In this in-depth analysis we will explore Colombia’s broader economic landscape, the real estate investment market in Medellin, real-life property investment case studies, complete with detailed financials and I’ll also take you through my own experience of buying a penthouse in Medellin.

Whether you’re a seasoned investor or just curious about the potential of Medellin’s real estate market, join me in this comprehensive article to explore a world of opportunity with a real estate investment in Medellin.

Table of Contents

I spent a month in Colombia to investigate investment opportunities. This article is part of my intellectual exercise to gain a better macro-understanding of the country’s economic situation, and outlook.

To be fair, I started off my trip in the Amazon. So only after having hung out with my monkey friends and taking a few naps did I head out to dig deep into investments.

Man standing with three monkeys on his head
Go Blue Jays

And then nap 1 and nap 2

Macro overview of Colombia

Colombia is consistently at the top of various Latin American rankings

The Heritage Foundation ranks Colombia fourth in South America in terms of economic freedom in its 2023 index, behind Chile, Uruguay, and Peru.

economic freedom index latin america 2023

Similarly, the World Bank ranks Colombia as one of the regional leaders in its Ease of Doing Business 2020 ranking.

Economy graphic

So far so good. Colombia is one of Latin America’s freest economies, in a generally business-unfriendly region. Overall, we can talk of relative economic freedom.

Colombia boasts attractive demographics for investors

In spite of a fertility rate below replacement level (1.8 per woman), Colombia has an appealing demographic curve due to past fertility rates, which will result in the population expanding over the next 30 years.

Colombia population graphic
Source: World Population Review

A growing population is a key driver of growth. Also, Colombia is a magnet for immigration thanks to easy residency options. The country currently has almost 2 million socialism-fleeing Venezuelans living within its borders.

Similar to most of Latin America – a relatively unsophisticated economy

In spite of being one of Latin America’s freest economies, with a local market of over 51 million people, and with access to both the Caribbean and the Pacific, Colombia’s export profile is relatively primitive. It essentially pulls things out of the ground and exports them, with minimal local value creation. Add tourism, and these are the main exports.

export profile colombia 2021
Source: OEC

Non-commodities exports are growing fast, which is great. However, if you are of the view that we are on the cusp of a commodities bull market, I don’t mind seeing such a commodities-heavy export profile. It does point to a potentially very cyclical economy though. Additionally, the lack of CAPEX in the oil industry in the last few years is visible in its production numbers.

Colombia Crude Oil Production graphic
Colombia Crude Oil Production. Source: Trading Economics

A key export, energy, is likely to do very well

On the one hand, commodities have started doing well, and we are likely to see a worldwide structural deficit in oil production which should lead to much higher energy prices. Seeing that substantial part of Colombia’s exports are energy, this should be very growth-positive.

Current Account to GDP - Colombia
Current Account to GDP – Colombia. Source: Trading Economics

Colombia’s growing Foreign Direct Investment figures, combined with a boom in energy prices would go a long way in solving Colombia’s persistent current account deficit.

Colombia FDI in million USD
Colombia FDI in million USD. Source: Trading Economics

Colombia has been financing itself through external debt

Total External Debt Colombia in USD million
Total External Debt Colombia in USD million. Source: Trading Economics

A lot of the debt seems to be held by the government

colombia government debt to gdp graph
Colombia Government Debt to GDP. Source: Trading Economics

Luckily, most of the government debt is held locally, and it seems to be on a downward trajectory. But the amount of foreign currency, and externally-held debt has been growing.

Graphic of Colombians public depth profile
Source: BNP Paribas

Is Colombia going to hit a wall?

If Colombia were to continue on its current path, it would face issues. A persistent current account deficit, relatively high government debt, declining FDI, and a refugee crisis. The only way out of it would be through radical, free-market structural reforms to attract FDI and take advantage of its natural resources and great geographic location.

But there haven’t been many reforms. And let’s not forget that Colombia has been particularly peaceful in the past few years, as many guerillas and paramilitary groups signed peace deals with the government. Yet, FDI did not flow in massively.

