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Bancolombia S.A. Message Board

  • totheplate1 totheplate1 Dec 2, 2008 12:01 PM Flag

    Perfect Storm Brewing in Colombia

    Folks, I live and run a business here in Colombia. The changes in the last two years have brought such speculation and a real estate bubble no seen even in the go-go Internet days of the U.S.

    A good sign of this is the recent announcement by CIB of the sale of assets (smells like they are raising much needed cash).

    First, one must understand that real estate in Cartagena in particular, as well as Bogota Medellin and Cali are at levels that exceed the best cities in the U.S. Yes, a nice condo in Miami is at least half the price of one in Cartagena.

    Second, most of these apartments have been purchased by"dirty" money looking to be repatriated. That's right folks, all the money siting in containers on Miami piers is finding its way home pushing values to the obscene levels yet no one lives in these things. The buildings are dark at night. I have friends who have sold furniture to guys who are purchasing for the 5 apartments each bought at one time - not exactly guys you want as neighbors. They are never occupied and they could never find a buyer if they wanted to sell now that the boom has ended. It is exactly what happened in Panama in the last 10 years - they call it the dark city (no lights on in the beautiful skyscaper condo buildings.

    If that doesn't frighten you then look at the available credit that has happened in the last two years. 4 years ago you could not get credit. Today you cannot find the real price on any item....they only post the monthly payment on it. To spur an increase in credit demand, banks offer restaurants a deal for their dinners - 30% off if you pay with Visa. They all run out and get cards which are offered in the airports just like the old days in the U.S.

    Cars? Most car salespeople have made more money in the last three years as a lawyer or good doctor. I know one girl who explained to me that she makes more money on the financing than the car - sound familiar?

    No, the game is over in Colombia. The U.S. enters a recession and pulls the 9 billion in aid it has given this country for it security and its back to chaos here.

    I am an economist by education and have never seen a boom like this one anywhere. As recently as 5 years ago a home in Cartagena I purchased for 400K is now over $4 million. Buildings in need of renovation you could have bought for 50K are now 2 million. The rents wouldn't come close to covering the debt particularly since borrowing rates are 23% or higher.

    As for the bank in general, this bank is one of the worst retail organizations around. Lines are hours long and the paperwork to do the simplest transaction is a joke. Its like the dark ages. But that's all banks in Colombia not just CIB. However, it does need to desperately come into the modern world.

    No, this game is over. I bought CIB in Jan of 03 for just under $3 and sold it in early 07 for just under $30 and have not looked back. When it gets back to $5 maybe I will look at it but I know there's a lot of pain to come between now and then. That's just Colombia.

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    • Are you sure you are talking about Colombia? I am quite you are confusing that beautiful country with one of its neighbors.
      Colombia, the risk is wanting to stay.

    • I don`t know what is the real intention behind your
      post .
      I also have bussines in Colombia , your statments are
      not true and Bancolombia is a gret bank , with an
      amazing smart people on its management, the last earnings
      report is oustanding.

    • Obviously a post from a short that knows nothing about Colombia

    • I'm afraid you are wrong my friend. I just got back from Cali and bought myself a beautiful apartment on the 8th floor located in very nice area for 55K (Brand new) I had to put 30% down and the other 70% can either be finance through a bank in Colombia usually between 5-15 years unlike in the U.S. I will pay out of my savings account, so no need to finance and i'll own outright. I'm a cpa in the U.S, born and raised in Cali. There's a building boom in Cali where beautiful buildings are being erected for less than you can buy anywhere in the U.S. A friend of mine owns three apartments and lives like a king. Question: Where do you see the dollar going and where will you park your money?
      By the way, there are a lot of rich people living in Colombia who are not involved with dirty money. President Uribe has implemented several regulations to prevent money laundering and to fight the guerrila. Just look at the USD/COP chart and see for yourself how stable this currency has been since the housing crisis started in the U.S

 
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