This content is from: Local Insights

Colombia: Real estate and infrastructure opportunities abound

Over the past decade, the real estate market in Colombia has grown tremendously and new horizons have opened for investors, including in the urban renovation and real estate project segments, renewable energy, and public private partnerships (PPPs) generally.

Urban renovation projects have become one of the main areas of opportunity for real estate investors. Colombia's National Development Plan prioritises the development of such projects across the board, including large and small urban areas. Consequently, Colombian public policies now actively promote the improvement of specific areas of cities, in terms of housing, public transportation, basic sanitation and environmental sustainability.

The government has also strongly supported the development of solar energy generation projects. Under Law 1715 of 2014, activities regarding the production and usage of renewable energy (such as solar energy) were declared as matters of public utility and social interest. The Law provides the following benefits in favour of investors of solar energy generation projects, among others: (i) a deduction of 50% on income tax for a five-year period and up to 50% of the total amount of their investment; (ii) equipment and services related to the project are excluded of VAT; and, (iii) zero tariff rates to import equipment, materials and inputs intended exclusively for the development of these projects.

Moreover, the government has encouraged the use of PPP structures to develop urban renovation projects and many other infrastructure projects. Under these structures, domestic and international investors can find the most attractive alternative options to participate in projects of great long-term importance, and continue to develop their presence in and impact on the Colombian market.

Diana Ibarra

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