Investing In Colombia: The Secret Is Already Out

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Penthouse Living At A Bargain-Basement Price

I look for any excuse to spend time in Medellín. My wife has finished the apartment we bought here in 2011 to a luxury standard (why not, we figured, when we realized that luxury comes at a very affordable price in this town), and the city itself is, likewise, world-class.

On the drive into Medellín from the airport on my most recent visit, I noticed a sign I had not seen before at one of the gas stations we passed along the highway.

It said: “Bienvenidos.”

It also said, “Welcome. Bienvenue. Willkommen. Bem vindo,” and referenced at least one other language I didn’t catch.

The sign reminded me that global tourism is gaining momentum in Colombia. The country’s stigma is finally fading. This multilingual highway sign is just one indication.

Another is all the press I’ve been reading in other newsletters that have begun touting their newfound secret Colombia. You and I know that Colombia isn’t today’s discovery. We’ve been on to this secret for years. Maybe you, like I, have already invested.

If you haven’t, I don’t know what in the world you’re waiting for.

If you need another reason to pull the trigger in this market, the Colombian peso is cooperating nicely. When we bought our apartment in 2011, the peso was trading at about 1,760 to the U.S. dollar. It hovered in the range of 1,750 to 2,000 to the dollar until late 2014, when it began to decline.

Today it is at around 2,900 and has been trading in the 2,900 to 3,100 range for the last year with a few blips above and below that at times.

The weakness in the peso has been tied to low commodity prices, especially low oil prices, as Colombia is an exporter. Despite the fall in commodity prices, Colombia has been able to maintain decent GDP growth as the local economy moves forward.

And property values have appreciated steadily for the past six-plus years, in Medellín and elsewhere. My apartment purchased in 2011 is worth more today in U.S. dollar terms despite the interim currency fall.

One of the naysayers who wrote to tell me I was a fool to invest in Medellín in 2011 wasn’t concerned about the FARC or drug cartels. He thought the currency was too strong and told me he was going to wait until it hit 3,000 pesos to the U.S. dollar before buying.

Maybe this reader bought an apartment in 2015 when that benchmark was reached, but he didn’t save any money in U.S. dollar terms thanks to the strong growth of real estate values in this city over the intervening six years.

He also missed out on having use of a pied-à-terre of his own in this wonderful city all those five years… as well as on five years of cash flow from rental income.

One question we’ll try to address at next month’s conference in Medellín is where the Colombian currency might go from here. Is the trading band over the last year going to be the new norm or will the peso appreciate against the U.S. dollar over the next year? We’ll discuss with the help of local experts.

Two other important topics we’ll address at the conference, again with the help of local experts and advisors, are to do with moving money into (and out of) Colombia… and Colombian taxes.

Bottom line, no need to worry about getting money you’ve invested in Colombia back out of the country when you’re ready to take your exit. As long as you document the introduction of capital into Colombia correctly, this is a straightforward process.

Our Colombian attorney will walk attendees at next month’s event through the simple requirements.

What about taxes? Colombia is not a tax haven, so you want to take these into account for any investment you make in this country. Readers have written to ask if it makes sense to invest in Colombian real estate, specifically, given the associated tax burdens.

Yes, you’ll likely have a local tax obligation associated with investment return in Colombia; however, this is the case for any kind of investment you might make in this country. The associated burden is no more onerous for a property investment than for any other investment vehicle, in theory.

Again, we’ll break this down and address the details based on particular options and opportunities over the three days of the event in April.

Lief Simon

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About Author

Lief Simon

Lief Simon has lived and worked on five continents and traveled to more than 50 countries. In his long career as a global property investor, Lief has also managed multimillion-dollar portfolios of rental properties, for others and for himself. He offers advice on international diversification in his twice-weekly Offshore Living Letter and monthly Simon Letter dispatches.