How to Buy Real Estate In Colombia as a Foreigner
Who can buy property in Colombia?
Foreigners are fully allowed to own property in Colombia, including land, with no restrictions on the type of property they can acquire. Colombian law treats foreign buyers the same as local citizens. Additionally, foreigners do not need to be residents of Colombia to purchase property, and ownership rights are protected under the country’s legal framework.
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Investing in Colombia's real estate offers attractive opportunities due to the country’s growing economy, political stability, and increasing foreign investment. Colombia has experienced substantial development in recent years, with its major cities like Bogotá, Medellín, and Cartagena becoming hubs for business, tourism, and expatriates. The real estate market remains affordable compared to other Latin American countries, yet property values are steadily rising, offering strong potential for capital appreciation.
Colombia's expanding middle class, coupled with a thriving tourism industry, creates demand for residential, vacation, and rental properties. Additionally, the government has implemented policies to encourage foreign investment, making it easier for international buyers to purchase property. Colombia’s strategic location, pleasant climate, and diverse culture further add to its appeal as a destination for both lifestyle and investment purposes. With the potential for high rental yields in popular areas and ongoing infrastructure improvements, Colombia is becoming an increasingly attractive option for real estate investors seeking long-term returns.
Here are some sought-after destinations for real estate investment in Colombia:
- Bogotá - As the capital and economic center of Colombia, Bogotá is a prime location for both residential and commercial real estate. Areas such as Chicó, Zona G, and La Cabrera are particularly attractive due to their proximity to business hubs, upscale amenities, and cultural attractions. Bogotá offers a wide range of real estate options, including luxury apartments, offices, and retail spaces, making it a top choice for both local and foreign investors.
- Medellín - Known for its pleasant climate and innovative urban development, Medellín has become a popular destination for real estate investors. Neighborhoods like El Poblado and Laureles are highly sought after for their modern infrastructure, safety, and quality of life. Medellín attracts a mix of retirees, digital nomads, and property investors looking for long-term rental opportunities, especially in apartments and condominiums.
- Cartagena - Cartagena, located on Colombia’s Caribbean coast, is famous for its colonial architecture and vibrant tourism industry. The Old City (Centro Histórico) and Bocagrande are popular areas for purchasing vacation homes, luxury condominiums, and beachfront properties. Given its thriving tourist market, Cartagena offers attractive prospects for short-term rental investments and hospitality-focused developments.
- Santa Marta - With its stunning beaches and access to natural wonders like Tayrona National Park, Santa Marta is emerging as a real estate hotspot. It appeals to those looking for a relaxed coastal lifestyle, making it ideal for holiday homes, retirement properties, and boutique hotels. Areas like Rodadero and Bello Horizonte are particularly popular for beachfront apartments and villas.
- Cali - Cali, known as the salsa capital of Colombia, is gaining attention as a growing destination for real estate investment. With its warm climate and emerging urban development, neighborhoods like Ciudad Jardín and Granada offer good opportunities for residential investments. Cali’s lower property prices compared to other major cities make it an appealing option for investors seeking value and growth potential.
Where to find properties online:
Financing
Obtaining a mortgage in Colombia as a foreigner can be challenging due to specific requirements set by local banks and financial institutions. One of the key criteria is often the need to have residency in Colombia, which may limit options for foreigners without long-term visas. Additionally, banks typically require a significant down payment, which usually ranges between 30% to 40% of the property's value. Foreign buyers should also be prepared for more stringent documentation requirements, such as proof of income, creditworthiness, and, in some cases, an existing relationship with a Colombian bank. The process may involve more administrative steps, making it important to work closely with local professionals, such as real estate agents and financial advisors, to successfully navigate the mortgage application process.
Due Diligence and Sales Contract
In Colombia, due diligence is a critical step for buyers to thoroughly evaluate the legality and viability of a property before finalizing a purchase. This comprehensive process aims to identify any potential legal issues, financial liabilities, or other concerns that could affect the property.
In Colombia, the property purchase agreement, referred to as a "Promesa de Compraventa," sets forth the terms and conditions for the sale and purchase of a property. This formal contract commits both the buyer and seller to a future transaction involving a specific property. The agreement details the purchase price, payment schedule, and any other relevant terms, such as property inspections or financing conditions. Once the "Promesa de Compraventa" is signed, it becomes legally binding, meaning both parties are required to meet their obligations. Engaging a local lawyer to oversee the drafting and signing of this document is highly recommended to ensure all legal aspects are properly addressed.
Property Buying Costs and Taxes in Colombia
| Transaction Costs | ||
| Who Pays? | ||
| Property Transfer Fee | 0.50% - 1.00% | buyer |
| Legal Fees | 0.50% - 1.00% | buyer |
| Notary Fees | 0.15% | buyer |
| Real Estate Agent Fee | 3.00% - 4.00% (+16% VAT) | seller |
| Costs paid by Buyer | 1.15% - 2.15% | |
| Costs paid by Seller | 3.00% - 4.00% | |
| ROUNDTRIP TRANSACTION COSTS | 3.15% - 6.15% | |
| Source: Global Property Guide, PWC | ||
Footnotes to Transaction Costs Table
The round trip transaction costs include all costs of buying and then re-selling a property - lawyers' fees, notaries' fees, registration fees, taxes, agents' fees, etc.
Transfer Fee
Transfer fees are generally from 0.50% to 1.00% of the property value.
Notary Fee (Gastos de Notaria)
Notary fees are generally around 0.15% of the property value. These costs are split equally between the buyer and the seller.
Real Estate Agent's Fee
A real estate agent's fee is generally around 3.00% to 4.00% of the property value.