BIG TREND

Colombia 2014 | REAL ESTATE & CONSTRUCTION | VIP INTERVIEW

TBY talks to Rubén Darío Jiménez Monroy, Commercial and Projects Manager of Constructora Jimenez, on the state of the real estate and construction business in Colombia.

In your opinion, what is the current state of development in the construction and real estate industry in Colombia?

Thanks to the growth trends the country enjoys, the sector foresees a similar expansion in the next few years as it experienced in the last three to five years. We could divide the main driving forces in the sector into two: the housing segment and the public infrastructure segment. I think the four power generation projects will capitalize the growth of the sector in the near future, especially within the framework of the free trade agreements (FTAs) signed with the US and South Korea, for example. Regarding the real estate segment, we have recently seen fluctuations that are normal in the sector, and I expect these growth trends to continue for quite some time. There is still great potential for development in the entire country—since we are located on the coast, there is great potential in the second house market. As the purchasing power of the society continues growing, I expect this particular segment will also expand in the near future.

What is the potential for Santa Marta to become a top regional destination within the health tourism sector?

The climate and geographic conditions of Santa Marta make this city the best destination for people seeking treatment and medical procedures. From a health point of view, Santa Marta is the best place to live. Therefore, it comes as no surprise that the reputation of the city in health tourism is growing very quickly.

“I do not even think that there is speculation in the real estate market in Santa Marta."

What type of profitability can real estate investors find in Santa Marta?

This is something very subjective; it depends upon the type of housing and the segment in which this is located. We can talk of an average 5% to 10% profitability, which is still low. However, we have developed projects in the second housing segment with profitability levels, even before construction, of around 22%.

What would you say to those who contend that there is a real estate bubble in Santa Marta?

First of all, in order for a real estate bubble to exist, the value of the assets has to be akin to the debt, which it is not actually happening. Buyer's debt is around 55% of the value of the property. Santa Marta still enjoys very high revaluation levels. I do not even think that there is speculation in the real estate market in Santa Marta.

What are the challenges facing Santa Marta with the hosting in 2017 of the Bolivarian Games, which predict the arrival of over 5,000 people?

Hosting this type of international sporting event requires either having or building a first-class sports infrastructure. We see this as the perfect opportunity to better position Santa Marta at the international level, as happened with Barcelona and Beijing after the Olympic Games. It will help consolidate Santa Marta as a top tourism destination. Therefore, there are many opportunities and challenges.

How important are the Two Towers and Portovela projects for the city, and what will those offer to Santa Marta?

We have been pioneers in terms of design in the entire country, because we brought to Colombia, as a partner, one of the most recognized architecture companies in the world. We are leaders in terms of design. Also, we have the best teams of specialists. The locations of these two projects are unbeatable; they are located in the most dynamic areas of the city, by the sea.

In terms of social responsibility, what are some of the main actions Constructora Jimenez has implemented?

We have developed a couple of projects to help orphaned children in the city, and at the moment we are about to close an agreement with a consultancy company specializing in providing technical assistance in terms of corporate social responsibility (CSR), as we want to take our actions to the next level. Also, I would like to say that we are highly committed to providing the local population with labor opportunities; at the moment, 80% of our staff are from the local region. Additionally, we offer regular and continued training courses; we also provide them with financial support in order for them to further specialize their careers or take particular courses they are interested in. Finally, we have also developed a scholarship program on four occasions to support local students.

In your opinion, how should Santa Marta's tourism potential be met?

Santa Marta has great potential in the tourism sphere, but at the same time it is surrounded by natural spaces that are legally protected, meaning that there are no construction options around these areas. I think we need to increase cooperation between local and national authorities, developing a long-term strategy for the city to fulfill its potential. For example, I think some lands should be given to develop certain tourism infrastructure projects, as well as other commercial projects. This applies to areas like Tayrona. At the same time, there are other areas in the city that in the last few years have consolidated their potential.

© The Business Year - August 2014