podcast because I want to start investing in real estate. Anyone from Bogota in the group? I would like to discuss the market down here. Also congrats for the awesome community!!! Cheers.

[Mike Lambert]

@Michael Reiserer

I agree with a lot of what you wrote. Obviously you live there so you know what's going on. As you mentioned, whether you'd want to invest there or not depends a lot on your risk appetite (aside from lifestyle considerations). Colombia is an emerging market and people who are risk averse will never invest in Colombia, irrespective of any other considerations.

Then, it depends on whether you're the kind of person to look at the bottle half full or half empty. As a non-resident foreigner, I don't have to deal much with the problems you're mentioning whereas you probably see those problems every day. So, it's to be expected that somebody in my position would be more positive than somebody is yours.

As to Medellin being one of the most avant-gardist city, I was referring to the city winning the Lee Kuan Yew World City prize in 2016 ahead of New York City and Tel Aviv: https://www.leekuanyewworldcit.... The whole article is worth reading. Of course, not all problems haven been solved yet because it takes time but investors look at the future, not the past. Colombia isn't a developed country yet and, if you compare with the emerging world, you'd be hard pressed to find other cities that have undergone such a transformation. If Medellin was the second city of a developed country, real estate prices would be much higher.

As to the economy, of course wages are too low and inequalities are too high. That's one of the main characteristic of an emerging market economy. As the economy grows, the middle class emerges and grows (as it is the case in Colombia) but, sadly, it'll take (much) more time before it spreads to the poor, hence the social unrest. Also, I'm not sure about the oil dependency: oil revenues represent less than 4% of the country's GDP so I don't see why the COP should follow the price of oil.

The problems you are mentioning were certainly not better 10 years ago. Yet, over the last 10 years, real estate prices have gone up a lot (and, as you suggested, are still low). You are absolutely right to mention these problems. They are real and we shouldn't sugarcoat or ignore them when considering investment decisions. But should they prevent anyone from investing just by themselves? While we should always look at the risks, whether you look at real estate or stocks, the overly risk-averse and pessimistic people (and I'm not suggesting you're one of them) who focus on the negatives don't invest and therefore don't make money. The positive and optimistic are the ones who make the money because they are the ones who invest. Because the reality is that real estate and stocks have always ended up going much higher over time, whichever problems we have encountered, including Covid.

Finally, in investing, you make the most money when the situation goes from bad to less bad. You'd have the most potential if you buy when the situation is still really bad (when there's blood in the streets so to speak) but the risk is too high as the situation might not improve. If you wait that the situation becomes good, you have missed the boat. And one of the reason for the low prices when doing international comparisons is because many if not most foreigners aren't aware that things have changed for the better since the time of Pablo Escobar. However, as the city becomes increasingly popular with the foreign retirees, work from home crowd, snowbirds, digital nomads and tourists, that could finally change.