Published on and written by Cyril Jarnias
The Colombian real estate market is going through a pivotal phase. After a sharp slowdown starting in 2022, momentum has picked up again, but on a very different basis than the previous decade. The growing weight of rentals, the rise of foreign investment, the explosion of short-term rentals, the growth of sustainability and digitalization, and new forms of financing like tokenization: the sector is undergoing a profound transformation.
This is the increase in real estate prices in Colombia over the last five years.
A Market in Transition Between Slowdown and New Growth
The recent trajectory of the market shows a clear shift in phase. After several years of strong expansion driven by new construction, sales, public subsidies, and low interest rates, the sector absorbed a shock starting in 2022.
Sales of new homes fell from 13.7 units per 1,000 households in 2022 to 8.5 in 2024. In the key affordable housing (VIS, Vivienda de Interés Social) segment, the drop is even more pronounced: from 33 to 18 units per 1,000 low-income households. The decline is all the more significant as this segment represents about 70% of annual new home sales in the country.
The Colombian real estate sector experienced a marked contraction in 2024, with an increase in completed unsold homes, many abandoned projects, and a 23.7% drop in residential building permits (15.02 million m²). Furthermore, the suspension at the end of 2024 of the ‘Mi Casa Ya’ aid program, for budgetary reasons, deprived the affordable housing market of crucial support, affecting approximately 40,000 households.
However, the phase of a simple “soft landing” is giving way to new momentum. New home sales increased by 5% in 2024 (152,246 units), then by 4.1% in the first half of 2025 (77,151 units). Most importantly, forecasts from BBVA Research announce a notable rebound: +9% in sales in 2025, then +11.5% in 2026, mainly driven by the unsubsidized segment (non-VIS), which is more creditworthy and less dependent on public aid.
The current situation is therefore characterized by a transition towards a more selective expansion phase: faster recovery in the mid and high-end segments, persistent sluggishness in affordable housing, and a reduction in the number of new projects that should limit future supply and support prices.
A Key Sector for the Colombian Economy
This market restructuring weighs heavily on the national economy. According to the most recent data, construction represents about 4.3% of Colombia’s GDP (5.1% if the scope is broadened) and 1.55 million jobs. Over the last decade, the sector has represented up to 7.5% of GDP and 14.7% of total employment, confirming its role as a macroeconomic stabilizer.
This is the number of millions of new households created between 2000 and 2025, compared to only 5.9 million formal homes built.
In this context, monetary policy is a decisive element. The central bank (Banco de la República) lowered its policy rate to 9.25%, after a tightening cycle aimed at curbing inflation which peaked around 13.3% before falling back to around 5.21%. The goal is to stabilize rates around 7% in 2025 and 6.5% in 2026, which should pull down the cost of mortgage credit. The average interest rate on housing loans was still 11.89% in June 2025, but down significantly from the previous year.
Colombia, A Nation of Renters: A Historic Shift
One of the most striking phenomena in recent years is the reversal of the ratio between owners and tenants. Colombia has become the Latin American country with the highest share of renting households.
Data from the statistical institute DANE shows that approximately 7.3 million households live in rental properties, compared to 7.1 million homeowner households, meaning 40% renters versus 39.5% owners. This “crossover” occurred in 2022, at the end of an upward trend in rentals observed since 2018. For comparison, the Latin American regional average is around 21% renting households: Colombia is therefore an exception.
This shift has several implications. On the one hand, it establishes rental as the dominant form of tenure, especially in large metropolitan areas. On the other hand, it signals the difficulties in accessing homeownership for a large part of the population, particularly households in socioeconomic strata 1, 2, and 3, which represent nearly 88.5% of renting households.
Why Is Renting Increasing So Much?
Several structural factors converge to explain this rise of the rental market.
Rapid urbanization, with about 200,000 new residents per year in major metropolitan areas like Bogotá, Medellín, and Cali, strongly increases the demand for accessible and well-located housing, in a context of growing difficulty in accessing homeownership due to land and construction costs.
The transformation of family models also plays a role. It is estimated that there are nearly 7 million childless households, which prefer smaller, cheaper homes compatible with greater mobility. These profiles – young professionals, childless couples, students, independent workers – more easily turn to renting, or even to more flexible housing forms like co-living.