There are deep social issues in Colombia

I won’t talk about the various internal conflicts with guerillas and paramilitaries that keep popping up, but will just focus on the social side of things. Throughout 2021 there were massive, violent and violently-suppressed protests across the country.

People want jobs, better services, and better security.

Petro’s election

Gustavo petro colombia president
President Petro

President Petro was elected in June on the thinnest of margins.

It’s true that the optics are not favourable at all. During his campaign he talked about wealth redistribution, higher taxes, and even a ban on oil, gas and mining exploration, which are crucial to the local economy.

As a result, as soon as he was elected, the Colombian Peso (COP) took a massive hit.

Same thing with Colombian equities. They took a huge hit.

However, what has since transpired is that Petro does not control the local congress, so laws need negotiations with the opposition parties. What was expected to be radical left wing policies has since been very much watered down:

Overall, though Petro is absolutely not a positive, the currency overreacted to his election and retraced back most of its losses. He’s a negative, but not to such an extent, which offers an arbitrage opportunity.

Finally, Petro’s reign is nearing its end. The Colombian people are not impressed with him and delivered his party a big loss in the October 2023 local and regional elections by electing the business-friendly opposition.

Is Colombia a good investment?

Looking at it purely from a macro point of view, and not digging into the specific asset classes:

  • If the commodities bull market does not materialize, I see too many headwinds, and not enough tailwinds.
  • If the commodities bull market happens, the inflow of cash will cover a lot of the issues in the short and medium term.
  • The government should use this opportunity to implement structural reforms, which may or may not happen. Realistically, some will take place but not enough.
  • This looks to me like a market that I would not want to be overweight. However, it is a very interesting diversification play away from the geopolitical hotspots of the West, the Middle East, and Asia.
  • In the current day & age, I want geopolitical diversification. Colombia offers this, with attractive capitalization rates if one invests in real estate in Medellin and in some cases Cali.
  • Therefore, how to play this market?

The first objective is to find a Medellin real estate investment that will not just beat currency depreciation, but also bring attractive returns in hard currency equivalent

This chart of the Colombian peso is what your investments will be racing against, and hopefully be exceeding.

USD to COP. Source: XE

What is important to note is that when you invest in core Bogota or Medellin real estate, the reality is that real estate prices track the USD as both buyers and sellers in such neighbourhoods think in dollar terms. When the currency devaluates, sellers typically raise their COP prices accordingly. If they don’t it offers an arbitrage opportunity.

It’s one of the core theses for investing in core real estate in Medellin – its inherent hedge against COP devaluation.

The local stock market does not appear to have been a great hedge against currency depreciation

colombia stock exchange
Source: Trading Economics

There are obviously out-performers in there, but as a whole, the Colombian stock market has been a disappointment. I’ll want to dig into this to understand whether there is a potential upside after years of under-performance. Is making Medellin real estate investment in Medellin a better option?

Why make a real estate investment in Medellin?

Though Bogota is the capital city, Medellin, Colombia’s second city, is by far people’s favorite place to live in and visit. Its 2.5 million inhabitants are blessed with “eternal spring” weather which almost never requires one to wear a sweater, nor to use indoor heating and air conditioning.

Medellin has a seen a true surge in foreign tourism thanks to sharp marketing, a unique lifestyle, and affordability.

Not only is the city itself very pleasant with a wide variety of dining and drinking options, but the surroundings are known to be breathtaking as well.

Unsurprisingly, Medellin comes out top in various worldwide rankings of best places in the world to be a digital nomad, to backpack, to retire, and even to conduct medical tourism.

Medellin has a strong and diversified economy

This is a huge plus when making a real estate investment in Colombia.

Mercado Libre Medellin Innovation Center
Mercado Libre Medellin Innovation Center

Medellin is not just about tourism. When you walk around Medellin you can tell that the city does not cater exclusively to tourists unlike Cartagena. The locals go about their lives in various industries.

