As the onion diagram shows, the impact on the real estate market must be

analyzed from several variables, and more taking into account the fragility
of the economies in South America.

A study by JP Morgan Asset Management showed that Colombia is in a

fragile position due to its dependence on oil. Proof of this is that the fall in
prices from USD 100 to USD 40 in 2015 meant the country went from
being one of the least vulnerable countries on the continent to one of the
most. (Portafolio, 2015)

García-Amaya (2015), one of the JP Morgan analysts, is aware of this

problem:
One of the most important issues being worked on is for the Government
to diversify its sources of income. Oil is cyclical and finances should not
depend too much on a single product. (Portafolio, 2015)

The uncertainty caused by the pandemic led the Government to take

measures for the economic reactivation of the country. In terms of
unemployment, the month of May 2020 registered the highest
unemployment percentage in the last 20 years, with an unemployment rate
of 21.4% (DANE, 2021).
 
According to a study carried out by some universities in the country
(Santander University, Magdalena University & Pontificia Bolivariana
University), 67.3% of people have been affected in economic terms during
this time, in addition, it was confirmed that there were some attitudes of
fear, confusion and symptoms that affected people's mental health.
(Martínez, et al., 2020).
 
 

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1.2. Definitions and Terms

In order that the research proposal can be understood in a better way,

some important terms will be defined below.

First, to talk about the commercial real estate market, it should be

mentioned that there is the possibility of investing in the public and private
market. In the private market the investor acquires properties and
manages them, for example by renting. On the other hand, you can also
buy commercial real estate trading stocks, usually known as real estate
investment trusts. (Kishor, 2020)

But what advantages are found in real estate? First of all, it has the
potential to offer absolute returns. Then it’s potential to protect against
unexpected inflation. Third, it is a good option to diversify investments
against stocks and bonds. Additionally, if they are well managed, they can
provide constant cash inflows and ultimately their potential to provide fiscal
advantages. (Garay, 2016)

At the same time, the economic reactivation strategy that the Colombian
government launched must be put into context, and specifically the
ambitious plan that was established for people to acquire a home, since
the granting of 200,000 VIS and non-VIS housing subsidies was enabled.
(Colombian Goverment, 2020). A VIS home is defined by the Ministry of
Housing (2020) as:

It is one that brings together the elements that ensure its habitability,
quality standards in urban, architectural and construction design whose

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 maximum value is one hundred and thirty-five current legal monthly
minimum wages (135 SMLM). (Ministry of Housing, 2020)
 
Just to mention, the minimum wage in Colombia for 2020 was USD 256.

To complement, the housing bubbles that appear in the markets must be

considered, a real estate bubble is understood as a significant increase in
prices, above the fundamentals -structural conditions of supply and
demand-. (Cifuentes, 2020)

 
 

1.3. Research Question

 
 
The research question that will be the reference for this research proposal
will be ‘How do uncertainty situations as the pandemic and it´s effects
influence the purchase decision of Real Estate in Colombia?’. In this way,
the study proposal seeks to identify what changes occurred in the thinking
of property buyers during this time of uncertainty.

As evidenced in the graph, it is important to understand consumer thinking

and behavior, the dynamics of the economy in Colombia and the effects
that confinement has had on people. Next, analyzing the strategies (mostly
marketing) that both the government and the construction companies have
had in this time will lead to an understanding more in line with the reality of
the context.
 
 
 
 
 
 
 

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