Focus: A vehicle of economic development

A Solid Performer

Nov. 3, 2021

Colombia's housing sector was almost unaffected by the pandemic and will continue to drive the economy forward for the next few decades.

With a population of over 50 million, Colombia is quite a young country. The average age is only 31 compared to 40 in the UK and 48 in Japan. This means that Colombia will need a large number of houses for newlyweds and civil partners who decide to live together in the coming years.

The housing boom that will happen in the next five years is not necessarily a burden. Quite on the contrary, it can be a vehicle for economic development and job creation. The real-estate and construction sector create a variety of employment opportunities for people with relatively low skills as well as highly skilled architects and engineers.
While the lowest average salary for someone working in the housing sector is COP1.95 million those with highly sought-after skills can make as much as COP9 million per month and even more.

The housing sector was one of the first sectors that showed definite signs of recovery after the COVID-19 pandemic, which slowed down or stopped the activities of many sectors. After all, if people were supposed to stay at home and avoid unnecessary outings, it would not be possible without having enough houses for the nation's population.

Several industry insiders in Colombia have told TBY that although the market for office complexes has been stagnant since the beginning of the pandemic, the housing sector is quite vibrant as there is a strong demand for new homes in the market. TBY's sources have confirmed that both 2020 and the 1H2021 have been positive for the industry. Meanwhile, local and national governments have continued to invest in the construction infrastructure to keep the construction sector alive as a vehicle for economic development.

Recently, Alejandro Ramirez, president and director of CEMEX Colombia, explained to TBY's correspondents in the country that, “Despite the challenges because of the COVID-19, construction sector showed it resilience and its relevance related with the role of being an economic trigger, in charge of developing projects even during crisis. That is why perspectives are fairly positive."

The government was committed to provide social housing for the less privileged classes even before the pandemic. Back in 2018, the housing sector showed signs of stabilization—if not robust growth—with over 175,000 units sold. The number of units sold is beginning to pick up in 2021, and developers have diversified their portfolio to meet the needs of all social classes.
At the lower end of the spectrum, the need for immediate housing has prompted some companies to come up with eco-friendly, low-cost solutions. A local company named Woodpecker WPC recycles coffee husks to build, sustainable, cheap, and eco-friendly houses in some parts of Colombia.

As Colombia is a major producer of coffee, husks are not in short supply, and Woodpecker WPC has found a way to turn them into prefabricated, durable materials which can be assembled into houses quickly by minimally-trained workers. As of 2021, some 3,000 houses and several public buildings have been constructed using this method—mainly in rural parts of Colombia.
Meanwhile, at the higher end of the price spectrum, developers continue to supply villas and waterfront apartments with 6 bedrooms or more, although the demand for luxury houses is noticeably lower than the demand for basic housing. Middle-income neighborhoods have seen the majority of construction activities since 2020. Plaza de la Hoja, is a flagship housing project in one of Bogotá's middle-income neighborhoods. The plaza contains some 456 units in the downtown. The newest trend in Plaza de la Hoja, and many similar complexes under construction, is incorporating commercial and communal spaces in residential plazas to create a feeling of urbanity among the residents.

The developers do not want to build soulless, Soviet-style budget houses which fail to impart a feeling of urban inclusion among the residents. Plaza de la Hoja, and similar projects, also try to achieve social inclusion by creating a vast array of designs and units appropriate for all budgets. While the modern plaza is home to some of Bogotá's professional and rising businesspeople, it also has units to offer to displaced Colombians—which is an admirable step toward eliminating social segregation of various income classes.

What is more, the housing sector in Colombia is a long way away from saturation. It is estimated that the housing deficit in the country is just under 10%. If we take aging and low-quality hoses that need to be replaced soon into account, too, the housing deficit will be as high as 27%. Jonathan Malagón, the country's Minister of Housing, City and Territory, told TBY in an exclusive interview that, “half of the homes that will exist in 2050 have not yet been built imposing additional pressure on the generation of quality housing." This means that the construction sector will remain active and dynamic for at least the next three decades, enabling many businesses to enter the sector and make reasonable profits.

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