Only 3% of adults in Colombia have a mortgage loan, illustrating the weak development of mortgage credit.
A Boiling Rental Market
In this context, rental has become a real engine for real estate investment. It is estimated that approximately one quarter of new homes are now acquired with the intention of being rented out, whether for classic long-term rental or short-term rental like Airbnb.
The tension between strongly growing rental demand and limited new housing supply has mechanically driven rents upward. Medellín, having become the most expensive city for rental housing, saw its rents climb by over 11% for both apartments and houses in 2025. Nationally, rents weighed heavily on inflation: in March 2025, the “housing” category (including rents) represented the largest contribution to the monthly price increase, accounting for 0.17 percentage points of the general index.
Rental yields are logically stoking investor interest. In the second quarter of 2025, the average gross rental yield reached 7.03% nationally, with notable variations by city: around 8.25% in Bogotá, 7.78% in Medellín, 7.31% in Cali, 7.00% in Barranquilla, and 5.71% in Cartagena for long-term rentals. In the case of tourist rentals, yields can be 50 to 150% higher than those of standard leases.
Prices That Are Rising… But More Slowly and Very Differently
In terms of prices, Colombia stands out for a sustained medium-term increase, even if the pace tends to moderate.
Over the twelve months ending in September 2025, national prices increased by 10.9%, bringing the cumulative increase over five years to nearly 59.83%. Since 2005, prices for existing homes have nearly quintupled in nominal value (+375%), representing a real increase of about 93% after accounting for inflation. Over the last decade, the nominal increase of about 91% corresponds to a much more modest real increase, around 12%.
Annual increase of the new home price index in the second quarter of 2025, before adjusting for inflation.
Marked Differences Between Cities
The price trajectory varies significantly according to local markets.
A table allows visualization of these recent differences in new homes:
| City | Nominal Variation Q2 2025 (New Housing) | Estimated Real Variation |
|---|---|---|
| Medellín | +6.14% | +1.06% |
| Bogotá | +3.12% | –1.97% |
| Cali | +4.76% | +0.30% |
| Nationwide | +4.26% | –0.75% |
Medellín appears as one of the most resilient markets, with real growth still positive, while Bogotá and part of its metropolitan area are experiencing price erosion in real terms, a consequence of a more fragile supply-demand balance and increased pressure on household affordability. Cali is in an intermediate zone, with slight real growth.
Absolute price levels also illustrate the market hierarchy. In average value around mid-2025, the following approximate price ranges are typically observed for apartments:
| City / Zone | Approximate Average Price per m² (USD) |
|---|---|
| Bogotá | 1,500 – 2,000 |
| Medellín (El Poblado) | 1,400 – 1,900 (over 2,500 for prime) |
| Cartagena (excluding ultra-prime) | 800 – 1,200 |
| Cali | 950 – 1,150 |
| Barranquilla | 700 – 1,000 |
| National Average | approx. 3.45 M COP/m² (≈ 950 USD) |
In Bogotá, some high-end enclaves like La Cabrera, El Nogal, or El Retiro reach between 10 and 13 million pesos per square meter, while popular neighborhoods like Kennedy or Castilla remain three times cheaper. Medellín presents a similar configuration, with El Poblado at the top, Laureles and Envigado as mid-range alternatives.
A Favorable but Fragile Macroeconomic Context
Price evolution remains closely correlated to the macroeconomic framework. Major international institutions anticipate Colombian GDP growth of about 2.4% in 2025, then 2.9% in 2026, in an environment of declining inflation towards 4–5% and falling policy rates. The national currency, the Colombian peso, stopped its vertiginous slide of 2022 – when it was flirting with 5,000 COP to 1 USD – to stabilize around 4,000 COP/USD in 2025. This stabilization provides visibility for investors, even though the country remains exposed to external shocks (commodity prices, U.S. rates, etc.).
Colombia’s budget deficit in billions of pesos for the year 2024.
Between Qualitative Shortage and Rental Boom: A Complex Housing Deficit
Beyond production and sales figures, the central challenge of the Colombian market remains meeting a demand that is very heterogeneous socially and geographically.
