Valuation Issues in Colombia

This is a high-level summary of issues likely to be relevant to international groups with operations in Colombia or that are considering transactions in Colombia. The following overview was prepared by VRG member firm Valorar.

At present, Colombia presents different challenges when doing valuations, regardless of the type of asset.

These challenges focus mainly on the available information that appraisers have, as well as technology.

Other factors may include topics such as the continuous training of appraisers and some methodological aspects within the legal framework that need to be refined.

This text seeks to provide information, by way of illustration, on the main aspects that hinder valuations in Colombia. They are considerations solely from our experience since there are no figures that support this information.

It is also noteworthy that Colombia now has an important legal framework that, together with international partnerships in the field of methodological courses and development, has given stability and support to the sector.

Main Valuation Challenges in Colombia

In Colombia, these are what we consider to be the challenges that generate the greatest impact on valuations:

  • Access to market value information in three key aspects:
    1. In municipalities outside of the capital, offer price information is scarce.
    2. For certain typologies (meaning the type of asset to be appraised), offer price information is scarce or deficient, even in the country’s larger cities.
    3. No public information on lawsuits and/or transactions is available.
  • Lack of continuous updates of the property tax registry, including the number of properties and their assessed values.
  • Land management plans are not updated with the necessary rigor, and the information provided to the appraiser comes in different formats that are difficult to interpret and analyze, mainly in municipalities rather than larger cities.
  • Lack of continuous training of appraisers, both in methodologies and in legal aspects.
  • Lack of methodologies that are standardized by law for some of the valuations that done in the country as well as the need to refine some existing methodologies.
  • Availability of appropriate technology to perform valuations with greater agility.

To learn more about how we can work with your company, we welcome you to visit us online or contact Juan Camilo Gómez or Jorge Mario Angel Arbeláez.

For more information about VRG’s full scope of international valuation and value-related services, contact Bill Hughes.