Colombia's Capital Finds New Sense of Optimism

BOGOTA, COLOMBIA — Once a byword for kidnappings, bombs and chaos, Bogotá has become one of South America’s most attractive cities for foreigners to live and invest in.

The Colombian capital has a buoyant real estate market, thanks in part to a burgeoning economy and improved security. Also, the lessons learned from a local property crash 10 years ago has helped the country avoid the worst of the global downturn.

“Eight or nine years ago, Bogotá was a scary place to visit,” said Brian Andrews, a television news reporter who once worked in Florida and now anchors an English-language news report here.

Álvaro Uribe, Colombia’s president since 2006, has taken a hard line on security issues and scored notable successes against left-wing guerilla groups in recent years. Although the Revolutionary Armed Forces of Colombia, a rebel insurgency, continues to challenge the government — most recently in December with the kidnapping and killing of a southern governor — the capital city, with a population of 6.5 million, has not been affected.

“Now Bogotá feels like it could be a city in the U.S., but with a particular Latin flair,” Mr. Andrews said.

He has spectacular sunsets from his apartment (“a cathedral of space, full of glass and wood”), in a district that is attracting increasing numbers of professionals. He rents the apartment, a penthouse unit that has one bedroom and two bathrooms just north of central Bogotá, for the equivalent of $500 a month.

In practical terms, it is very difficult for a foreigner to get a mortgage from a Colombian bank unless he or she has a Colombian spouse or has lived in the country for at least six months and has a valid residence permit. But if a mortgage is not needed, non-Colombians can buy real estate with their passport.

The mainly residential sections of northeastern Bogotá, traditionally the preserve of the middle and upper classes, present the clearest evidence of the country’s peace dividend. The streets around the popular park at Calle (Street) 93 are full of new cafes and restaurants, their terraces busy until late evening. Much of the rest of the neighborhood presents a tranquil picture: maids sweeping the front steps, dog walkers exercising their charges.

Mauricio Jaimes, a real estate agent with Buy Colombia Realty, an Internet agency with agents in the country’s main urban centers, said property in the city’s northeastern districts increased in value by an average of 25 percent a year in the boom period from 2003 to 2007, before prices leveled off.

The city’s most expensive real estate is in that section, closest to the mountains that form a natural barrier to expansion on its eastern flank.

High-end units in new, and predominantly red brick, apartment buildings in the northeastern districts of Rosales, Chicó and Bosque Medina now sell for 5.5 to 6.6 million Colombian pesos per square meter — $254 to $305 a square foot. Although prices stagnated in 2008, they did not retreat, suggesting that they were not fundamentally overvalued, real estate experts say. During 2009, Mr. Jaimes said, there was a small increase of 2 to 3 percent in values.

Zoning policies in Bogotá favor mixed commercial and residential areas. That has kept the city’s financial district from being deserted after dark and over the weekend, a drawback in similar districts in South American cities like São Paulo and Caracas.

In 1999, Colombia had its own property crash. Spiraling inflation pushed up adjustable mortgage payments for large numbers of investors and homeowners, producing mortgages that were more costly than the properties were worth.

“Colombians learned from that real estate crash,” says Felipe Gámez, an architect whose construction company is building a 245-room Hilton in the financial district, one of a several luxury-hotel developments in the city. “Home buyers here invest very rationally, and builders begin construction when units are sold. That way, supply matches demand.”

Also, anyone who wants to buy an apartment or home before construction, what the industry calls “off plan,” puts payments into trust funds until the work is completed, a requirement that provides security for the buyer and reduces the risk of tax evasion.

The recovery of the city’s real estate market after the 1999 crash was accompanied by changes in local attitudes about the form and functionality of living spaces, at least among the capital’s most wealthy residents.

“Colombians might have become a little more austere in the last couple of years, but the boom was amazing,” said Yvonne Meyer, editor in chief of Casaviva, a magazine dedicated to residential design and architecture.

She proves her point by referring to some of the magazine’s back issues, which were heavy with advertising for imported wooden floors, luxury spa-type bathrooms and Italian kitchens.

“Our idea of what a kitchen could be changed,” Mrs. Meyer said. “Kitchens used to be solely a place where the maid would prepare food. But not any longer: Now the kitchen has become very much a social area and a focal point of the home. Many now incorporate islands so that the host can show off his culinary skills to guests. The effect is more modern, more urban.”

And televisions have started to appear where they were never seen before: in the reception rooms of upper-class homes. Mrs. Meyer explains that flat-screen TVs are more aesthetically pleasing to Colombians: “They can be fixed on the walls to look like pictures, and don’t look out of place among pieces of contemporary art.”