In 2017, this sector presented a contraction of 10% compared to 2016, mainly explained by the fall in the construction of non-residential buildings of up to 16.2% and of 6.2% in residential buildings. 

This industry, which has been considered as one of the areas with the greatest spur effect of the economy, showed the lowest growth in 2017. However, government support stimulated construction due to the execution of building activities, such as low-income housing, hospitals, schools, prisons, and museums, among others, all of which are developed under Public-Private Partnerships (PPP), with a cost close to COP$ 11 billion.

Residential Sector

The residential sector was marked by contrasts. On the one hand, the medium and high segment recorded a significant adjustment in both supply generation and demand, with a decrease in sold units by 12.9% and 18.5% respectively. On the other hand, the low-income housing (LIH) segment which boosted the residential sector, increased by 17.9%, with an investment of COP$2.4 trillion driven by the Mi Casa Ya program.

With the aim of promoting the construction sector, three measures were made public in the last Colombian Construction Congress:

  • Increase coverage of new housing loans in amounts between COP$ 99.6 and COP$ 320,9 million, subsidizing 2.5% of the interest rate, thus reaching 20,000 coverages in 2018 and 2019. The program seeks to activate housing purchases in strata 3 and 4 (middle class and upper middle-class housing), boost investments for an additional COP$ 9 billion and increase the demand for construction inputs by COP$ 5 billion. 
  • Promote the "Save your Rent" program, which allows severance payments for the members of the National Savings Fund (Fondo Nacional del Ahorro - FNA), to use the monthly rent payment in capital to purchase their own home. 
  • Provide COP$ 1.2 billion to subsidize the interest rate of loans with Findeter, in order to finance projects in education, health, and energy, among others.

According to BBVA Research, the construction industry will grow by 3.6% in 2018, based on the recovery expectations of the consumer confidence and the greater dynamism of credit in the segment. On the supply side, the performance of the construction industry will depend on the costs of construction, the business credit channel and the vitality of the finished inventory. 

Featured Information

  • The real estate industry constituted 5.3% of GDP in 2017.
  • Low income housing demand (VIS) increased by 17.9% in 2017, with an investment of COP$ 2.4 billion.
  • This industry provides 1.4 million jobs which is 7% of the country’s work force.
  • Growth expectations for 2018 are at 3.6%.

Source: National Administrative Department of Statistics (DANE), The Colombian Chamber of Construction (Camacol), BBVA Research, Panorama Macroeconómico Davivienda

Experiencia
Provided advice to PATRIMONIO AUTÓNOMO ESTRATEGIAS INMOBILIARIAS – PEI in the structuring, implementation and execution of the first real estate securitization vehicle in Colombia.
Provided advice to PATRIMONIO AUTÓNOMO ESTRATEGIAS INMOBILIARIAS – PEI in the structuring, implementation and execution of the first real estate securitization vehicle in Colombia.
Provided advice to GOLDMAN SACHS in the review and acquisition of fiduciary and real estate assets in Colombia.
Provided advice to GOLDMAN SACHS in the review and acquisition of fiduciary and real estate assets in Colombia.
Providing advice on a permanent basis to INVERSIONES COLOMBIANAS ARAUCO in the revision and analysis of the real state and urban strategic properties in which its shopping centers will be developed.
Providing advice on a permanent basis to INVERSIONES COLOMBIANAS ARAUCO in the revision and analysis of the real state and urban strategic properties in which its shopping centers will be developed.
Providing advice to BANCO ITAÚ in all matters and real estate agreements related with its operations in Colombia.
Providing advice to BANCO ITAÚ in all matters and real estate agreements related with its operations in Colombia.