Last year saw price hikes across the economic spectrum. This year doesn’t seem like there’s going to be much of a break for consumers and first-time homebuyers either. Even as the government keeps inflation under control, Bogotá in recent years has catapulted from being one of the least expensive capitals to the top of the region’s rankings.
To live here is to pay more for a meal, an apartment and public services than living in Santiago, Mexico City and Buenos Aires. It may come as a surprise that the cost of living in this nation’s capital is higher than that of Amsterdam, Toronto and Dubai according to the 2012 Mercer report, which placed Bogotá at 53 of the 214 cities.
The ranking by Mercer is more than a game of numbers. To live in Bogotá is to bear the brunt of high prices: everything from renting a studio apartment to buying groceries at your local supermarket. The square meter for a new apartment in Rosales or Santa Ana can be priced at $8 million pesos, or roughly U.S. $4,500. Take then a 100 sq meter apartment and you are looking at U.S. $450,000 with a 30 percent down payment.
Some new apartments over the city’s circunvalar have their meterage priced at $11 million pesos. Then you have the costs of “soft” culture and items, such as going out to a restaurant or buying tickets for a concert. In a country where incomes are not increasing at the same rate as the cost of living, some question how long Bogotá can sustain a cost of living that begins to match New York City.
The influx of oil dollars from Venezuela as well as large-scale investment from other markets is changing the dayto-day spending realities of Bogotanos. The country’s banks have played a part in driving up the debt by easing credit. While this has helped the automobile sector sell more cars, it’s a precarious policy when it comes time to pay back loans.
Facing economic slow down in exports from the country’s industrial sector, the central bank lowered this month its lending rate a quarter of a point to 4 percent. With inflation hovering near 3 percent and a currency which performs strongly against the U.S. dollar, Colombians have been swamped with new imports thanks to low or no duties on foreign goods. Driven by their new-found financial freedoms, Bogotanos are increasingly spending more on foreign items and travel. While there is an urge to see the world, the conclusion is that at home, the cost of life is taking the shape of “bubble” about to burst.
15 Responses to Bubble to burst?
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I dont think Bogota’s bubble is about to burst, specially when the city is limited by the mountain and there is no place to build more houses in the good areas middle-high and high class are seeking. Bogota also lacks the Manpower to deal with IT and tech leading, having to bring so many expats, also as the capital all the embasies…. all the mentioned now makes it hard to compete with an expat that comes with a 5kUSD rent allowance and as it is… THERE ARENT MANY FLATS AND HOUSES LEFT ON THE GOOD AREAS…. is a bummer
ofcourse the bubble will burst….its called the free market an as the price goes far beyond the reach of the people then supply will increase and demand will decrease thus the price will come down…voila…simple economics….Colombia has been putting the cart in front of the horse for far too long and lets be honest, Colombia is beautiful but safety and security are awful and safety and security has to be good for foreigners to bring money or move to colombia
Great article! and good stats. Just the other day a friend wanted to look at a possibly buying a small pad in Chico. 100 meters = 500 Million Pesos. Those are big numbers for the amount of space you’re getting.
This article seems more of a conversation in Juan Valdez among people that “heard that someone heard…” No proper studies or statistics to contrast and back it up. Just a typical foreign press article about what seems on the exterior. Shame on you, specially because you are a Bogota paper.
Hello. Not quite sure what you mean when you say: “shame on you,specially because you are a Bogota paper.” Precisely, I think it’s our duty to write and have opinions regarding the rising cost of real estate. Maybe precisely that’s why the Central Bank is lowering interest rates, and the ANDI wants even a further reduction. Too much credit. Not enough growth. Thank you for reading us.
I am glad someone else has started to sound the warning, I have been talking about the bubble about to burst in Colombia for atleast a year now over on CR…thanks for helping to open peoples eyes more…..
Well done City Paper. Ever since you guys broke the story, it’s now become hot “news” in the big and very bland Colombian media who are now jumping all over this story with the very real “bubble” scenario affecting our city.
i don´t see how the ´bubble´can´t burst.Exports are slowing significantly and wages are stagnant…the same recipe that caused problems in the rest of the leveraged credit dependent world.Apartment construction is continuing at a fever pitch,as it is seen as a sure bet investment….and as long as many people continue believing this fib and not seeing the bigger picture,many will be fooled into purchasing at inflated prices.Time will tell,Colombia has many aces,but I believe the bubble will pop.Kudos to the City Paper for having the gumption to suggest the possibility
As a real estate professional i must say Bogota is far from a burst… While high priced areas located in “estratos” 6 and 5 will slow down or reach a cap this year, “estrato 4 neighborhoods are doing extremely well and will continue to do well. As Paul said you just need to know where to look. Coming from a background of flipping homes back in the states, Bogota is the perfect place to do this. Look for a fixer-upper, something you can afford, doesn’t matter the neighborhood, upgrade the kitchen and baths and guaranteed you will make a nice profit. Strike while the iron is hot!
Mario coming from Real Estate and coming from Flipping houses in the USA you sureley should be able to see a bubble much like that in the USA has formed and like the housing crash of 2007-08 Colombia on the current track is there also and it is only time before it burst…………and it will be ugly….
Bogota is significantly cheaper than Cartagena.
You can still afford it, honestly. Most expats get by nicely on $2mCol a month, and though the rent in Rosales is expensive, most people pay between $400,000 and $1.2m COL depending on your preferences. Bogotá is a strange city because you can pay $1,500 for a beer, then walk 1 block and pay $12,000, you just got to know where to avoid if you’re looking to save.
Agree with Paul, it´s a city of real and significant contrasts. I think in terms of property prices, yes they´re going up, but I´m not sure the bubble is about to burst. There´s little evidence to point to, either way – it´s a very difficult one to call. I think Bogotá will continue to thrive and continue to become more expensive. It´s a real gem, so it´s little surprise.
Seriously? Wow! I was contemplating looking for work in Bogota as I am miserable where I live in coastal Colombia. I visited Bogota recently for several days and was enthused about the vibrance of the city and realized how much I miss big cities, I’ve lived in NYC and Toronto. Where I am now is a cultual waste land. How sad to read this article, I doubt I can afford it
Hi Bcad, this article talks about the most expensive neighborhoods in Bogota, but there a lot of good places which are not that expensive, and as Paul said, its just a matter of knowing where to go. Don’t change your plans!