REAL ESTATE

Colombia 2020 | REAL ESTATE & CONSTRUCTION | B2B

Colombia's real estate sector is making a strong revival and presenting a host of opportunities after a three-year period that saw an oversupply of new homes and a growing housing deficit.

Jean Baptiste Wettling
JEAN BAPTISTE WETTLING
Director
JLL Colombia
Bernardo Asuaje
BERNARDO ASUAJE
General Manager
Grupo Attia

How does the acquisition of HFF align with the JLL's strategic vision to grow its capital market business?
JEAN BAPTISTE WETTLING It made sense for HFF to partner with us and vice versa. For us, it was obvious to become number one in an important capital market like the US, though for HFF, JLL's global platform made a great deal of sense, as it is strong in its home country but not abroad. We have excellent capital market abilities all over the world, and HFF can now go after international markets. In Colombia, we have been active in capital markets for about 10 years, which HFF can also capitalize on by convincing its domestic clients in the US to do things abroad. All these make this joint venture and the vision between the two companies a great deal of sense. The results in 2019 proved that it was definitely a smart move.

How would you define Grupo Attia?
BERNARDO ASUAJE Grupo Attia is looking to redefine the way real estate is done in Colombia. We are not looking to compete against the usual players that build traditional complexes, retail spaces, and offices. We seek to do projects where we can add value. For example, we have projects that are focused on senior housing, a new segment in the country. We also do lifestyle projects, which are based on creating a community. Our clients become part of a community where they have access to restaurants, bars, spas, and many other activities and services. This differentiates us from other players. We are also doing what we call urban renovation projects. We have a project in Barranquilla, located in a property that was invaded by illegal businesses. Through an extensive recovery process, we launched one of the most important urban renovations projects in the city. We will build urban parks, a shopping center, and affordable housing for nearly 1,000 families who will live there. 2020 will be a good year for us because we are launching many new projects. We are looking to do mixed-use projects with a focus on hospitality, while also looking to see how to add more value than traditional real estate.

What are your views on the corporate real estate market in Colombia?
JPW From 2016 until the 2018 presidential election, real estate activity was slow. We saw a boom in call centers, BPOs, and shared service centers. The development of these operations has been key to the growth of the office market in Colombia, especially in Bogotá and Medellín. Since the last presidential election, we went through another 20% devaluation. After some fiscal reforms, the situation has significantly improved. In 2019 we saw interesting movements such as Bancolombia's decision to buy a top-class office building in the city center. It will upgrade its headquarters in Bogotá, the way it did 10 years ago in Medellín. The same thing is happening in the logistics segment. Companies often operate out of outdated inefficient facilities with multiple owners; however, this is slowly changing. A good example is DHL's acquisition of Suppla, the number-one logistics company in Colombia. Such a transaction will translate into more sophisticated real estate decisions since DHL will bring world-class standards to its operation.

How have you sought to bring in more investment?
BA One of the things that we like to do, as opposed to looking only for institutional capital, is to look for both institutional and retail investors. Usually, if somebody in Colombia wants to invest in the real estate market, the best they can do is buy an office or an apartment and rent it out. However, this is not usually the best deal in terms of profitability, especially in Colombia. It is not like the US where there is access to REITs. The way real estate has worked for the last 20 years in Colombia is that big deals are reserved for private equity funds or institutional investors. What we decided to do when we started fundraising was to give access to smaller investors that do not usually have access to such deals. So, our investors can invest anything from USD30,000-40,000 and upwards. Right now, we have about 50 such investors, and our aim is to attract 300 to 400 more in two years.