Colombia’s Other Caribbean City

Wednesday, August 04, 2010

Dear Reader,

Colombia is the hot new buzzword in newspapers, travel magazines, and real estate blogs and forums. After years of civil unrest, the country is finally emerging as a modern, affordable destination for tourists, expats and second-home buyers alike.

We’re currently analyzing the market in Colombia, deciding if it makes sense for real estate investors. If the research pans out, we’ll put boots on the ground and investigate opportunities first-hand. We’ll keep you posted.

In the meantime, Lee Harrison just sent us reports from his most recent trip to Colombia—and we thought we’d share them with you.

Today, Lee starts with a city on Colombia’s Caribbean coast. It’s got great weather, white sands—and it’s undergoing a major facelift. Yet it’s usually overlooked in favor of another coastal city, Cartagena. Lee explains you you shouldn’t miss Santa Marta, below. 

Margaret Summerfield

Discover the Colombian Caribbean’s Most-Promising Market

Santa Marta boasts a dramatic setting, comfortable climate and a choice of affordable properties

Dear Reader,

Dazzling beaches, white sands, and warm, blue waters…not to mention balmy weather and sunshine almost every day of the year. These are the first things that struck me when I landed in Santa Marta, on Colombia’s Caribbean shores.

But frankly, I expected to find these, so none of it was a surprise. After all, even my guidebook did a good job describing the weather and the beaches.

But what I didn’t expect to find was a city loaded with property opportunities. One that’s in the process of a major facelift, and as a result, is beginning to draw investors from around the world. After a few days on the ground, I found three major areas of opportunity within a space of about 10 miles.

We’ll have a closer look at all this, but first let me give you some background on the area.

First of all, Colombia is almost like a newly-discovered country, with respect to the international marketplace.

Granted, Colombia’s been there a long time. But the stigma created by guerrilla attacks, kidnappings and drug cartels has kept all but the most adventurous international buyer away for years. Many have even avoided the Caribbean markets—like Santa Marta and Cartagena—which were never plagued by these sorts of dangers in the first place.

And even after seven years of dramatic improvement, the veil is only now beginning to lift. For the most part, Colombia is still off the radar for most property buyers. But with today’s travel endorsements from mainstream publications like the New York Times, that will change quickly.

Secondly, there’s the intrinsic value of the Santa Marta area. It’s warm all year, and has little rainfall. Unlike most Caribbean destinations, it’s bounded inland by desert. And this is important—because the prevailing breeze brings the dry desert air over the city, which makes for a dry climate instead of a humid one.

The beaches in the area are sandy and palm-lined, the boardwalks active and bustling, and the water always calm, blue and warm.

Finally, there’s the market dynamic. Santa Marta has a number of factors that are moving the market these days, and I’ll discuss them below.

The greater Santa Marta region spans a 12-mile distance from the airport in the south, to Tabatinga in the north. (Due to the coastal orientation in this area, the shoreline runs approximately north and south). Within that general region, a few areas really stood out. We’ll look at them from south to north.

South of El Rodadero: the pre-construction zone
El Rodadero Sur, Playa Salguero, Pozos Colorados and Bello Horizonte are south of Santa Marta, between El Rodadero and the airport. Bello Horizonte has the widest beach I saw in the area.

I tend to group these areas together market-wise, since they share their feel of exclusivity, a relatively quiet atmosphere, and the availability of new construction projects.

In this area, I think the best buys are the pre-construction deals.

On two projects, I tracked the prices of units between pre-sale and groundbreaking, and found that they increased 6.5% once construction started (and 8.5% as of today, with construction a few months underway). The developer is forecasting a 15% to 20% increase when construction completes in 18 months.

What makes this play even better is that inventory (and supply) is limited. Clean titles are very hard to acquire in this area, so there are few projects starting up. Those that manage to get titles and permits sell quickly.

On Playa Salguero, the Playa Linda project is now offering pre-construction buys on large apartments at $1577 per meter, which works out to $212,911 for their 1450 square foot (smallest) apartment.

