Monday, Nov 16, 2009
Bubble arrives in South America
Colombia Reports: Cartagena, the world's biggest real estate bubble
To see a good example of this underground economy, one need only look at Colombia's "Riviera" and charming UNESCO city, Cartagena. Of all the real estate bubbles I have studied in the world, this one could be the biggest. And when it pops, there is very little visibility as to where the floor is. Cartagena could see price declines in excess of 50% in its "new Miami" - Boca Grande, and far greater in the old city of El Centro where prices have risen beyond the most insane logic. The concept of return on investment or cap-rates have been thrown out the window and mania has taken on new meaning - all in a city where unemployment is far higher than most parts of Colombia and, as a resort area, offers little beauty in its beaches. To say the market is artificial is an understatement.
2 Comments
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1. Gloommonger said...
This interests me as my wife has a house in Cali which we are selling. Was considering buying in Cartagena, maybe not such a good idea.
gone-to-colombia, do you know of any other resources on the Colombian property market?
2. gone-to-colombia said...
Sorry for delay.
Sadly, no. The problem is that most sources are in the pay one way or another by the real estate people.
All I can say is from my own pint of view, from what I see.
My impression is that the market is tottering. There have already been falls in price but this is still a work in progress.
Of course, what i know is Cartagena, quite different from Cali.
The most i could say is there is no hurry.
Good luck