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Construction (CON)

A Top Export Prospect for Colombia

Market Estimates

(in U.S. $ millions)

COMPLETE YEAR

JANUARY-OCTOBER

CONSTRUCTION MATERIALS

2010

2011

2011

2012

Y-o-Y %Var.

Colombian World Imports

1.152

1.899

1.546

1.597

3.3% INCREASE

Sources: DANE

  • Construction in Colombia represents 6.9% of GDP
  • Infrastructure: 3.7%
  • Buildings: 3.2%
  • Construction generates 1.2 million jobs (5.8% of the total workforce)

Infrastructure and Residential/Commercial Construction are the key markets in the Colombian construction industry. With a share of 52.5% in 2011, infrastructure was the largest market, followed by the residential market that constituted a share of 34.7% in the same year. The construction sector has been one of the most dynamic sectors of the Colombian economy registering an average growth from 2000 through 2011 of 6.9% versus 4.1% total GDP, which has resulted in increased participation in the economy rising from 4.2% in 2000 to 6.9% in 2011.

The Government's Development Plan 2011-2014 has five sectors called "government engines of growth" among which the most representative are Housing (construction goal of USD 1 million affordable housing for the underprivileged) and Infrastructure (construction and remodeling airports, ports, roads, etc..), which are expected to generate a growing demand for building materials of low, medium and high range. The Director of the National Infrastructure Agency of Colombia (ANI), recently estimated more than USD 8,600 million, 3% of the GDP, as Colombia’s annual investment in infrastructure starting in 2014.

As established by Business Monitor, a positive flow in FDI is likely to continue in the medium term, supported by a new Public Private Partnerships –PPP- which is a law fast-tracked to support the government's ambitious infrastructure plan. Despite a recent cooling of macroeconomic indicators, a drop in mortgage lending and initiation of residential construction, conditions are expected to remain broadly supportive of residential and non-residential industry growth, forecasting 4.3% real growth in the subsector for 2012.

Improvements in Colombia's macroeconomic picture over the past few years are forcing the government to invest heavily in the sector as demand incrementally outpaces the outdated infrastructure endowment. As outlined by May's 2012 USD 56 billion infrastructure plan, Colombia will continue to offer a substantial portfolio to infrastructure investors, with the National Infrastructure Agency (ANI) looking to gain half of all funding from private sources. In terms of residential and non-residential construction, the Plan indicates significant social projects.

Law 1508, 2012 - the country's new PPP law - should open up Colombia's infrastructure market to a number of international firms and funds. According to the government, the PPP law has been designed to attract USD 8.4B billion in infrastructure FDI by 2015.

As part of Colombia's infrastructure plan, a number of concessions will be offered under the PPP model. Attracting FDI for urban regeneration is a focus of the Colombian government, as the country looks to build one million new housing units by 2014, half of which will be affordable social housing. Key builds include substantial regeneration programs in Cali and Bogota, as well as the construction of a 40,000 unit Eco-city - the first in Colombia - in the suburbs of Cali.1

Standards are becoming a differentiator for Colombian buyers seeking quality and value. In general, Colombian consumers appreciate U.S. products due to their excellent quality. However, competitive prices are a decisive factor when competing in this market. In this sense, it is important to highlight the significant growth of Chinese imports during the last years, with approximately 30% market share, due to considerable low prices.

The U.S.-Colombia Free Trade Agreement (FTA) entered into agreement in May 2012, and is forecasted to result in a measurable increase in U.S. exports of building products to Colombia. Colombian building products tariffs before the FTA averaged 13.2 percent, ranging from zero to 20 percent. Since May 2012 over 42 percent of U.S. building products exports to Colombia are duty-free. Tariffs on an additional 8 percent would be eliminated over five years and tariffs on a further 2 percent of exports would be eliminated over seven years. Tariffs on the remaining 48 percent of building products would be eliminated in equal cuts over ten years. Therefore, the FTA presents a significant opportunity for U.S. companies interested in exporting building products to Colombia.

