BUILDING MATERIALS SECTOR
The construction materials sector includes all activities related to the production of materials and other inputs used in the construction of buildings and infrastructure. Among these, cement, tools, metal products, ceramics, plastics, and rubber, and finishing products are included.
WHY INVEST IN COLOMBIA’S BUILDING-MATERIALS SECTOR?
ATTRACTIVE LOCAL MARKET WITH POTENTIAL FOR DEVELOPING A CONSTRUCTION MATERIALS INDUSTRY
- The Colombian construction industry is one of the largest in Latin America (USD 14,855 million in 2021). Additionally, it is a sector that contributes to the country´s economic development, that in 2021 accounted for 5.2% of the country´s GDP (Source: Fitch and DANE)
- In 2019 21 million m2 were approved (licensed?) for construction. Of these, 81% were for housing, 6.6% for commercial uses, 1.8% for warehousing, and 10.4% for other types of construction. (Source DANE)
- In 2021 housing sales grew 21%, to 248,843 units, of which 70% were social housing (Vivienda de Interés Social-VIS). There is growth potential in the housing and non-housing construction sectors, which is expected to grow 9% between 2021 and 2022.
COLOMBIA HAS A STRATEGIC LOCATION FOR DEVELOPING OPERATIONS WITH REGIONAL AND GLOBAL REACH
- With a strategic location in Latin America, Colombia has become an important (a major?) passenger and freight transportation hub.
- Latin America’s growing demand for construction materials can be supplied (met?), particularly for finishing materials, which in 2021 reached sales of USD10,344 million.
- The country´s construction materials exports have been growing, reaching its highest value, USD 518 million, in 5 years, a 36% increase Vis the previous year. (Source: DANE).
- Export capacity is represented by (based on?) more than 370 companies which each exported at least USD10,000 to nearly 60 countries.
- Colombia has a wide array of free trade agreements in place, which allow for duty-free export to major markets in Europe and North and South America.
COMPETITIVE FACTORS OF THE CONSTRUCTION MATERIALS INDUSTRY
- Colombia has a wide (solid?) business fabric in the construction materials industry, with more than 7 thousand companies related to construction-materials manufacturing, particularly in structural metal products, wood parts, concrete, cement, and plaster products as well as in ceramics.
- It also has more than 92 thousand construction companies, mainly in infrastructure and residential building construction.
- The country has a diversified and recognized construction materials offer, including iron and steel products, cement, and metal products, as well as glass, ceramic, and wood products.
- Colombia´s market facilitates exports thanks to the array of free trade agreements that allow for duty-free access to international markets. Additionally, local producers can import free of duties raw materials and capital goods which are not produced in the country.
- Between 2015 and 2020 Colombia registers more than 452,000 engineering graduates that can meet the sector´s needs for qualified labor.
FAVORABLE BUSINESS ENVIRONMENT IN COLOMBIA FOR THE CONSTRUCTION MATERIALS INDUSTRY)
- In 2022 Colombia is the world´s fastest-growing economy in Latin America. The IMF raised Colombia's GDP growth for 2022 to 7.6%, making its economy more dynamic than other countries such as Argentina (4%), Brazil (2.8%), Peru (2.7%), Mexico (2.1%), and Chile (2%). (Source: IMF)
- Between 2010 and 2021 foreign direct investment in Colombia´s construction sector reached USD5,861 million, with 2019 being the highest year in the country´s history with USD881 million worth. (Source: Banco de la República)
- Colombia´s market attracts FDI to the construction materials sector. Between 2011 and 2020 the country received 21 investment projects in the sector, totaling USD2,656 million (Source: fDi Markets)
- Global firms such as Mexichem, Cemex and Saint Gobain have chosen Colombia as an investment destination.
INVESTMENT OPPORTUNITIES IN COLOMBIA´S CONSTRUCTION MATERIALS INDUSTRY
- Attract construction materials manufacturing companies, increasing the country´s degree of sophistication (industrialization), allowing joint ventures or alliances with Colombia´s business sector to meet local demand with an export focus.
- Attract foreign investment to the production of steel structures for prefabricated housing, manufactured with sustainable materials and processes, to meet local demand and export to North and Central America, the Caribbean, Ecuador, and Peru.
These are the main reasons Colombia´s construction materials sector is a great choice and decision to invest in.