Estimates converge to place the housing deficit around 26.8% of households, meaning approximately 4.9 million households affected in 2024. In urban areas, the quantitative deficit would reach 17.3%, while the qualitative deficit (unsuitable, substandard, overcrowded housing) is around 5.1%. According to World Bank work, it would be necessary to build approximately 300,000 homes per year to catch up with this backlog, of which at least 60% would require public financial support.
This is the percentage of informal housing in the national housing stock, which can reach 55 to 70% in some cities.
This situation fuels massive reliance on renting, including under precarious conditions, and reinforces inequalities: Colombia is among the countries where housing costs weigh most heavily on low-income renters, who often spend a disproportionate share of their income on housing, to the detriment of other essential needs.
Short-Term Rentals and Tourism: A New Geography of Investment
The rise of tourism and remote workers has profoundly reshaped the map of rental investment. With a record of 6.2 million non-resident tourists in 2024, Colombia confirmed its status as a major destination, particularly for North American and European travelers.
The most visited destinations are Bogotá (nearly 35% of arrivals), Antioquia/Medellín (about 26%), and Bolívar/Cartagena (nearly 21%). Unsurprisingly, these regions concentrate a growing share of short-term rentals, whether dedicated to beach tourism, city breaks, or “bleisure” (business-leisure mix).
The number of tourist accommodations surged by 520% between 2020 and 2024 in Colombia.
In the most touristic markets, short-term rentals offer yields that are hard to ignore: in Cartagena, properties specifically targeting the vacation segment recorded value appreciations on the order of 20% per year, and gross rental yields that could exceed 12–15%. In this context, it is not surprising that entire segments of the supply are specializing in “short-stay” or “mixed” models (part long-term rental, part short-term rental).
Towards Stricter Platform Regulation
This rapid growth does not come without friction. The debate on regulating platforms like Airbnb has intensified significantly, both nationally and locally. Authorities are considering clarifying by 2026 the rules regarding licenses, collection of tourist taxes, operating conditions, and possibly, zoning restrictions.
The new regulation aims to reduce neighborhood nuisance, pressure on rents, and competition with the hotel industry, while securing this sector for investors. It will lead to higher operational costs (standards, taxation, management) and should lead to market normalization, with the growing arrival of institutional players and specialized managers.
New Ways of Living: Co-living, Multifamily, Leasing, and Micro-Cities
Demand for flexibility and services is gradually redefining real estate products. Several converging trends are emerging in major urban areas.
Co-living is gaining ground in Bogotá, Medellín, Cali, Barranquilla, Bucaramanga, and the coffee region. These shared spaces – private rooms, generous common areas, shared services – cater to mobile profiles: students, young professionals, expatriates, digital nomads. They capitalize on the search for a community-oriented living environment, against a backdrop of high purchase prices for “traditional” studios or small apartments.
Meanwhile, institutional rental investment models of the “multifamily” type – entire buildings owned by a single owner or fund and operated solely for rental – are beginning to appear, even though the regulatory framework remains unclear. The idea is to capture massive rental demand, especially in strata 1, 2, and 3, with standardized products, managed professionally, and equipped with shared amenities (gyms, green spaces, coworking, etc.).
Real estate leasing (rent-to-own) is also cited as a promising alternative for vulnerable households who do not meet traditional mortgage criteria. It allows spreading the down payment construction over time and offers a path to ownership.
The Serena del Mar project in Cartagena, a 2,500-hectare development, illustrates the concept of a “15-minute city” or “micro-city”. This planned neighborhood integrates housing, a hospital, a university campus, and commercial spaces, making essential services accessible within a 15-minute walk or bike ride. It combines density, mixed uses, and sustainability criteria, a model championed by companies like Santa Ana.
Tokenization and PropTech: The Silent Revolution of Real Estate Financing
Beyond bricks and mortar, the transformation of the Colombian market is also playing out in the digital pipes. Colombia has become one of the regional hubs of PropTech: in 2023, nearly 29% of the country’s technology investments were directed to this sector. Players like LaHaus and Habi raised $62 million and $156.3 million respectively, illustrating investor appetite for platforms capable of streamlining the purchase, sale, and financing of properties.
In this ferment, real estate tokenization is emerging as a structuring axis. Platforms like Expedit use blockchain to divide the ownership of real estate assets into “Security Tokens”. Concretely, a building can be split into thousands of digital shares, each representing an ownership or income right, more easily tradable than the underlying asset.
