The real estate market in Bolivia is a small one that is constantly growing and hasn’t experienced too many hard ups and downs throughout its history. This is a market that has prices constantly increasing at a slow but stable rate. But this has changed during the pandemic, bringing this event some permanent changes during 2020.
The housing market in Bolivia has been growing at a steady and continuous pace during the last decade, but getting a drop of 10% in sales prices and 30% in rental prices in 2020. During 2022, housing prices have gone back to pre-pandemic levels, and until 2025, solid and continuous growth is expected.
In the following lines, you’ll see all the details on how the current situation of the real estate market is in Bolivia and how we project, as Bolivian real estate experts, it will evolve in the future. Also, you’ll know some real estate investing strategies that are currently working well in the country.
What is the housing market in Bolivia?
The housing market in Bolivia is the place where home sellers and buyers meet to make deals and transactions about selling, renting, signing up “anticreticos” (a form of mortgage), or swaps with these properties.
The number of sellers as well as the number of buyers, among other microeconomic and macroeconomic variables, determine the selling prices of real estate properties in the housing market in Bolivia, like in any other country around the world.
We’re going to see what’s the current state of the Bolivian real estate market according to our analysis and opinion (you can see our Spanish real estate site), as well as the economic, financial, market, and demographic knowledge we have about the real estate field in our country.
General situation of the housing market in Bolivia
Nowadays in 2022, Bolivia is in a stage of recovering back to the prices that existed at the end of 2019, before the pandemic. At that time, prices of properties were steadily growing throughout the whole 2010 decade. But the pandemic hit and triggered an important shock in the sale prices of properties as well as their rental prices.
What happened is that real estate and home sale prices in the Bolivian housing market:
- Were in steady growth from the beginning of the 2010 decade, until the end of 2019.
- Dropped about 10% during 2020.
- Recovered around 5% during 2021.
- It’s expected they will reach pre-pandemic levels during 2022.
- It’s expected that from 2023 to 2025 they will grow at a similar pace as in the 2010 decade.
Additionally, what happened to rental prices in the Bolivian housing market they:
- Also experienced steady and continuous growth in the 2010 decade, until the end of 2019.
- Dropped about 30% in 2020.
- Recovered and reached levels around 10% less than in 2019.
- It’s expected that home rental prices will reach pre-pandemic levels in 2022, and from this point in time, they will grow at the same pace as before the pandemic.
- It’s expected that office and corporate rental prices will reach levels of 2019 during 2023, and from that year they will have a slower growth (this is a consequence of the switch from the work done inside physical spaces to virtual ones, which also has happened in Bolivia).
In short, what has happened, is going on, and will happen in the Bolivian real estate market is:
- The 2010-2019 decade has been a period of stable growth.
- 2020 was a year of recession in the housing market.
- 2021 was a year of recovery.
- 2022 is a year of stabilization.
- From 2023 to 2025 it’s expected another period of stable growth, having similar prices to 2019 as a starting point.
1) The last 10 years
In the last 10 years, the housing market in Bolivia has had stable and continuous growth in property prices, this has been caused mainly by 3 variables:
- The accelerated and continuous demographic growth of the population of Bolivia. The more population a country or a region has, the more valuable its properties become.
- The Bolivian GDP has grown at a rate of 4% per year during the 2010 decade. The wealthier the people of a country are, the higher price they can pay for real estate properties.
- Immigration to most populated areas and cities in Bolivia from all over the country has been continuous and very accelerated. The more people migrate into a city or region, the more valuable the properties in this place become.
During the last decade (2010) these 3 variables have just triggered higher and higher prices in the housing market of Bolivia, diminishing and even leaving without an impact the speculation and unexpected events that could create market bubbles or provoke volatility in the prices of the housing market in the country.
This is why home prices, in a steady way and with an important acceleration at the beginning of the 2010 decade, went up from around $40/ft2 to nearly $110/ft2 in 2019 in most commercial and residential neighborhoods of Bolivia.
But all of this changed because of an unexpected and fortuitous event with an overwhelming force, the pandemic.
The 2010 decade has been a time of continuous and steady growth in both sale and rental home prices in Bolivia, multiplying these by 250% throughout this decade.
2) During the pandemic
At the beginning of 2020, the effects of the Covid-19 pandemic became palpable in Bolivia. The quarantine started and people became in many ways very upset and afraid, they tried to avoid or delay most real estate deals and transactions, they also suddenly had less money to pay their rents and started to sell their properties to get liquidity and pay unexpected health treatments and similar expenses.
