The Magic of Cartagena

The cobblestone streets and colonial architecture of Cartagena de Indias give the city a magical feeling. Nobel-Prize-winning author Gabriel García Márquez, known for his novels rich in magic realism, drew inspiration from this port city. Now might be a good time for overseas buyers to try their luck on Cartagena. Consider, for example, what $5 million buys: A more than 16,000-square-foot, restored 18th-century house with high ceilings, 12 bedrooms, two courtyards, a lap swimming pool surrounded by tropical vegetation, and city and ocean views. The single-family house listed with Julio Corredor & Cia., an affiliate of Christie’s International Real Estate, has an asking price of 15 billion Colombian pesos, or about $4.8 million. Colombia's peso has tumbled more than 30% against the strong U.S. dollar in the past year, giving buyers with the U.S. currency an opportunity to buy prime real estate. The peso is among other currencies from emerging markets that have fallen in the past year. House prices in Colombia are rising. Knight Frank’s Global House Price Index, which measures mainstream house prices, reported a 7.2% annual increase in Colombia's home values in the second quarter. Colombia's growth was higher than the rate in larger economies in Latin America such as Mexico and Brazil. “A shortage of supply set against rising household incomes—in turn due to an expanding middle class—are behind the acceleration in prices,” explained Kate Everett-Allen, a partner in Knight Frank's Residential Research team. In 2014, Colombia, with a population of over 48 million, had economic growth of 4.6% and a 9.1% unemployment rate. The economy is expected to continue to grow this year—GDP rose 3% in the second quarter compared with the same period in 2014—although the expansion is expected to be lower amid falling oil prices, Colombia’s main export, and the weaker peso. It remains to be seen whether the drop of the peso will hurt domestic demand for homes. Verónica Dávila, director of Julio Corredor & Cia., said that investors in recent years, given the growing economy, have increasingly moved their money from stocks to real estate. Dávila said that house-price growth has slowed of late as inventory has increased, making it a good time for investors with U.S. dollars, whether they are locals or foreigners. Foreign buyers in Colombia come mainly from Venezuela, its neighbor to the east, Dávila said. Other international buyers come from Chile and expats from Europe and the U.S. who move to the country to work for multinational companies. Foreigners make up about 25% of all buyers in the walled Old Town of Cartagena, Dávila said. “With a peso sharply devalued, it is the best time (to buy) for everyone,” she said. Write to Andrea López Cruzado at andrea.lopez@dowjones.com Follow Mansion Global on Facebook, Twitter and Instagram Write to us at info@mansionglobal.com