For developers, this approach allows access to new capital flows, diversifying funding sources beyond bank credit, and structuring more flexible deals. For investors, it lowers entry barriers: medium-sized savers can participate in large projects, once reserved for a few institutional players.
An example cited by specialists is the tokenization of a multifamily building in Medellín, comprising 100 residential units and 20 units for short-term rental, for a total investment of 50 billion pesos. Each segment (long-term, short-term, ground-floor retail) can be tokenized separately, allowing adjustment of risk and return profiles according to targeted investors.
The benefits highlighted are multiple: democratization of investment, increased liquidity, transparency and security via distributed ledgers, automation of financial flows via smart contracts triggering payments upon reaching construction milestones. Added to this is the possibility of attracting international capital which, via tokens, can be invested and divested more quickly.
Potential Hindered by Law and Trust
Tokenization, however, faces several challenges. The first is legal: Colombia does not yet have a specific framework governing the issuance, trading, and taxation of Security Tokens backed by real estate. This lack of clear rules creates a risk of legal uncertainty that deters large developers and institutional investors.
The deployment of new digital instruments requires robust cybersecurity infrastructure and a skills upgrade for all players (developers, agencies, banks, supervisors). Public trust will depend on transparency regarding platform governance, asset custody, and data handling.
Despite these obstacles, the convergence between PropTech, green finance, and the “physical” real estate market appears as one of the major accelerators in the medium term. It could be articulated with other major trends, such as the digitization of land registries, electronic signing of deeds, or predictive market analysis via artificial intelligence.
Sustainability and Green Buildings: Colombia as a Regional Pioneer
Another major transformation, often underestimated by international observers: the green turn of the Colombian real estate sector. The country has positioned itself as a regional laboratory for sustainable buildings.
Between 2021 and 2022, approximately 27% of new buildings obtained an environmental certification, notably via the IFC’s EDGE (Excellence in Design for Greater Efficiencies) tool. This represents nearly 11.5 million square meters of certified or soon-to-be-certified space. In total, Colombia already has nearly 300,000 new homes with a sustainability certification and about 157,000 EDGE-certified residential units, a large proportion of which are affordable housing.
Today, about 43% of licensed housing space is reportedly engaged in an environmental certification process, and 16% of non-residential space. Some projects show impressive performance, with reductions in energy consumption of up to 45% and water consumption of 42% compared to a reference building.
An Increasingly Demanding Regulatory Framework
This shift is no accident: it is based on an arsenal of public policies that have gradually reconfigured the sector.
Since 2015, Colombia has imposed green building regulations for new residential and commercial buildings. An update in 2025 strengthened requirements on water and energy savings, with differentiated goals according to municipalities and projects, and established local monitoring and control mechanisms.
Simultaneously, the country has adopted a national roadmap towards carbon neutrality of the built stock. Presented in 2022, this “Roadmap for Net Zero Carbon Buildings” sets two major milestones: achieve net-zero operations for all new buildings by 2030, then for the entire building stock by 2050. It outlines 67 objectives and 175 actions in six areas (corporate practices, materials, urban planning, new buildings, existing buildings, informal settlements), consistent with the country’s commitment to reduce its greenhouse gas emissions by 51% by 2030.
Powerful Financial Incentives
Regulatory advances are coupled with concrete financial incentives. Several major Colombian banks – Bancolombia, Davivienda, BBVA, Banco de Bogotá, Caja Social – offer “green” financing products for construction, with interest rates 0.5 to 2 points lower than traditional loans for projects meeting sustainability criteria. In 2016, Bancolombia issued the region’s first green bond for an amount of 350 billion pesos, with IFC support. Davivienda followed in 2017 with a $149 million issuance.
The IFC granted a $200 million credit line to BBVA Colombia in 2022 to finance green buildings.
For households, the benefit is far from theoretical. In low-income housing, the energy bill can represent up to 15% of monthly income. Reducing water and electricity consumption through efficient technologies and bioclimatic design constitutes a tangible gain in purchasing power, especially in a context where the cost of housing weighs increasingly on budgets.
Foreign Investment: A Decisive but Volatile Engine
Colombia is attracting more and more international capital, drawn by a combination of high yields, still competitive prices, and investor-friendly policies.
