HOUSING FOR THE MIDDLE CLASS IN COLOMBIA
The middle class in Colombia is increasingly requesting owner-occupied housing. A group of Danish investors is building more than 700 apartments in the country.
In the past 10 to 15 years, Colombia has experienced rapid development, which has led to a reduction in poverty, among other things. Since 2002, the lowest income class has decreased from 50 per cent of the population to about one third. The number of people with a middle income has almost doubled and now makes up 25 per cent of the population.
It is a tradition in Colombia to own your own home, so the economic progress has led to increasing demand in the housing market. A group of Danish investors with experience from Latin America estimates that building homes in Colombia constitutes a good business opportunity, and they have therefore decided to invest DKK 32m in apartments in three Colombian cities, including the capital of Bogota.
“Colombia is an interesting market with high demand, and we believe that the investment will ensure a positive outcome for the investors and contribute to the development of the Colombian real estate market”
Martin Nymark, CEO of Exact Invest
Martin Nymark has invested in and developed property in South America in the past eight years. As the manager of the Danish investment group, Exact Invest is actively involved in the development of the individual housing projects.
In recent years the supply of homes in Colombia has increased, and in most major cities there are many building projects underway. However, despite the increase, demand is still high, and it is estimated that there is an acute housing deficit of nearly 4 million homes. At the same time the average age is low compared to Europe. More than half of the 50 million Colombians are under 27, and the majority of them do not own their own home.
Despite a slight decrease in growth, the overall development has led to more people being able to afford their own home. This goes for the growing middle class in particular, but even poor people are able to afford a home today due to state subsidies for purchasing a home.
The Danish investor group focuses on building homes for both the lower and upper middle class, and has currently invested in four projects with more than 700 apartments and a small retail area. About one third of the apartments have been sold.
DKK 4.5m from IFU
IFU has invested DKK 4.5m in the investment company Exact Colombia I A/S. The reason is that the investment can contribute to improving the Colombian capital and housing market, which is still underdeveloped and lacks foreign capital.
– We think it is an interesting investment that can provide a positive return, but also contribute to improving conditions in Colombia, which despite the positive development is still overshadowed by the other large countries in Latin America when it comes to investments, said Henrik Jepsen, Investment Director, IFU.