The situation macroeconomicinterest rates, inflation in prices of materials of buildingthe lowest purchasing power of the homes and devaluation are factors that have generated uncertainty in the continuity of projects sold ‘off plans’ by construction companies.
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Given this scenario, firms have had to increase the percentage of homes sold to begin construction and thus provide security for the completion of the project.
The so-called ‘balance point’ has gone uphill in the last five years, and has even grown by close to 15%..
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It is worth clarifying that the equilibrium point is the percentage of the total number of homes that a builder must have sold to begin construction building.
This percentage results from an agreement between the builder and the bank that finances the Project.
(See: Half of housing projects in Nariño, at risk due to road closure).
According to the Colombian Chamber of Construction (camacol), it is notorious that the equilibrium point has ‘has been on the rise in recent years’Even, according to the president (e) of the union, Edwin Chirivi, although each construction company is free to define this point, in recent years this figure has gone from 60%-65% to 85%. In housing VIS is 90%.
“This variation responds to several factors, but mainly, the more sales volume they have, the more commercial certainty there is that the project is ready for its construction phase”Chirivi said.
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According to him Census of buildings of Danethis dynamic has influenced the initiated area of building over the years.
For example, in the third quarter of 2021 in Bogota 839,723 mt2 began and in the same period of 2022, 778,220 m2.
And while this guarantee has worked over time to build trust, with the fluctuation in prices and changes to which the country’s economy has been subjected due to various adversities, the construction companies their profits have suffered.
According to Cesar Mejía, president of the construction company Camu, previously this activity guaranteed the success of the project, tying house pricesone or two years before handing them over.
“Therefore, when inflation was 4%, costs could be projected in a more assertive way and the projects gave their profit margin. What happens now, although we have a good break-even point, housing costs have risen a lot and in the end the profit is impacted”, said the president, who assured that for this reason they should be cautious in the final price of the properties.
On the other hand, this increase has functioned as a ‘shield’ against these changes in the economythis preventing the impact of withdrawals in the projects.
“It may happen that if things continue to rise and macroeconomic conditions get complicated, buyers could withdraw from the business, there the equilibrium point is important, especially with banks, because with high rates it is difficult for them to lend them,” Mejia concluded.
The possibility of going from the payment of a initial fee to the remaining payment through a creditadds to the list of challenges for buyers, who now with longer marketing times to achieve the point, will continue paying longer a lease.
PAULA GALEANO BALAGUERA
Journalist Portfolio
