Colombia’s tourism drive bears fruit

Last Updated: Jun 12, 2007

Colombia’s tourism drive bears fruit

Colombia launched an aggressive tourism drive backed by President Alvaro Uribe’s iron-hand command. The government wanted to show that Colombia is now a safe country for tourists to enjoy the beauty of the Andes and the Amazon basin.

The drive to boost tourism saw fruitful rewards, with the number of cruise ship arrivals jumping by 45% from 2003 to 45,000 in 2005. According to Proexport Colombia, there was a 65% increase in foreign visitors from 2002 to 925,000 in 2005. Proexpert is “in charge of promoting Colombian non-traditional exports, international tourism and foreign investment.”

Security threats continue

Ensuing paramilitary issues threaten the growth of tourism. Uribe’s administration, through his leadership, has been successful in investigating deeply into the operations of the paramilitary Autodefensas Unidas de Colombia (AUC). AUC was responsible for kidnappings and mass murders in the past.

Some 30,000 paramilitaries demobilized due to Uribe’s persuasion, and are now volunteering to testify about AUC’s operations in exchange for reduced sentences and non-extradition. This investigation uncovered more of the paramilitary’s possible links to Colombian legislators. Recently, the Supreme Court has ordered arrests of several legislators suspected of having financed AUC and being involved in the planning of attacks.

These developments are hurting the government’s image just as locals and foreigners are starting to believe that Colombia has become safe, especially with impressive improvements like a 73% fall in kidnappings since 2002. Now, there is pressure to assure that the present
administration no longer has any connection to the AUC.

Economic stability

Colombia remains to be one of Latin America’s stable economies. Its inflation rate has also seen continuous decrease from 7.1% in 2003 to 4.7% in 2006. From 2005-2006, its GDP per capita grew by 3.05%.

Property prices have not yet reached their 1995-peak level, which may partially be caused by the persistent political troubles. House prices in Colombia now are still around 40% cheaper than 10 years ago. Apartment prices only rose by an estimate of 2.17% in 2006, while detached house prices only by around 2.3%.

Global Property Guide research shows that apartments in Bogota are in the market for an average of US$736 per square meter (sq. m). On the other hand, house prices in the city sells for an average of US$646 per sq. m.

Cartagena

Cartagena prices are also beginning to rise smartly. The sea-lapped port city (pop. 1 million), founded in 1533, is attractive to both tourists and property buyers for its charm, history, safety, and beaches. Cartagena was a slave port.

Cartagena has been selected to host the World Tourism Organization's 2007 convention, the travel industry's most important gathering. And the Lonely Planet has picked Colombia as one of this year's 10 hot spots. Since 2003, the number of cruise ship arrivals has jumped by 45% to 45,000 in 2005.

The average cost per meter for residences in good condition and in the more desirable locations in Cartagena is approximately COP 1,000,000 pesos (US$350) per sq. m.

Property collapse

The fall of house prices after 1995 was largely caused by very high interest rates. In the 1990’s, there were around 320,000 defaults. Banks repossessed 12,000 real estate properties, putting severe strain on the banking system. The government is progressively working on decreasing interest rates further.

“Recently, Bank Colombia (a private bank) dropped interest rates for mortgage debt to 12% and that has really activated the interest of home buyers, and is giving the real estate industry a very active market,” says Posada Gomez of the Central de Inversiones, Colombia. Other private banks have followed.

“High-end property, luxury condominiums have increased in value by 30% or perhaps a little higher, compared to five years ago,” says Gomez. “But this movement is very restricted to upper end property. The lower end is very slow.” This is due to the large volume of dispossessions, which mainly affected middle and low income house-buyers.

Housing deficit

Colombia is still a poor country and most of the population is not well housed. A 2005 survey revealed that 34% of respondents do not live in their own houses, and 79% of these find it unlikely they will ever own one.

The housing deficit amounts to 2.4 million houses. This is about 26% of the entire housing stock. To address the deficit, 185,000 houses must be constructed annually, but in 2006, the housing stock increased only by 96,970.

Owner-occupation is slowly declining from 67.4% in 1988 to about 63% in 2005. At the same time, the share of renters is rising from 24% to 30.6%. This should not be welcomed as good news by landlords because, of the 15 million people living in rented dwellings, about 90% belong to low-income groups.