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Government Support to Uplift Construction in Colombia: Ken Research

“Construction in Colombia, Key Trends and Opportunities to 2020 ” is the latest report introduced by Ken research. In this highly revealing report, the company states the various aspects having significant effect in the Colombian construction industry. The report sheds light on detailed market analysis, information, insights and expansion prospects by market, project type, and type of construction activity. The report’s chief focus is captured by the insights into the impact of industry trends and issues faced by this contemporary industry. Jeopardy and the profiles of the foremost operators in the Colombian industry are put under the exploration glass. The data highlights the largest construction projects in Colombia along with the pensive analysis of equipment, material and service costs across each project type.
Population of this Latin American country has been increasing significantly at a constant rate since the late 2000s. The Gross domestic product was increasing until 2013 but saw a decline after wards. The annual GDP growth is predicted to take a leap by 2020. The positive impact of these figures has translated well into the construction industry of the country. In real terms, the Colombian construction commerce registered the growth rate of 3.9% in 2015, 10.5% in 2014, 11.5% in 2013, 5.9% in 2012 and 8.2% in 2011. Added to this is the fact that this industry will continue to expand in real terms over the forecast period of 2016 to 2020. The Departamento Administrativo Nacional de Estadistica (DANE), the country’s national administrative department of statistics disclosed that Colombia’s total area under construction increased by 2.5%, from 11.5 million meter square in 2014 to 11.8 million meter square in 2015. The industry’s output value is anticipated to post a forecast-period compound annual growth rate (CAGR) of 2.82%; a slowdown compared to 7.90% CAGR witnessed during the review period (2011-2015).
Colombia’s construction sector has represented self-motivated speed up which is reflected by the fact that more than half of the population owns homes. The construction sector rumbled because of a blend of factors, including greater competition and fewer precincts in the financial markets, increased capital inflows, relaxed directives and administration of financial institutions, and a loose monetary policy. The lack of demand and the excess supply of houses precipitated a sharp fall in real prices. In 1998, house prices had dropped to 1991 levels. This situation further depressed the quality of mortgages and loan guarantees in general, leading to a bust in the housing market between 1997 and 2000. Infrastructure assembly in recent years has focused on electricity projects and urban mass-transportation systems. Because of fiscal constraints, the government has promoted greater involvement of the private sector in preserving and developing road and rail network. The production of cement and other non-metallic building products is closely linked to the changes in the construction sector. In Colombia, cement output is highly concentrated, with three main economic groups controlling more than 90 percent of total output. Regarding imports and exports of construction products, the country has exported average billions of dollars over the past years. The import of supplies has increased substantially in the last five years, showing good results of economic growth.
Government investments in infrastructure and residential construction increased the issuance of building permits and contributed to growth. The country’s construction industry will continue to expand in real terms over the forecast period mainly attributed to investments in transport infrastructure, energy and utilities, and reasonably priced housing projects. Additionally, government investment in public infrastructure and educational healthcare buildings as part of the 2016-2020 contributed significantly. Development Plan will support the growth. Industry growth will
be supported by the government’s National Development Plan 2014-2018, inhabitant’s growth, urbanization, and complimentary government policies with regards to public-private partnership (PPPs). The industry is expected to be supported by government plans to develop public infrastructure, educational infrastructure, the tourism and manufacturing sectors under the PIPE 2.0 commonly known by locals as “Plan de Impulso a la Productividad y el Empleo”. It intends to invest USD 6.1 billion with the aim of maintaining sustainable financial growth and creating 300,000 jobs by 2018. This will provide the much-needed push to the growth trajectory. Modern transport infrastructure is vital for the growth and competitiveness of Colombia’s economy, which is well identified by the government and thus is focusing on infrastructure development.
Over the forecast period, residential property prices are expected to remain buoyant due to a demand for residential property and a housing deficit.

Ken Research
Ankur Gupta, Head Marketing & Communications