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WHATS A FAIR PRICE?
A common question asked, even before looking at a residential property is: “what is the average cost per meter”? The answer can get you in trouble, but it is a starting point.
This year, and for the past couple of years, the average cost per meter for residences in good condition, and in the more desirable locations is approximately 1,000,000 Pesos per square meter.
Many foreign buyers are more familiar with area size expressed in square feet. Pesos one million is currently, about $350. u.s. per meter, or about $32.50 per square foot. This figure will become more meaningful if you consider the variables which make up building costs: bathrooms and kitchens per square foot are the most expensive areas. Larger areas cost less per square foot than smaller. Apartments with features such as a swimming pool, dedicated parking space, garden area, etc. will cost more per square foot. And, of course, the location can have a large effect on the per square foot price. A property that fronts right on the Caribbean will be more than one that is across the street from the beach, and a quiet location that is more “residential” in appearance but close to shopping, will usually cost more than one that is in the middle of the congestion. Regarding monthly administration fees, an apartment building with hundreds of units will cost less per unit to maintain and secure, than one with 20 or so.
Current construction costs in the U.S. are about $100. per square foot, which does not include the cost of land, permits, design, etc., and can go up to $350 per square foot for custom luxury construction.
Construction quality in developing countries is often better than “back home”. Here, engineers and designers will typically “over design”, because they are required by law to personally stand behind their work for five years. To reduce or eliminate potential structural problems, they will specify more steel and concrete than commonly used in developed countries where insurance will cover any “errors and omissions”.
The big reason for the difference, of course, is the cost of labor. Workers wages here in Cartagena, can be as little as 10% of cost per hour in your country. Labor cost is normally one half or more of construction cost.
Lower labor costs often means that the design is more ornate and labor intensive than boxy “cookie cutter” designs that are economically common back home. Look at the hundreds of photographs of apartment buildings and homes on my web site and you will notice a large variety of designs including many that are curved which may be more of a challenge to furnish (ever try to buy and hang a traverse rod drawn curtain, covering a round window?), but which is the most expensive type of construction when it comes to material waste, and more importantly, higher labor costs. Cartageneros take pride on being “unique”!
The caveat to the rough price guideline, of course is that you must compare the property with others in the same general area, to establish a better idea of relative value. This is where depending on a reputable Real Estate professional, that has full command of your language, and is a graduate engineer from a respected U.S. university, can be a big plus. And never forget the three most important rules that apply all over the world, relating to real estate value: location, location and location! Cartagena is a great world-class location, so already, your batting .333! Now let Paul Juan Realty find your neighborhood location, and your home location!
Enjoy your life-in Cartagena on The Caribbean.
Annual Property tax rate in Cartagena is 0.65% of the assessed value as determined by The City of Cartagena. Market values are usually higher than Assessed values. While a property is under construction, the worst case scenario is that government INSTITUTO GEOGRAFICO AGUSTIN CODAZZI, assess the property at market value, which would be the sale price.
Example 1: if you pay $180.000.000 pesos ($64,000 U.S. dollars) for a previously owned apartment, that is assessed at $120.000.000 ($42,800 U.S. dollars) you will pay $780.000 pesos (0.65%) or $278 U.S. per year.
Example 2: if you buy a property that is under construction the assessed value would be undetermined. The worst case scenario is that it would be assessed at the sale price. For example if the sale price was $250.000.000 pesos ($89,000 U.S. dollars) you would pay $1.625.000 pesos (0.65%) or, $578 U.S. dollars.
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Office: Bocagrande, Cra. 1 Calle 13 Edificio Cartagena de Indias - Local 1. Tel.: (57 5) 665 0515. Celular: (57) 311 660 2756. Cartagena de Indias, Colombia.
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