Foreign direct investment (FDI) flows reached approximately $17.4 billion in 2023, up 1.5% year-on-year, of which 65.6% went to non-mining sectors (manufacturing, commerce, hospitality, technology). The construction sector captures about 3.4% of this investment, in a construction market valued at nearly $52.9 billion, with a projected compound annual growth rate of 10.1% over the 2020-2025 period.
The year 2024, however, marked an inflection, with an FDI contraction of 18.32% over the first eleven months, reflecting a more tense global environment and local political uncertainty. Nonetheless, some hubs are holding up very well: Medellín, for example, attracted about $168 million in FDI in the first half of 2025, an increase of 378% compared to the same period in 2024.
Foreign buyers now represent 15 to 20% of the national real estate market in Colombia.
Attractiveness is reinforced by a relatively liberal legal framework: foreigners have the same property rights as Colombians, with no ownership restrictions except in some border or environmentally sensitive zones. They can buy a property with just a passport, register their investment with the central bank to guarantee capital repatriation, and, above a certain threshold (about 350 times the monthly minimum wage, or nearly $115,000 to $120,000), obtain an investor visa (M-10) leading to permanent residency after five years.
Financing and Exchange Constraints Not to Be Underestimated
This enthusiasm, however, should not overlook certain limitations. Local financing for non-residents is costly and demanding: banks apply interest rates 2 to 4 points higher for foreigners than for nationals, with down payments of 30 to 40% required and terms often limited to 20 years. Mortgage rates also remain high in absolute value (8 to 11% for residents, 10 to 13% for foreign residents, 13 to 17% for non-residents), even though they are declining.
The Colombian peso exchange rate reached a level of 5,000 COP to 1 USD in 2022, creating an opportunity for hard-currency investors.
Added to this is a non-negligible tax environment: tax on rental income (with a marginal rate that can reach 35% for non-residents on net income), tax on real estate capital gains (10% after two years of ownership), transaction taxes that bring total acquisition costs to around 5.8% of the purchase price. A wealth tax applies above certain net worth thresholds (several hundred thousand dollars), although its rate remains moderate (about 0.5% from a certain level).
Outlook: A More Mature, More Regulated, More Technological Market
In summary, current trends in the Colombian real estate market paint a complex, yet promising landscape.
On one hand, fundamentals remain solid: moderate but positive economic growth, continued urbanization, persistent housing deficit, rise of the middle classes, tourist attractiveness, still significant FDI flows. Long-term, projections suggest annual price increases of 4 to 6% on average over the next 3 to 5 years, with cumulative gains of 40 to 50% over 5 to 10 years in areas benefiting from massive infrastructure investments (Bogotá metro, cable transport, road and logistics axes).
The Colombian real estate market presents several significant risks: tension on financial accessibility with very high price-to-income ratios in Bogotá and Medellín, a vulnerable budgetary framework, political uncertainties approaching the presidential election, potential for tighter fiscal or regulatory policies, limited urbanizable land in top-tier metropolitan areas, and structural increases in construction costs.
The key trends emerging are clear:
Five major dynamics are currently transforming the real estate investment market. First, renting, having become the dominant mode of occupancy, has transformed residential real estate into a distinct asset class, requiring more professional management for its attractive yields. Second, short-term rentals and tourism are redrawing the geography of investments, favoring coastal cities and urban centers attractive to digital nomads. Third, sustainability is now an unavoidable standard, imposed by regulation, banks, and the markets. Fourth, technology (PropTech, AI, tokenization) is revolutionizing financing, marketing, and asset management, broadening access for individual investors but creating new regulatory challenges. Finally, public intervention, via subsidies, standards, or platform regulation, remains a structuring factor in a tight budgetary context.
For stakeholders – developers, investors, households, public authorities – the key will be to anticipate this move towards higher standards and complexity: integrate affordability constraints, bet on products adapted to new lifestyles, leverage technological instruments without neglecting the social dimension of housing. From this perspective, the Colombian real estate market is heading less towards a simple “recovery” phase than towards a new era, more mature, more regulated, and more demanding, where value creation will come as much from financial engineering, urban and environmental quality, as from simply constructing additional square meters.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