There are many mines in the area surrounding Medellin, and the city has been successful at attracting foreign FDI in the tech space. It has even been dubbed the “Software Valley“.

Major tech players such as Alibaba and South American giant Mercado Libre have invested in Medellin.

Medellin Real Estate Investment Market

What is crucial to understand for people who want to make a real estate investment in Medellin, is that because the COP depreciates over time, it is hard to make substantial capital gains in USD terms. The play in Medellin is:

  1. The absolute value you pay. The average price per square meter in Medellin currently stands at 5 million COP, which is roughly $1,200 per m2 ($112 per ft2). This is an incredible price for such an increasingly world-class destination. Smaller units (below 80m2) command a premium; higher end neighborhoods such as Laureles and Poblado also.
  2. The very high rental yields / capitalization rates that can be obtained in some segments of the market.

The local market is relatively uninteresting. When speaking to agents and checking prices online, it becomes clear that gross rental yields, on the long term, unfurnished, local market stand at about 4-5%. The real money is to be made by renting to foreigners.

I generally dislike targeting foreigners, as it is a market that is more fickle

Destinations are cool one day, and then not so much a few years later. Or people realize the opportunity and the segment quickly becomes overcrowded, thus depressing yields. This is extremely common in markets where agents tell you to target “embassies” and “diplomatic” staff.

However, in Medellin’s case, I am bullish on this segment.

American digital nomads will be the driving force for strong real estate rental yields in Medellin

The reality is that a few hours flight away from Colombia is a massive market of high-earning Americans who simultaneously realized a few things:

  1. They can work almost entirely remotely.
  2. They can work from abroad, thus leaving behind an increasingly toxic environment. This perception of toxicity applies to Americans of all political stripes.
  3. They can live a cheaper, nicer life abroad and in many cases can save on taxes if structured properly.

Millions of Americans have either reached these conclusions, or will soon.

Americans have high standards for housing, can afford it, and don’t mind paying

I don’t mean to come across as rude, but I need to make a clear comparison between European digital nomads and American ones. I don’t have exact data to back it up, but rather many data points from having met hundreds of digital nomads as I travel around the world. People like to open up to me about their personal finances :).

European digital nomads typically earn €2,500-€3,000 after taxes. For Europe, this is a great salary. Most are very content with these figures.

American digital nomads in contrast would probably not get out of bed for such an amount ($3,000-$3,500 per month). Earning $6,000-$7,000 per month is fairly standard, as well as 6 figures.

Also, let’s face it, Europeans are often budget-conscious, and have traditionally lived in housing that is less opulent than Americans’.

The result is that Americans have the means, the “want”, and the “need” to pay for superior housing.

A limited supply of well-designed, well-managed, and furnished apartments makes for an ideal combo of relatively low per m2 pricing, and high rental rates for digital nomads who rent for a few weeks to a few months at a time.

First-time American digital nomads will stick to the name brands, which is bullish for making a real estate investment in Medellin, Colombia

Medellin is one of the world’s top digital nomad destinations, along with other places such as Chiang-mai, Bali, Budapest and Mexico.

Medellin will be a huge winner, because it’s not just marketing, but actually really nice too. I must admit that I came here with low expectations. Being well traveled, maybe I became a little arrogant thinking along the lines of “if it’s that popular it’s can’t be that nice. It’s probably basic”.

I was wrong. Medellin and its surroundings are lovely.

And this is why I travel full-time looking at investments worldwide, because traveling so often exposes how wrong I am.

To top it off…

Medellin airport is undergoing a true boom

Medellin is becoming a major regional air transport hub. Internationally, there are many flights to Miami, as well as to Lima, Mexico city, Cancun, Orlando, Buenos Aires, Sao Paolo, Santiago de Chile, etc.

All of these connections will bring in more tourism, more business, more nomads and Medellin will increasingly become a playing ground for those with money.

Rio Negro airport (Medellin airport) saw its 2022 domestic traffic grow 37% versus pre-Covid 2019.

