The question almost nobody asks before a high-end purchase in Medellín is who the next buyer is. It's an uncomfortable question because the honest answer at the very top of the market is: not many people, and it may take a while.
The four pools
Broadly, the buyers for expensive Medellín property come from four places, and they want different things.
Wealthy paisa families. The deepest and most durable pool, and the one foreigners consistently forget about. They buy for family reasons — proximity to relatives, schools, the club — and they have strong, specific preferences about which lomas and which buildings are correct. A property that reads as prestigious to a foreigner and unremarkable to a paisa family has lost its largest buyer pool.
Other foreigners. Growing, real, and volatile. This pool expands and contracts with the exchange rate, with Colombia's news coverage abroad, and with visa policy. It is not a pool you want to be the sole buyer base for.
Returning Colombians. Colombians who built careers in the US, Spain or Panama and are coming back with dollars or euros. They tend to want new construction and security, and they behave more like foreigners than like local families.
Investors. Interested in what the property yields. They are largely absent at the very top — a large luxury home rarely pencils as a rental — which is precisely why the top of the market is thinner than the middle.
Where elevation cuts against you
The higher and more spectacular the property, the smaller the intersection of those pools. A three-bedroom in a well-regarded Poblado or Envigado building sits inside all four: a paisa family, a foreign couple, a returning Colombian and possibly an investor could each want it. A very large house at 1,900 metres with a specific architectural point of view sits inside one, maybe two.
That doesn't make it a bad purchase. It makes it a long purchase. Distinctive high-end property here can sit on the market for a long time, and the eventual sale often happens at a number that reflects how few alternatives the buyer had — in whichever direction that cuts.
The practical rule
Decide your holding period honestly, then buy accordingly.
- Might sell inside five years? Buy the more ordinary thing in the more liquid zone. Poblado and Envigado at conventional sizes. You will enjoy it slightly less and exit it enormously more easily.
- This is where you intend to stay? Ignore all of the above and buy the view. Liquidity is a cost you only pay if you sell.
- Buying for the visa? Liquidity matters more than people expect, because plans change and a property you can't exit is a plan you can't change.
The exchange-rate layer nobody prices in
If you earn and think in dollars, your Colombian property is a peso asset and your return has two components: what the property does, and what the peso does. The peso has moved substantially against the dollar in recent years, in both directions.
A property can appreciate handsomely in pesos and lose you money in dollars, or the reverse. Neither outcome has anything to do with whether you chose a good apartment. If you're going to hold a peso asset, hold it long enough that the currency noise averages out, or accept that you're making two bets rather than one.
Questions this raised?
Send them. I answer real questions about real situations, and if the answer is that you shouldn't buy anything yet, that's what you'll get.