The construction materials sector is comprised of all the manufacturing activities to produce materials and supplies for the construction sector. These products include cement, lime, plaster, plastic, rubber, tools, metallic products, ceramics, stone, and clay.
Why invest in Colombia’s construction materials sector?
Attractive local market with potential for development of the construction materials industry:
- o Colombia has the third largest construction industry in Latin America (USD 22.1 billion in 2019), after Brazil and Mexico. Additionally, it is a sector that contributes to Colombia’s economic development: in 2019 it accounted for 7.2% of the GDP. (Source: IMF and National Administrative Department of Statistics, DANE as per its Spanish acronym.)
- There is growth potential in the residential and non-residential construction sectors due to the growing middle class. These two types of construction account for 50% of the sector’s value. Furthermore, with its 2018-2022 national development plan, the Colombian government’s goal is to build 520,000 units of social interest housing (VIS, as per its Spanish acronym) and priority social interest housing (VIP, as per its Spanish acronym) and/or neighborhoods, which will increase the country’s demand for building materials. (Source: Fitch Connect and Ministry of Housing, City and Territory.) (Source: Fitch Connect and Ministry of Housing, Ciudad y Territorio.)
- On average, Colombia builds 17.8 million m2 in new areas every year. In 2019, the country licensed 23.1 million m2 for construction, of which 78.6% was for housing, 1.8% for offices, 8.1% for retail and 11.5% for other types of construction. (Source: DANE.)
- Additionally, there is a potential demand for construction materials due to the development of infrastructure projects. Currently, there are railway, airport, and road projects under development in Colombia.
- Construction materials exports have increased. In 2019, they amounted to USD 438 million, the highest value since 2012, an 18.6% increase from the previous years (Source: DANE.)
Favorable business environment for the construction materials industry:
- o Colombia is a large dynamic economy that is projected come leader in Latin America. In 2019. It reported a 3.3% growth compared to 2018, according to the GDP monitoring study by the DANE. Colombia has consolidated its position as the country with the greatest growth among the large Latin American markets. (Source: DANE.)
- In the last 15 years, Colombia made significant headway in its investment climate. Consequently, foreign direct investment (FDI) has increased considerably. Colombia is renowned among investors as a reliable and stable location for operations, and it is one of the most business-friendly countries in Latin America and one of the most competitive in the region. (Source: FDI Markets.)
- Foreign direct investment in Colombia’s construction sector reached a record high in 2019, worth USD 848 million. (Source: FDI Markets.)
- Colombia’s building materials sector attracts FDIs. Since 2010, 18 investment projects have been allocated to this sector. (Source: FDI Markets.)
- Global companies such as Mexichem, Cemex, and Saint-Gobain have chosen Colombia as an investment destination.
Prime strategic location for the development of operations with a regional and global reach:
- Colombia is a strategic point of connection between North America, South America, and Asia.
- Colombian ports connect more than 4,500 regular export shipping routes with direct and indirect services offered by 30 shipping companies and eight shipping consolidation companies with access to 680 ports worldwide.
- Colombia has strategic advantages with access to the main markets in the Americas, reaching ports such as Santos, Brazil, approximately 63% faster than from Veracruz, Mexico.
Competitive factors of the construction materials industry:
- Colombia has an ample business network of building material manufacturers, comprised of 25,726 companies. It also has a competitive network of retail and wholesale companies to supply domestic and international markets. (Source: Unified Commercial and Social Registry, RUES as per its Spanish acronym.)
- The country offers a diverse and renowned supply of building materials such as iron and steel products, cement, metallic products, glass, ceramics, and wood, among others.
- The Colombian market presents opportunities to export building products and a series of trade agreements which grant preferential access to international markets with 0% tariffs.
Investment opportunities in the construction materials sector in Colombia:
- Install manufacturing plants to produce profiles, doors, windows, metallic carpentry, and other aluminum products for domestic and international construction industries.
- Set up cement production plants to supply the local market and exports.
- Set up plants and/or create strategic partnerships with Colombian companies in the sector.
- Set up factories to produce wood products for construction (wooden frameworks, scaffolding, stakes, wooden platforms, and temporary items).
- Set up factories to supply the growing domestic and regional demand for glass products for construction.