The proposal is to develop a five‑story mixed‑use building in Bogotá’s Galerías district (localidad Teusaquillo). For an estimated US $650 k—including land, construction and furnishings—the project would deliver 16 short‑term‑rental apartments and two ground‑floor retail spaces, with projected net cash flow of roughly US $73 k per year (≈ 11 % net yield).
Location
- Neighborhood: Galerías, Teusaquillo – classified as estrato 4 (upper‑middle‑class).
- Key arteries: La Caracas (future metro line, expected completion 2028) and Carrera 30, providing strong connectivity.
- Nearby attractions: Estadio El Campín (largest football stadium in Bogotá) and Movistar Arena (major concert venue). These generate regular spikes in visitor traffic for sports events, concerts and other large gatherings.
- Mixed‑use environment: The area combines residential, office, retail and a mall, indicating stable demand for both housing and commercial space.
Building specifications
| Component | Details |
|---|---|
| Stories | 5 |
| Apartments | 16 units, each 23 m² (≈ 250 ft²). Floors 3‑5 feature 4.2 m ceiling heights, allowing mezzanine extensions that can raise usable area to 34–45 m². |
| Retail | 2 ground‑floor units (≈ 20 m² and 30 m²). |
| Rooftop | Shared amenity space with jacuzzi, small gym and barbecue area. |
| Construction | Demolition of existing structure, no underground parking, permits already secured. Estimated build time 12–15 months. |
| Fit‑out | Approx. US $50 k for furniture and finishes. |
Financial assumptions (USD)
- Airbnb nightly rate: US $25 per unit.
- Occupancy: 75 % (conservative for low‑price units).
- Airbnb gross revenue: $25 × 16 units × 365 days × 0.75 ≈ $110 k.
- Retail income: $4 600 / yr (conservative estimate).
- Property tax: $4 250 / yr (roughly offset by retail income).
- Management fee: 15 % of Airbnb revenue.
- Utilities (gas, water, electricity, internet): $8 640 / yr.
- Security (night guard, optional): $8 000 / yr.
- Maintenance reserve: $4 000 / yr.
Total annual turnover: ≈ $114 k
Net cash flow after expenses: ≈ $73 k
Net rental yield: ≈ 11 % on a $650 k investment.
Guest profile and demand drivers
- Local market: Residents attending football matches, concerts, or visiting hospitals; business travelers staying near major roads.
- International market: Tourists and expatriates seeking affordable, safe accommodation in a large Latin‑American city (≈ 10 million inhabitants).
- Event‑driven spikes: Proximity to the stadium and arena ensures periodic surges in occupancy.
Potential upside
- Unit enlargement: Adding mezzanines can increase each apartment’s usable area to 34–45 m², supporting higher nightly rates.
- Higher occupancy or rates: The conservative 75 % occupancy and $25/night rate leave room for improvement as the area develops.
- Retail mix: Selecting complementary tenants (café, small restaurant, pharmacy) can enhance the building’s appeal and maintain rental income.
Risks and considerations
- Currency risk: The Colombian peso has a history of depreciation, which can affect returns when converted to USD.
- Regulatory environment: Short‑term rentals are subject to local zoning and licensing rules; changes could impact Airbnb operations.
- Operating costs: Security, utilities and maintenance may rise, especially if the building’s estrato classification changes.
- Market dependence: Cash flow relies heavily on sustained demand for short‑term rentals; a downturn in tourism or event attendance would affect occupancy.
- Capital appreciation: The speaker expressed limited expectations for USD‑denominated appreciation due to currency trends; upside is primarily from cash flow rather than property value growth.
Comparative perspective
For the same capital outlay that would purchase a single condominium in a high‑cost market such as Vancouver, this Bogotá project provides ownership of an entire building with diversified income streams (16 Airbnb units plus two retail spaces) and the ability to directly control pricing, occupancy and operational standards.
