By Chris at www.CapitalistExploits.at [6]
Everyone likes to buy things at a discount, right?
This fact, together with human irrationality, explains why masses of eager shoppers line up in front of stores on the first day of a holiday shopping season. Black Friday anyone?
While not exactly buying a new J. Crew V-neck sweater 30% off the standard price, the tenet of buying quality assets at attractive prices made the camaraderie of Warren Buffet and Charlie Munger the most successful investment partnership ever!
Recently, while scouting for investment opportunities in Medellin, Colombia, we stumbled upon something interesting.
In Colombia, you can today buy an iPad (and other Apple gadgets) for slightly less than what it sells for in the US, the base for setting the prices of Apple products around the world.
And I'm not talking about a sketchy looking hustler approaching you with a seemingly generous offer in front of the local train station. This was at an electronics store in one of the largest malls in the city of eternal spring, as Medellin is aptly called.
But as intrepid investors, what excites us more is the fact that this doesn't only go for iPads. It's the discounts available in the local real estate market that we're much more keen on.
For example, we have been looking at high-grade apartments in the heart of Medellin selling for about $1,000 per square meter.
Less than a year ago, the price tag on these same apartments was around $1,400 per square meter.
To be clear - buying individual apartments, as mentioned last week [7], is a novice means of investing and most investors rarely fully understand the risks they're taking.
But fortunately, you don't need to be focused on buying condos or apartments. Opportunities like that exist across the board - from hotel developments (speaking of hotels, Medellin is in desperate need of a decent five-star hotel) to raw land to luxury homes in the countryside!
The credit for that goes largely to the local currency, the peso, which lost more than 40% of its value over the past 12 months.
We have mentioned in many posts that we expected a sustained USD bull market. We're in the throes of it now and the opportunities to play the other side of this are visible here.
Any smart investor hedges risk and we see Medellin real estate as a fantastic hedge, both geopolitically as well as from a pure supply-demand perspective.
The demand for real estate will continue to be strong and this is being driven from large spending on infrastructure projects that are transforming various parts of the city.
This goes from positive impact of cable cars and outdoor escalators on poorer neighborhoods to ambitious highway projects currently underway. Buying in the line of this progress is attractive to us.
On top of that, growth in the property market is being driven by a burgeoning tourist industry, medical tourism and a rapidly growing entrepreneurial scene fueled in no small part by more than 30 universities and colleges.
For a real estate investor with a global appetite Medellin is definitely one of the places worth taking a closer look at.
As the old adage goes, the opportunity doesn't knock twice, and we believe this one is no different.
- Chris
PS: We'll be back in the country in August. If you'd like to join us look out for details in your inbox shortly.
"Success is where preparation and opportunity meet." - Bobby Unser