Rediscovering Medellin – A Look at Recent Data to Contextualize a Housing Market Boom
Before starting this article, I only had one thing clear: Medellín is a very particular place. It has very good publicity and has a distinctive image among Colombian cities. I asked a friend who recently moved to Medellín why he would love to live there: “Beautiful people, great weather all year-round and solid industry”, those were his reasons for such an enthusiastic portrait of Medellín. Like many people, my perception of the city was shaped by the media portrayal of the time period, around 35 years ago, when the drug cartels ruled the city (and some even say, the country). We all know those gruesome stories of violence, but since then what has happened? I realized that I only had a historical memory of a place plagued with gigantic problems and now, when I was faced with a present image that gave me a reliable source, I couldn’t help but wonder “Am I missing something?” So I decided do some more research and find out what’s going on in the Medellin market.
It didn’t take long for me to discover some basic facts:
(1) Medellín is the second most important city in Colombia with more than 2.5 million inhabitants and a huge industrial-manufacturing complex, which falls short only behind the capital.
(2) They are pushing technology very hard and seem committed to riding the wave of growth in the business of artificial intelligence and tech startups. The current president recently inaugurated the Center for the Fourth Industrial Revolution in Medellín, an initiative affiliated with the World Economic Forum that seeks to revolutionize the public and private sectors. Medellin today brands itself as the Valle de Software.
(3) Medellín is currently the main exporter of fabrics and textiles in Colombia, owning 53% of the market share that sells to the United States, Venezuela, Mexico and the EU. According to the National Department of Statistics, DANE, Medellín has been strong in almost every industry sector for over a decade and it seems like it’s only growing from there.
As seen in the graph’s purple column, in 2018 only food related products and services, basic chemical industry and “others” took a small dip in its production rate. Every other domain of the economy increased. Now, on the sales column (in blue), the stellar figure is the iron and foundry sector that grew over 31 points, showcasing the huge demand for construction materials, a trend that apparently hasn’t stopped. A pleasant climate, friendly people and many investment and business opportunities are some of the advantages that Medellin offers to expats.
People, both local and foreign, are trying to move to Medellín at an unprecedented rate. Construction continues across the entire metropolitan area, and the city has not left a single stone unturned in search of a place to start building.
The demand is at an all time high, as people become enamored with Medellín and naturally this boosts prices. But it is actually more complicated than that, as explained by Federico Estrada, manager of La Lonja Medellín, who said that the market is secured for the upcoming five years because the government has solidified and increased subsidies for the VIS (spanish for social interest household), making this subsidy a tool for the more budget-oriented Colombian citizen who’s looking for a house. Estrada also pointed out that the recent tragedy of the Space building collapse pushed higher and higher the standards of construction in the region and that made prices increase even more, since higher quality means more expensive materials, more well-paid experts, further testing and regulatory overseeing.
Eduardo Loaiza, manager of Colombia’s Chamber of Construction stated that the POTs were a terrible incentive for the construction business due to their restrictions. (If you don’t know what a POT is, see #5 in this article: 15 Spanish Terms You Should Know to Deal in Colombian Real Estate
Not only that, in general, construction costs are going way as is explained here by experts in the field: ¿En Medellín se estaría generando una burbuja inmobiliaria?
They cite a wide variety of scenarios such as the topography of the region, building restrictions, scarcity of land and independent variables such as the price of steel that have been going up consistently.
In the graph, we can see that in April 2016 the price of steel fluctuated around 2,500 yuan, while today it is more than double. Now, considering how vital steel is to the construction market, it doesn’t take much to visualize how its price can directly affect the real estate industry.
All these factors make construction very expensive and drive prices up. Medellín in 2019 was located well above the capital city of Bogotá in terms of price/m2 in the value of new homes and more than two points above the national average according to DANE.
But, let’s dig a little deeper into this graph. Cúcuta, a border city, experienced the surge in prices fueled by the crisis in Venezuela, since a huge amount of Venezuela’s middle class decided to establish themselves in the comfort and security that Colombia could provide that Venezuela no longer could. For Cundinamarca, the measurement is of the Cundinamarca region (including the municipalities of Cajicá, Chía, Cota, Facatativá, Funza, Fusagasugá, La Calera, Madrid, Mosquera, Soacha, Sopó and Zipaquirá), not an individual city and that piling of data makes it rise on the list. As for Pasto and Popayán, well, they’re a testament for Colombia’s general stability: stagnant cities are now growing everywhere but we must consider that this graph is measuring the amount of variation in prices, not the prices themselves, so whilst Popayán and Pasto (both very cultural and touristic cities), rank higher on the list, it is still Medellín with the highest overall prices.
The growth rate is so significant that some even wonder if we are witnessing a housing bubble. And how can you blame them? The general price of new homes in the last quarter of 2020 was seven points higher than in 2014, when other major cities such as Barranquilla or Bogotá were only around two or three points above the 2014 average. This is not surprising at all once you have considered the variables: like Austin, Tx, Medellín is the city of fashion in Colombia; a place that harmoniously mixes fashion, technology, industry and friendly people. Some call it the “cool city of Colombia.”
Now, unlike other Colombian departments, the development of the region is amazing; Along with Medellín, the entire department has experienced an increase in growth that is easily visible on this map provided by DANE:
Measure the amount of area designated for construction. Medellín appears as the city with the largest amount of land destined for residential construction in the country! As seen above, the purple areas represent the departments and are more than 71% of the total constructions, not counting traditional homes and alternatives. When one makes the comparison on the map, which is quite complete and interactive, if you are interested I definitely recommend visiting the site and reading it, there is no doubt: Medellín is booming and people seem to be catching up, if you want to look at another interesting graph, enter to the following link: “Geovisor of Geographical Web Services”.
On another note, Medellín’s neighbor, Itaguí, ended 2019 with 35 new housing projects and has seen an increase in construction of 195 % from the numbers of 2010. In the same fashion, Envigado went from having 883 hectares of residential land in 2014 to 1315 in 2019.
However, even when the entire valley is increasing in value, Medellín still leads the sector, and no wonder! It isn’t just because it is the head of the departmento, but because according to the official data it has the best rates of development.
As we can see in the latest available data, Medellín ranks first in the development index throughout Antioquia, also leading in areas such as the availability of drinking water and electricity. See more municipality by municipality comparisons here: http://www.antioquia.gov.co/planeacion/fichas_municipales_web/index.html
So, after those two days of exhaustive research, I found myself in a very different city than I had imagined. Medellín is not only one of the safest places to live in Colombia, it is an explosive economic epicenter and a city loved by locals and visitors alike. So much so that, to my total bewilderment, in 2021 Medellín is listed as the best city to live in Colombia but there is more: Medellín is the city with the highest ranking of citizen satisfaction in the entire country, since 87% of its citizens are satisfied and happy living in the city. Those numbers definitely blew my mind! (SEE ALSO: Mejores ciudades para vivir en Colombia en 2021 – Rankia ).
UPDATE 2023: Medellin does not only contend as the best city in Colombia but one of the best in the world (to visit and retire). This isn’t just my opinion but according to major rankings such as Forbes & Time Out.
After reviewing the data and comparing the numbers, I honestly can’t think of a place with greater potential for the future of its market and its people. Since at least 2004, Medellín’s property values have not experienced a negative year (see graph below). Incredible, I must say that I am happily surprised and hopeful for what will come to Medellín.
Questions, comments, concerns? Send us an email in the contact section or message: (+) 57- 317- 523 3469 I would be happy to discuss the data further as well as the potential returns involved.
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