All of this resulted in that, during 2020, home sale prices went down about 10%, standing at around $100/ft2 in the most exclusive neighborhoods of the country link. The impact was greater in the rental prices, which dropped about 30% in that year from the prices that were common at the end of 2019.
During 2021, the properties started to recover their previous values, and in many cases, it was seen that home selling prices managed to reach pre-pandemic levels, but not in all neighborhoods and cities, nor all types of real estate properties. Nevertheless, rental prices were still down and below pre-pandemic levels by 15% to 20%.
It was also observed that virtual and distance work trends went ahead 5 years in Bolivia. And this way of working, which is also happening all over the world, is causing spaces meant for offices, businesses, and similar workplaces to permanently lose “speed of growth” in their rental prices.
Now in 2022, you can see that real estate for housing has almost reached price levels that existed at the end of 2019 and it’s expected that, during this year, they’ll stabilize at this level. But prices of spaces for offices and businesses are still lagging and it’s expected that they will only reach pre-pandemic levels in 2023, and from that year their growth rate prices will be slower than in the 2010 decade.
2020 has been a year of economic recession as a result of the pandemic, it caused a general 10% drop in real estate selling prices and a 30% drop in rental prices.
3) The next 2 years
The 2022 year, as we already see, it’s expected to be a year of stabilization of the housing prices at the levels they had at the end of 2019, recovering very similar prices in almost all the zones and cities of Bolivia, except for rental prices for offices and corporate spaces, which are expected to reach pre-pandemic levels only in 2023.
During 2023, a growth that could have been occurred in 2020 is expected to initiate, even a little bit more accelerated during this year, this caused by a “recovery rebound effect” that could happen after the practical ending of the pandemic impacts in the economy, anyway, this still very uncertain and this rebound effect probably won’t happen.
But at least, it’s expected that during these 2 following years, real estate prices will stay equal to or above the levels they had at the end of 2019, this means these to be around $110/ft2 in home sale prices in the most exclusive neighborhoods and areas of Bolivia.
Both 2022 and 2023 will be years of stabilization of sale and rental prices in the housing market, and probably with growth beyond 2019’s levels in 2023.
4) The next 5 years
In general, from the middle of 2023, home sale prices are expected to continue growing at least at the same speed they were in the 2010 decade. And maybe a rebound effect in housing prices will appear during 2023, which will trigger the prices that year and part of 2024 to grow even faster than what is expected.
This will happen if the Bolivian economy has the same general rebound effect, and after the pandemic effects completely end it tries to reach levels of growth as if this health emergency hadn’t existed, triggering a growth peak of more than 5% of GDP during 2023. If this rebound effect doesn’t happen, at least a growth with the same speed as 2010 will occur from 2023 to 2025.
Growth rates for housing prices will certainly recover, except for properties meant for offices in downtown areas of major cities of Bolivia. It’s predicted that this type of real estate space, first in its rental prices and after a while in its sale prices, won’t grow anymore at the same speed as the 2010 decade. This is a result of the changes in the way people work, also happening in Bolivia, with the arrival of better virtual working environments, 5G, and virtuality as a permanent phenomenon.
Beyond 2025 up to 2028, it’s difficult to predict in a detailed way, but nothing makes us expect that properties in the country will fall in price or will maintain their current prices, they will simply go up in price, at least at the same rate as in the 2010 decade. Only catastrophic events of, for example, a deep recession in Bolivia similar to Venezuela, or some important worldwide issues may change this tendency.
Nothing lets us think that a more accelerated increase in residential housing prices may happen, maybe caused by the changes in how people work, from physical to virtual, instead just a recombination of the places where people live will happen. So the remote working force will prefer more residential and premium neighborhoods instead of standard ones to support their virtual work. These neighborhoods will have larger and more comfortable spaces and ambiances dedicated to supporting virtual and remote working.
These neighborhoods and properties that have these aspects of comfortability and ergonomy for remote working “maybe” will get both their sale and rental prices increased, and also a higher rate of growth in these prices than in neighborhoods that don’t offer these kinds of amenities and features. But this is still quite uncertain and still to be seen if it will happen.
From 2023 to 2025, and very likely until 2028, the growth rate of prices in real estate properties will again be very steady and continuous, like we have seen in the 2010 decade, except for properties made for corporate spaces and offices.
