Homebuilding Still Booming in Colombia with Support from Government Incentives

A construction crew lay cement in a new, four-story apartment building in Bogotá’s popular Chapinero neighborhood. (Photo: Jared Wade)

Despite the lackluster economic growth expected for Colombia in 2016, the homebuilding sector is one very bright spot, according to a new Fitch Ratings report. Its analysis, “Colombian Homebuilding: Cementing Growth,” says that the sector has grown 6.3% on average each quarter for the past five years and that this trend will continue in the short term.

Even with inflation challenges and low oil prices affecting the overall economy, Fitch considers homebuilding companies to be resilient enough withstand the current volatility. The ratings agency credits those in the industry’s ability to develop conservative capital structures and wide interest coverages.

Another positive factor is the government’s desire to continue providing incentives for homebuilding. “Despite the impact of falling oil prices on public finances and investment, the government has signaled its intent to continue stimulating the homebuilding sector in the short term,” said Jose Luis Rivas, associate director in Fitch’s Latin America group.

One prestigious new project in Bogotá is the 13-story Vitrum apartment buildings on 7th Avenue and 94th Street. The chic, glass-wrapped building currently under construction was designed by renowned New York architect Richard Meier. A former winner of his profession’s highest honor, the Pritzker Architecture Prize, Meier has previously built a structure in Rio de Janeiro but chose Colombia for his second undertaking in South America.

The towering BD Bacatá skyscaper is another building taking the capital to new heights — literally. Upon completion, it will be the tallest building in Colombia, and the mega-project, which will be mixed use and include some housing, is leading to an array of smaller construction in the central district. Since the BD Bacatá was planned and funded — through an innovative crowdfunding scheme — there has been a spate of announcements of other apartment complexes, buildings, and urban projects planned to break ground in the years to come.