Its international traffic went up an astonishing 53% over the same period. Just imagine the impact on rentals.

In which neighborhoods should you invest?

Two neighborhoods are particularly investable when considering a real estate investment in Medellin, Colombia.

El Poblado

Map of Medellin
El Poblado is the most premium area in Medellin. Pretty much all of the area is investable, but the different areas all have their plus and minuses. Locals like to live in high-rises up in the hills to have unbeatable views of the city.

Most the area is comprised of private complexes, whether composed of individual homes or large buildings. This is also where all the offices and the best malls are located.

Parque Lleras and Provenza

Technically these neighbourhoods are part of El Poblado, but they are so notorious that they deserve a special mention. Essentially, they are where most tourists spend time, and where wealthy locals like to go eating and partying. This map below is crucial for you to understand.

Girls”: This is the area with a lot of prostitution. Walk around there in the evenings and girls (mostly) litter the streets and pack the girly bars. Small-time drug dealers abound as well. If you’re into this that’s fine, but I’d be very wary of buying real estate in this area due to the type of clientele I might attract.

Cool Bars and Restaurants”: This is the really cool area. Tons of exquisite restaurants, cool bars, and nightclubs. The wealthy locals want to be seen around here. Expands a bit north as well.

The real challenge is that during the day it is not too visible, so make sure you go for an evening walk before making an offer. One street might have cool restaurants and great vibes, while the next street could be a sex den.

Overall though, rental demand in this area is extremely high.


A bit farther to the north-west from El Poblado, or a 15 minute cab-ride away, is the gentrifying neighborhood of Laureles which was recently crowned a “top 40 coolest neighborhood in the world” by Time Out magazine.

40 coolest neighbourhoods in the world time out magazine
40 coolest neighbourhoods in the world time out magazine laureles medellin

Foreigner-wise, when people stay for not too long in Medellin, they typically tend to stick around Parque Lleras and that area. However, people who stay in Medellin for a few months often prefer to stay in Laureles because it is better value, calmer, more walkable as it is flat as opposed to hilly in El Poblado, and has equally good amenities.

I personally like this area a lot, and it comes at a 20%-30% discount to El Poblado.

Street in Laureles
Laureles is very green, flat, and walkable
Real Estate heat map of Laureles
Real Estate investment market map of Laureles

However the city is building a lot of public transport in this area. Medellin is widely known in Latin America for having some of the best public transport. This will further catalyze Laureles as a central neighbourhood.

new metro lines in laureles medellin
New metro lines in Laureles – big catalysts

A concrete example of a Real Estate Investment in Medellin, Colombia

This is an actual case study of a lovely apartment that Mauricio, my Swedish real estate agent here in Medellin, helped a friend of mine buy and rent out. He essentially managed the project, and has access to all the numbers.

This is why you follow The Wandering Investor, because of on-the-ground research such as this.

I’ll put the numbers in USD using the actual exchange rate at the time of transactions.

This massive 135m2 three-bedroom, three-bathroom apartment was sold for $178,000, which corresponds to $1,320 per m2, which is about $122 per ft2, fully renovated. These numbers include the terrace and Jacuzzi. It is located in El Poblado, in a prime area between Parque Lleras and Santa Fe mall.

This particular apartment did not require a renovation job, but these typically costs between $200 and $450 per m2 ($19 – $42 per ft2) depending the the depth and luxury of the remodeling. As part of his services, Mauricio connects his investors with the right interior designers, architects, and project managers.

Do note that my friend decided to turn the third bedroom into a home office, with two desks, high-end chairs, and monitors. He is targeting the digital nomad market.

Here is the exact breakdown. We are assuming a conservative occupancy rate of 85%. In reality, it has been over 92% using contracts of a month up to a year. All the actuals are from Mauricio’s numbers. I just changed the occupancy rate, and added relatively high maintenance costs.

Essentially, there is buffer in these numbers.

