Increased tourism, undervalued properties, a thriving economy, and a strong USD translate to unparalleled investment opportunities.
The capital city of the Valle del Cauca, Santiago de Cali – or simply “Cali” – is the third most populated city in Colombia with an estimated 2,319,655 residents. The southwest city sits on both sides of the Cali River at around 3,250 feet (1,000 meters) above sea level.
Nestled within the subtropical intermontane Valle del Cauca, Cali is treated to summer-like weather year-round and cooling mountain breezes in the evening.
Cali grew into a flourishing industrial hub in the 1940s, when the introduction of the railroad meant the landlocked city could export its sugar and coffee to world markets. Today, the city remains the primary commercial center of the Valle del Cauca.
Over the last ten years, Cali has remained largely overlooked by foreign visitors and investors compared to popular cities like Bogotá, Medellín, and Cartagena. But after a slow start, this southwest Colombia city has begun to gain momentum as tourism rates soar, rental demand grows, and real estate prices go up faster than in any other major city in the country.
Find out what’s in store for Colombia’s third largest city in the coming year and beyond in our Cali real estate forecast for 2019.
In an effort to drive tourism, Colombia has invested nearly $1.5 billion USD over recent years to improve airports, roads, and marketing efforts. And it’s worked: tourism across Colombia has seen massive growth over the last decade.
The boom is Colombian tourism is expected to continue into the next decade. According to the World Travel & Tourism Council, the total contribution of travel and tourism to Colombia’s GDP is predicted to rise by 3.7% from 2018 to 2028. The country is forecasted to welcome over 15 million foreign visitors by 2023.
The most popular destinations for international travelers in Colombia have traditionally been Bogotá, followed by Cartagena and Medellín. Now, Cali is catching up.
From 2013 to 2016, the salsa capital saw a whopping 50% increase in tourism. As a center for Latin American commerce and up-and-coming tourist destination, the city is also attracting business travelers and investors, in addition to retirees, digital nomads, and vacationers.
To accommodate the influx of visitors, the Cali government has invested heavily in upgrading its airport with increased security and more international flights. At the same time, luxury hotel brands like the Sheraton, Marriott, and Hilton have established properties in Cali.
So what does 2019 hold for Cali tourism?
Based on steadily improving tourism rates over recent years and improved infrastructure, coupled with the city’s vibrant culture, warm climate, and natural beauty, we predict Cali tourism rates will continue to rise faster than those of any other city in Colombia in 2019 and over the next ten years.
Real estate prices
Around the country, local real estate prices have been increasing steadily for the last decade. But nowhere else in Colombia has seen the massive growth of Medellín, where a boom in tourism and a flourishing economy have driven real estate prices up an average of 7% per year since 2003.
So what about Cali? Think of the city as Medellín 10 years ago.
Like the rest of the country, Cali has seen a rise in local real estate sales and rentals. However, the salsa capital lagged behind other major Colombian cities when it came to shaking off its outdated, dangerous reputation. That’s why Cali continues to see enormously undervalued real estate even as tourism and real estate demand within the city soar.
Today, Cali real estate costs as much as 30% to 60% less than Bogotá, Cartagena, and Medellín. Cali is likely to offer exceptional property values throughout 2019, but not for long – “I think as things start to take off in Cali we might expect an even greater appreciation [than Medellín] for the next decade,” predicts Rich Holman, Founder and Chairman of Lifeafar.
A look at GDP growth in Colombia
Over the last ten years, Colombia as a whole has witnessed unprecedented economic growth. From Latin America’s fifth largest economy in 1990, Colombia has risen to become Latin America’s third largest economy with a gross domestic product (GDP) of $309.2 billion USD in 2017.
According to the Colombian Ministry of Finance, the nation’s GDP is expected to grow to 3.4% in 2019. From 2019 to 2020, Colombia GDP growth is forecasted to accelerate at a steady pace thanks to rising oil prices, stable private consumer consumption, and recovery of non-oil exports, among other factors.
A word about USD strength
In addition to soaring tourism rates and economic growth, one of the many compelling reasons to invest in Colombian real estate is the currency exchange of the Colombian peso (COP) against the U.S. dollar (USD).
As of March 26th, 2019, the Colombian peso is trading at 3,132 to the USD, compared to 1,872.5 to the USD on this day eight years ago. This means USD investors have 67% more buying power compared to investors eight years ago.
The bottom line
It’s hard to say for certain what the future holds for the Colombian peso as exchange rates are often notoriously difficult to predict. For now, the improved exchange rate – combined with increased tourism and rental demand, undervalued properties, and a thriving economy – translates to unparalleled real estate acquisition opportunities in Cali.
To see how you can benefit from the opportunities available in Cali, visit our investment portfolio page to view the investment projects happening in Colombia and abroad.
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