Euro-Chic And Insanely Cheap—Act Now On This Dollar Discount
Arriving in Medellín for last week’s Live And Invest In Colombia Conference, I was struck immediately by signs of the post-pandemic economic recovery well under way.
Indeed, this country is roaring back. It enjoyed growth of 10.8% year over year for the last quarter of 2021.
Returning to our neighborhood in El Poblado for the first time in three years, I was struck by the numbers of non-locals out and about. I saw more foreigners walking around downtown Medellín my first weekend in town than I’ve ever seen in the 12 years I’ve been spending time here.
Asking friends and contacts on the ground, my impressions were confirmed. Tourists are back… at least in part because Colombia is imposing no pandemic-related travel restrictions.
The strong tourism figures translate into a need for 2,000 more hotel rooms. Investment partners in this city are working on making that happen.
The cost of everything runs from affordable to insanely cheap in dollar terms.
The Colombia peso fell to 4,100 to US$1 in 2020… recovered by January 2021… only to depreciate again to 4,000.
As I write, the exchange rate is sitting at about 3,800.
Expectations are that Colombia’s peso will rebound to pre-pandemic levels of 3,400 to 3,500 per US$1, and I agree…
What Does This Mean To You?
Meaning you have an immediate window of opportunity to take advantage of the historically weak peso to diversify your real estate investment portfolio to include a Colombia property buy.
I’m not over-stating my case when I suggest that every portfolio should include a holding in this country that, as speaker after speaker at last week’s conference reminded all those in the room, is finally taking its place on the world stage.
Typically, a depreciating currency means local inflation, offsetting the depreciation. That’s not the case in Colombia.
You know the Big Mac Index. I’m a bigger fan of Burger King so follow my own Whopper Index.
When I was last in Medellín, a Whopper Combo Meal at the Burger King a few blocks from our apartment cost 14,900 pesos. At the time, that was about US$5.
This trip, that Whopper Combo Meal was 19,900 pesos… or about US$5.
A quick look online shows you’ll spend US$9.99 for the same lunch in the States today.
Of course, if the currency shoots past its pre-pandemic level of 3,400 to, say, 3,000, that peso price for a BK combo isn’t going to fall in step. Dollar-earners will be paying almost US$6.63… which will still be cheaper than U.S. prices but 32% more than today in dollar terms.
Exchange-rate fluctuation is one reason I recommend you make investments in the local currency for countries where you plan to spend time. If you’re earning pesos to spend when you’re in Colombia, then you don’t have to care about moving exchange rates. You move that risk from your budget altogether.
Alternatively, you could follow the strong dollar as a couple of perpetually traveling friends have done for decades. They spend time in Europe when the euro is weak. Go to Mexico when the dollar is strong against that peso. Etc.
I admire their flexibility but prefer my strategy. It allows me to be where I want to be when I want to be there and to stay until I’m ready to leave.
That’s why my portfolio includes cash-flowing investments in euro and Colombian pesos, among other currencies.
Paris and Medellín are places I intend to spend time every year… for as many years as I’ve got left.