Best Prospects/Services Return to top

  • Concrete additives
  • Float glass
  • Certain stone articles,
  • Prefabricated buildings.
  • Glazed and unglazed ceramic
  • Non-wired glass in sheets
  • Non-wired glass colored
  • Fiberboard
  • Tubes
  • Pumps and ventilation equipment
  • Valves
  • Doors and windows
  • Pipes of cast iron
  • Structures and parts of iron, metal or steel
  • Parquet panels of wood
  • Ceramic sanitary fixtures
  • Articles of asphalt or similar materials in rolls
  • Glass fibers and articles
  • Sinks and wash basins of stainless steel and aluminum structures and parts.
  • Drywall
  • Lightning – Home electronic appliance

Opportunities Return to top

Growth in 2013 will be based on two main drivers: offering attractive products and achieving greater market coverage. In the second half of 2013 the bidding for ANI infrastructure projects will begin and this will spur to the industry. It is projected that the construction (civil works and housing) will rise from 8.1 to 9.3 percent in 2013.

The outlook for the residential/commercial construction industry for 2013 remains positive; this following a slower period in 2012 due to the increased construction prices. However, to support the market, the Republic Bank cut the interest rate 25 basis points to 4.75% at the end of August 2012.

Table: Colombia Construction And Infrastructure Industry Data, 2010-2016

 

2010

2011

2012e

2013f

2014f

2015f

2016f

Construction industry value, USD billion

20.1

23.1

24.5

27.5

30.8

34.5

37.5

Total capital investment, USD billion

64.4

84.6

90.6

100.3

112.5

126.0

137.1

Total capital investment, % of GDP

22.4

26.1

26.6

26.5

26.2

26.1

25.9

Capital investment per capita, USD

1,391.6

1,803.5

1,906.1

2,082.3

2,306.0

2,553.0

2,744.3

Infrastructure Industry Value as % of GDP

3.3

3.4

3.4

3.5

3.5

3.6

3.6

Residential and Non-residential Building Industry Value As % of Total Construction

52.9

53.0

52.4

51.6

50.9

50.1

49.1

Residential and Non-residential Building Industry Value, USD billion

10.6

12.3

12.9

14.2

15.7

17.3

18.4

f = BMI forecasts. Sources: DANE/BanRe/ILO

In nonresidential constructions, a favorable outlook is expected for the building of warehouses, offices and hotels. For the Colombian Chamber of Construction-Camacol, the GDP construction/building industry forecast for 2013 could reach 9.9%, where half would be the non-residential building locations and 2.2 percent would account for construction of the 100,000 affordable housing units for the underprivileged.

  • Structuring opportunities for Public-Private Partnerships (PPP Law issued in 2012)
  • Construction of roads, bridges, ports and basic infrastructure (principles of sustainability are increasingly demanded in the bidding conditions)
  • Renovation of the Centro Administrativo Nacional en Bogotá –CAN- Public Buildings District.
  • Building of 1 million new housing (70% Affordable Housing for the Underprivileged)
  • USD98.5 million worth of contracts for the construction of judicial buildings

Resources Return to top

CS Bogotá contact: Paola Lugari, Commercial Specialist

Email: paola.lugari@trade.gov

Tel: (571) 275- 2723

  • Business Monitor Industry Reports: www.businessmonitor.com
  • Colombian Chamber of Construction-Camacol: www.camacol.co
  • National Department of Statistics www.dane.gov.co
  • Proexport www.proexport.com.co
  • National Planning Department (DNP) www.dnp.gov.co
  • National Infrastructure Agency : www.inco.gov.co
  • National Agency of Industries www.andi.com.co
  • National Association of Financial Institutions –Anif: www.anif.co
  • Colombian Council of Sustainable Construction: www.ccs.org.co
  • Spain Exports and Imports-ICEX: www.icex.es
  • Portafolio: www.portafolio.com.co

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1 Business Monitor