19 de May 2015
Construction materials, a sector with opportunities in Bogota
Forero further comments that: "According to national accounts and Camacol estimates for 2014, demand for building construction was 40% higher than in 2010. An investigation by the National Planning Department (DNP) has concluded that construction, in synergy with the manufacturing industry, is the third largest cluster of Colombia, with 16% of its GDP, the articulation of 13 sectors and the absorption of 11.8% of the workforce."
Juan Gabriel Pérez, CEO of Invest in Bogota notes: "Bogota has investment opportunities along the entire construction value chain, from venture capital funds specialized in real-estate investments to the production of goods and provision of complementary services for the industry. Since Colombia and the region is a growing market, builders are demanding ever greater volumes of product with sophisticated quality and design features."
The city and its surroundings offer a very attractive scenario for corporate investors because of the ample availability of raw materials, skilled labor and competitive salaries, incentives and institutional support.
Perez continues, saying that "the building materials sector is a priority for Bogota in attracting investment since it signifies the arrival of companies that add technology and know-how and complement a specialized local sectoral cluster. A time of interesting challenges for local industry is fast approaching because of the city projects that are soon to be generated, such as the Bogota Agora Convention Center, the Triángulo de Fenicia (a giant urban renewal project) and other infrastructure for mass mobilization, such as Safe Pedestrian Environmental Networks (Redes Ambientales Peatonales Seguras - RAPS), bici-inclusive (cicloinclusivas) routes and trunk roads and integration works of the Transmilenio system."
Data of interest
Bogota’s construction sector has a positive long-term trend; the city’s nominal GDP in the construction of engineering works rose from USD 1.37 billion in 2007 to USD 1.83 billion in 2010 and USD 2.43 billion in 2013. The city’s nominal GDP in building construction rose from USD 2.08 billion in 2007 to USD 3.48 billion in 2010 and USD 4.01 billion in 2013.
Greater Bogota comprises the main market in Colombia by volume of square meters under construction: in 2014, the construction area of the country was distributed as follows: Bogota, 27%; Medellin, 19%; Cundinamarca, 10%; Cali, 6%; Barranquilla, 9%; and others, 29%.
Construction spaces in Bogota are intended primarily for housing and offices. In 2014, the construction area by type of building was distributed as follows: housing, 68%; offices, 12%; civic buildings, 7%; hotels, 4%; commerce, 3%; general stores, 1%; and others 5%.
Housing construction in Bogota also has a positive long-term trend. In 2013, more than 59,300 housing units were completed; the biggest offering was in the Social Housing (VIS) segment, with 51.1%. The development of high-value projects also follows this trend: between 2006 and 2013, approximately 31 million square meters were developed, of which 22 million were homes of more than USD 44,000.
Currently, there is growing interest in developing social and priority housing due to the attractive conditions in the market for new housing projects:
- High unmet demand: Colombia has a housing deficit of 1.5 mm homes; Bogota’s deficit alone is approximately 600,000.
- Interest rates are at historically low levels and there are subsidies for mortgage interest rates on homes worth between USD 55,000 and USD 100,000.
- Family housing subsidies are available for families with monthly incomes of less than USD 1,310.
- The current district government seeks to build 700,000 homes during its four-year term.
The development of corporate and commercial infrastructure is dynamic and hotel and civic infrastructure development responds to the growing economic boom. The hotel construction area, in thousands of square meters, has evolved as follows over the past five years: 2009 (196.0); 2010 (193.3); 2011 (229.2); 2012 (269.0); 2013 (245.3) and first quarter of 2014 (258.1).