Crédito: PixabayTerranum foresees real estate recovery in Colombia
Alfredo Rizo, the company’s president, talks about prospects for the real estate industry and projects of the developer.
September 27, 2019Real Estate
The Colombian real estate market is undergoing a resumption, with slipping vacancy rates and occupancy expected to increase in the residential and office sectors, according to the National Administrative Department of Statistics (Dane), and based on data released in the first half of 2019. In the short and medium term, the scenario is optimistic for the entire real estate industry, says Alfredo Rizo, president of Terranum, the leading developer of the Colombian office segment.
“In general, the outlook for the market is good. For the logistics segment, where we have seen slower movements, I believe that there will be a big boost in the coming years, and, for the industrial sector, which is currently lagging behind a little, we expect new capital investments,” predicts Rizo.
Reviewing the various real estate segments, the executive highlights the housing shortage in Colombia, which makes the residential market one of relevant potential. “Particularly, the low and medium income residential segments come from a slower period [2018 and 2019]; however, the country has a great housing shortage, and there is room for social and midsize housing developments. In the upscale market, meanwhile, we see a slower recovery,” remarked the executive.
According to information from the Colombian Chamber of Construction (Camacol) released in August, between 1991 and 2000, Colombia registered 550,000 new homes, and reached 1.1 million new homes from 2001 to 2010. The country is now faced with the challenge of building 3.2 million homes between 2020 and 2030.
The mall industry, on the other hand, is expected to have lower growth rates due to the moment of this particular area. “We witnessed a boom on this market, and we are no longer a country with few malls per capita, going on to have a better development/population ratio. Today, malls are focused on the user experience and offer state-of-the-art structures. Therefore, I believe this is an industry that will not grow as much as it did in recent years, including because of the fact that there are already many [such] projects. However, it is likely to continue maintaining a positive momentum,” notes Rizo.
“It is our main project. We hope to reach 150,000 square meters by the end of the year, and plan to reach 240,000 square meters in five years,” Rizo points out.
In fact, the Terranum project was even the theme of a club meeting hosted by GRI Club Real Estate last June. Attended by Rizo, the meeting focused on issues related to the Colombian real estate market, new product trends, and changes in consumer profiles.
Another major venture of the Colombian Terranum group is Connecta 80, which is expected to have a similar proposal to that of the original project of the same name, located on 26th street. Still under construction, the new project will be built on the Boyacá avenue, another strategic route in the Colombian capital. “It will be a new mixed-use complex in a central city location. We hope to start construction in the second half of next year,” he adds.
He says the new venture will have three corporate towers, with about 80,000 square meters, which will be developed in phases.
With this in mind, the company has a 180,000-square-meter logistics center that can reach 430,000 square meters, including potential built-to-suit business. “We see slower growth [compared to other segments], but with interesting prospects.”
“Another part of the evolution of this segment will come from the need for companies to upgrade their spaces from the economic resumption,” he goes on.
Meanwhile, in the industrial segment – one of the highlights of which is a free zone north of Bogotá – Alfredo Rizo is also optimistic, given the possibility of economic recovery.
“We expect international companies to arrive with the growth of the economy. Another issue that is expected to drive the relocation of industries currently installed in the capital is the discussion about the normative change of city uses, which is expected for the medium and long-term and might boost this migration, both due to prices in cities and to the need for them to upgrade their spaces,” he says.
Asked about the potential of the real estate market in secondary and tertiary zones, the executive pointed out that he does not foresee business for his company in other locations. “As a strategy, we decided to focus on Bogotá for the corporate slabs and on city outskirts for the logistics centers and industrial zone. As a secondary zone, we look at Medellin. To us, at the moment, it is not a priority to be elsewhere in Colombia,” he noted.
The future of the Colombian real estate market is the theme of Colombia GRI, which is scheduled for October 16 and 17 in the capital city, Bogotá.
The fifth edition of the conference brings names of the likes of Jim Worms, CEO and president of Paladin Realty Partners, who will analyze the investment landscape on the local real estate market, and Sandra Forero Martínez, president of the Colombian Chamber of Construction (Camacol), who will address how the Land Destination Plan (LDP), a technical and normative land planning and management instrument, will impact the industry.
Check out details about the meeting and find out how to attend.
