Paladin JV to Develop 1,000 Residential Homes in Colombia for $100M
- Jan 31, 2013
Paladin Realty Partners L.L.C., a Los Angeles-based firm founded for the purpose of investing in Latin American real estate, has placed Colombia high on its radar with the founding of the PALVAL Homebuilding Platform. The joint venture endeavor with Grupo Inmobiliario y Constructor Valor S.A. will develop and market condominium properties targeting the country’s growing middle-class sector.
Paladin is demonstrating its confidence in Colombia’s for-sale multi-family market with an equity commitment of $15 million for PALVAL, and VALOR is adding to the investment with a $5 million contribution. All told, the $20 million of equity will allow for the development of approximately 1,000 residential units valued at an aggregate $100 million. It’s a timely pursuit.
The increasingly strong demand for condominium accommodations is hardly limited to the U.S.; the same trend is afoot in Colombia, particularly in the country’s high-density urban areas.
“Young populations are entering the workforce and there is increasing access to mortgage financing,” Fred Gortner, managing director with Paladin, told Commercial Property Executive. “And there is steady economic growth, which is leading to rising prosperity and the improved security situation is a big part of that success story.”
There’s nothing like a desirable comfort level to reel in a commitment from a homebuyer. As per a 2012 report by the U.S. State Department’s Overseas Security Advisory Council, “Security in Colombia has improved significantly in recent years, including in tourist and business travel destinations like Cartagena and Bogotá.”
And Bogotá is certainly a target market for PALVAL. Armed with VALOR’s vast experience in delivering projects in the city, PALVAL is placing a high priority on the market, where Paladin already has a presence. One year ago, Paladin chose the city for its entrée into Colombia through Paladin Realty Latin America Investors III L.P. fund’s establishment Pali-Trocha, a homebuilding platform venture with La Trocha, Ltd. The investment vehicle focuses on upper-income residential infill projects and boutique hotels in Bogotá. Already, Pali-Trocha has kicked off the development of two housing projects, which together, are 50 percent pre-sold.
While Bogotá has clearly been, and remains to be, of great interest to Paladin, the company is not ignoring the rest of Colombia, which is currently, as Gortner describes, an “investor-friendly environment for foreign capital.”
Growing demand, a positive foreign-investor climate–it may very well be a perfect storm for multi-family development in Colombia. It’s an environment that has long-term potential for PALVAL, Gortner believes. “Supply-side constraints–a function of a chroming dearth of capital in the region–plus Paladin’s focus on infill locations make overdevelopment unlikely relative to growing demand,” he said.
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