At the luxury seaside Ámbar project (already under construction), I found a 1206 square-foot unit going for $209,850, with 3 bedrooms and 2 baths. At $1874 per meter, I believe this sale is a resale from a pre-construction buyer, who most-likely paid about $1700 per meter.

El Rodadero: for capital appreciation
El Rodadero lies about 10 minutes south of Santa Marta, and it’s been the main draw in the area for years. The beaches are nicer than Santa Marta’s, and it offers a small-town feel that you won’t find in the city. Yet it’s far more bustling than El Rodadero Sur and the areas to its south that I discussed above.

In El Rodadero, I believe property values will increase…but not because of any new projects or infrastructure. I think they’ll increase because the beachfront and near-beachfront properties are “outliers”. That is, they’re priced well below what the world market would indicate for Caribbean beachfront…especially in an area with Santa Marta’s pleasant, dry heat.

For example, right on the beach, I found a 10th-floor, 1443 square-foot, 3 bed/3 bath apartment built in 1973. It has ocean-facing balconies in both the living room and the master bedroom, for an asking price of $149,800. And just 1.5 blocks in from the beach, we toured a 3 bed/2 bath apartment of 948 square feet for only $58,900.

Also, in a building called Edificio Playa Blanca, we looked at a corner apartment with a partial sea view about 2 blocks from the beach. It had 1217 square feet, nice stone inlaid floors, and an asking price of $85,653.

These prices are sure to rise as international attention focuses on El Rodadero. In fact, some of the properties I track have gone up 10% in the last six months.

Santa Marta (the city) gave me quite a surprise. My old guidebook said to avoid the city…that it was run down, dangerous and unattractive. But what I found was a rapidly-improving municipality that’s undergoing major renovation and development.

Santa Marta has developed its waterfront, and it now has a green, well-kept park and boardwalk along its length, from which you can watch the cruise ships coming and going from its harbor. And the city has tastefully restored several of its parks to their original beauty, along with a number of historic buildings.

In total, Santa Marta is spending $50 million on its waterfront and downtown…much of it on refurbishment that’s already finished.

But the big news yet to come is the $8 million dollar marina project, already under construction. The hard part is done…that is, the marina’s surrounding jetties. During my visit, they were getting ready to install the docks, 256 boat slips, and the onshore facilities.

And the marina has in turn inspired a number of new projects along the shore, such as condos, shopping, and a general renovation in some neighborhoods. 

In Santa Marta, I’d look to buy in neighborhoods near the beach, or invest in the ongoing waterfront development as it comes to market. I think the city of Santa Marta has the most upside potential in the region right now. And the cost of entry is low, at less than $50k.

We stopped to see a small house in town, about 7 blocks in from the new marina. It had 4 bedrooms, 2 baths, and 1260 square feet for an asking price of $48,100.

At the high end, I really like a project called Casa del Río, an antique-style residential project in the middle of Santa Marta’s renovated areas, with the beach, boardwalk, shopping, and pedestrian walkways nearby. The smallest units go for $159,000 (700 square feet) and the largest sells for $269,000 (1388 square feet). The building has high-end amenities, including Bosch kitchen appliances, and a rooftop pool with a view of the historic center and the ocean. This is a shining example of the kind of gentrification that’s taking place.

For information on the properties in Santa Marta, please contact Mauricio Jaimes ((JavaScript must be enabled to view this email address)). Mauricio speaks English and French as well as Spanish.

Also, I’d strongly advise that you buy through an attorney. I’ve worked with English-speaking Ricardo Vélez Benedetti ((JavaScript must be enabled to view this email address)).

If you’re visiting Santa Marta with an eye on a real estate purchase, you’ll find a wealth of opportunity in just a small area. And any way you go, you’ll be getting a lot of property and value for your money.

Lee Harrison

Note: All prices are quoted at 1868 Colombian pesos per USD; the rate on July 26, 2010.

Posted Under:

beachfront, colombia