“In general, the outlook for the market is good. For the logistics segment, where we have seen slower movements, I believe that there will be a big boost in the coming years, and, for the industrial sector, which is currently lagging behind a little, we expect new capital investments,” predicts Rizo.
Reviewing the various real estate segments, the executive highlights the housing shortage in Colombia, which makes the residential market one of relevant potential. “Particularly, the low and medium income residential segments come from a slower period [2018 and 2019]; however, the country has a great housing shortage, and there is room for social and midsize housing developments. In the upscale market, meanwhile, we see a slower recovery,” remarked the executive.
According to information from the Colombian Chamber of Construction (Camacol) released in August, between 1991 and 2000, Colombia registered 550,000 new homes, and reached 1.1 million new homes from 2001 to 2010. The country is now faced with the challenge of building 3.2 million homes between 2020 and 2030.
The mall industry, on the other hand, is expected to have lower growth rates due to the moment of this particular area. “We witnessed a boom on this market, and we are no longer a country with few malls per capita, going on to have a better development/population ratio. Today, malls are focused on the user experience and offer state-of-the-art structures. Therefore, I believe this is an industry that will not grow as much as it did in recent years, including because of the fact that there are already many [such] projects. However, it is likely to continue maintaining a positive momentum,” notes Rizo.
Corporate potential
With a strong presence on the corporate market, Terranum has one of Bogotá’s most iconic complexes, Connecta, which comprises corporate and mixed-use buildings. Among other points, the venture stands out for its proposal for sustainability and care with the ecosystem, which attracted local and international giants like WeWork and Amazon.“It is our main project. We hope to reach 150,000 square meters by the end of the year, and plan to reach 240,000 square meters in five years,” Rizo points out.
In fact, the Terranum project was even the theme of a club meeting hosted by GRI Club Real Estate last June. Attended by Rizo, the meeting focused on issues related to the Colombian real estate market, new product trends, and changes in consumer profiles.
Another major venture of the Colombian Terranum group is Connecta 80, which is expected to have a similar proposal to that of the original project of the same name, located on 26th street. Still under construction, the new project will be built on the Boyacá avenue, another strategic route in the Colombian capital. “It will be a new mixed-use complex in a central city location. We hope to start construction in the second half of next year,” he adds.
He says the new venture will have three corporate towers, with about 80,000 square meters, which will be developed in phases.
Expansion of e-commerce
Another development Alfredo Rizo bets on is the increased demand for distribution centers, driven by the growth in electronic commerce. “The e-commerce trend is growing worldwide, and we expect a growing demand for new and modern spaces [in Colombia].”With this in mind, the company has a 180,000-square-meter logistics center that can reach 430,000 square meters, including potential built-to-suit business. “We see slower growth [compared to other segments], but with interesting prospects.”
“Another part of the evolution of this segment will come from the need for companies to upgrade their spaces from the economic resumption,” he goes on.
Meanwhile, in the industrial segment – one of the highlights of which is a free zone north of Bogotá – Alfredo Rizo is also optimistic, given the possibility of economic recovery.
“We expect international companies to arrive with the growth of the economy. Another issue that is expected to drive the relocation of industries currently installed in the capital is the discussion about the normative change of city uses, which is expected for the medium and long-term and might boost this migration, both due to prices in cities and to the need for them to upgrade their spaces,” he says.
Asked about the potential of the real estate market in secondary and tertiary zones, the executive pointed out that he does not foresee business for his company in other locations. “As a strategy, we decided to focus on Bogotá for the corporate slabs and on city outskirts for the logistics centers and industrial zone. As a secondary zone, we look at Medellin. To us, at the moment, it is not a priority to be elsewhere in Colombia,” he noted.
Colombia GRI 2019
The future of the Colombian real estate market is the theme of Colombia GRI, which is scheduled for October 16 and 17 in the capital city, Bogotá.
The fifth edition of the conference brings names of the likes of Jim Worms, CEO and president of Paladin Realty Partners, who will analyze the investment landscape on the local real estate market, and Sandra Forero Martínez, president of the Colombian Chamber of Construction (Camacol), who will address how the Land Destination Plan (LDP), a technical and normative land planning and management instrument, will impact the industry.
Check out details about the meeting and find out how to attend.