Purchase price$178,000
+ Purchasing costs 2%$3,560
+ Exchange fees (0.6%) + financial transaction tax (0.4%)$1,780
Total purchase price$183,340
Renovation costs$0
Total investment$191,673
Monthly rent of $2,500 (based on actuals) x 12 = gross yield of 15.6%$30,000
– Vacancy of 15% (in reality Mauricio has a vacancy rate of 8%)$4,500
= Yearly rent$25,500
– Yearly HOA (Home owners association) – $150 per month$1,800
– Yearly Property tax $937
– Property management 10% of rent$2,550
– EPM (electricity, water, sewage) – about $120 per month$1,440
– Internet – $35 per month$420
– Maintenance (assume 5% of rent)$1,275
Net, net yearly rental income$17,078
Net, net rental yield before tax8.9%
Conservative figures

I can’t think of many markets in the world that offer such rental yields / capitalization rates for premium real estate.

Taxes on rental income in Colombia

I wish I could write more confidently here. I spoke to a few accountants, as well as agents. Everyone tells a different story.

  • Some say that you must pay based on the normal Colombian income tax rates, which would mean that the overall tax would probably not be very high as the first brackets are low (if you have one property).
  • Others claim that the property manager must withhold 20% on payments made abroad and that no income tax is due if this methodology is used.

Both sides of the story are very confident in their method, and back it up with legal analysis. In practice, it would appear that few people, including foreigners, pay much tax at all, whether they declare or not. It almost seems to be a non-issue.

If I were to make an investment, I would simply choose an accountant I am comfortable with, that seems to make sense, and not stress too much about it. I’d also check with my country of tax residency, and ask my accountant back home to check which method would be best for me to use so that I could benefit from double tax treaty benefits if there are any.

I like Medellin so much, I bought a Penthouse in Laureles

As a free bonus, a real estate investment in Medellin qualifies you and your family for a long term visa in Colombia

If you spend 350 times the minimum wage (about $83,000 at an exchange rate of 4,000 COP to the USD) on real estate in Colombia, you and your family are entitled to a 3 year migrant visa.

To maintain the visa active, you must show up for at least a day every 6 months, which implies regular trips to Colombia if you don’t plan on living there. You can renew the visa as long as you still hold the property. At year 5, you can apply for full residency.

I sat down with Alan, a US lawyer based in Colombia. You can get more information on how to obtain residency in Colombia by clicking on this link.

Video: A Real Estate Investment in Medellin, Colombia. Includes Capitalization Rate Calculations

Conclusions on making a real estate investment in Medellin, Colombia

I travel around the world full-time looking for investment and immigration options. I must say that I came to Medellin with low expectations because it had been so well-marketed. The reality is that the market for mid-term rentals is booming, will continue to boom, and is clearly under-served. The overall price per m2 is cheap for a vibrant city of 2.5 million people, and the rental yields are very attractive.

Due to a number of macro factors I certainly would not go all-in Colombia, but having a bit of exposure to this market is a great geopolitical hedge in a world of rising tensions.

If you need a good lawyer for your real estate transaction in Colombia, feel free to contact my lawyer Alan.

🏠 My Real Estate Agent in Medellin

Real Estate Investment in Medellin with Mauricio
Mauricio & team

Contact Mauricio to learn more about buying real estate in Medellin, Colombia. Mauricio provides excellent market insights and promising deals. He stands out for not only selling real estate but also managing rentals for real estate investors, renovations and ensuring accountability. This approach is key to setting realistic expectations, avoiding situations where a promised 12% yield turns into just 5%.

Other articles on Colombia:

Other services in Colombia:

If you want to read more such articles on other real estate markets in the world, go to the bottom of my International Real Estate Services page.

Subscribe to the PRIVATE LIST below to not miss out on future investment posts, and follow me on InstagramXLinkedInTelegram, YoutubeFacebookRumble, and Odysee.

My favourite brokerage to invest in international stocks is IB. To find out more about this low-fee option with access to plenty of markets, click here.

If you want to discuss your internationalization and diversification plans, book a consulting session or send me an email.