Variables that modulate the real estate market in Bolivia
The most important thing that we need to determine in any real estate market is the selling price of its properties, both in the present and in the future.
But to achieve this we need to take into account the 5 most important components of the housing market in Bolivia:
- The sellers. People that put their properties for sale. For example, if there are a lot of sellers then there is a lot of supply of properties, and the price of these decreases.
- The buyers. People that want to buy a property. For example, if there are a lot of buyers then there is a lot of demand for real estate spaces, and the price of these increases.
- The sale price. The most important variable is where the other variables get combined and produce their effects. At the end of the day what we want to know is how much the value of a property is, and also forecast how much it will cost in the future.
- The intermediaries. These are the banks and realtors, the first ones offering to finance for acquiring real estate at the other ones selling services. For example, if the interest rates for mortgages drop, a lot more people will try to buy a property with home loans, and the price increases.
- The regulators. These are the government entities that regulate and norm the housing market. For example, if there is a good regulation people have less fear of being scammed or misled and then there is more demand for properties and real estate prices increase.
These variables determine to a large extent the price of properties in any real estate market, but these other variables have also an important influence:
- The GDP growth of the country. One of the most important variables that affect the prices of a real estate market. For example, if people have more money, then they can offer more cash to buy a property, and the price increases.
- The migratory movement. Another very important variable that affects the housing market is, for example, if people migrate to the edge of areas in the Santa Cruz City of Bolivia on a large scale, as we are currently seeing, the prices of these properties in the outskirts of this city increase.
- The speculation and unexpected events. Completely unexpected events and the speculation caused by emotions and uncertainty can lead to changes in prices in real estate markets and their properties. For example, because of the pandemic, in which the economy of the country got stuck and put people in crisis, there was a necessity for more liquidity and less demand for buying properties, so the price decreased.
- The asymmetric information. Each real estate property is different and generally, people don’t know how to precisely determine the price of a home, the ones that know more take advantage of the ones that know less about a property. For example, if a buyer knows that if a property is renovated it could increase its price by about 20%, then he can offer 10% more to buy it, and he still gets a profit of 10% when he sells the house, and then the price increases.
- The leverage. This means increasing the reach of investment through loans. For example, if banks offer loans at very low-interest rates over many years and have few requirements, then a lot more people get encouraged to buy properties with a mortgage, then the price increases.
- The aggregated value. The possibility of materializing a potential aggregated value of a property after buying it. In many cases, this is not reflected in the price to acquire the property, but it is reflected in the higher price at which it gets later sold. This property has acquired aggregated value with the help of renovations, additional constructions, extensions, and similar activities, then the price increases.
Currently, real estate opportunities exist in Bolivia
All the facts shown above let us think that, nowadays, and very likely during the whole 2020 decade, the opportunities for buying real estate properties with a good return on investment in Bolivia will be in the:
- Purchase of land and small houses in the outskirts of cities like Santa Cruz and El Alto (which by the way are experiencing a very high increase in population), and to a lesser extent, cities like Trinidad and Cobija (for foreigners we recommend only Santa Cruz, and with a lot more care, El Alto).
- Purchase of 1-room and small apartments, with an area of 400ft2 to 600ft2, in premium and very exclusive neighborhoods, this means in the best neighborhoods of Bolivia link, like Equipetrol, Calacoto or Cala Cala, all of this to get the high earnings these properties have when they get rented.
- Purchase and rental of properties that encourage remote and virtual working, with features and amenities that support this way of working, like having more space for rooms and specific places for studying and working, separated places for children, and also in more residential neighborhoods, among other aspects.
- Purchase of high quality and even luxury real estate properties for Airbnb, as this is a tendency that is arising in Bolivia on short-term rentals for tourists and similar people, mostly in very residential neighborhoods like Equipetrol, Calacoto, or Cala Cala and in the downtowns of major cities. Anyway, probably this situation won’t last too long and the high earnings with Airbnb in Bolivia will stabilize and be normal around 2025.
As you can see, during the 2020 decade buying a real estate property in Bolivia in almost all cases will be a good investment, as it will help to save wealth and act as if it were a wallet (and make at least the same earnings as you could get in Bolivian saving accounts, and with almost the same returns as in stock markets of developed countries. It’s a fact that real estate in Bolivia almost all the time is going up in prices, and this tendency is not going to change during this decade, and probably neither during the next decade in 2030.
If you want to know more about how you can buy a house in Bolivia, with all the necessary steps, but also all the necessary precautions and restrictions you have in the country, visit our dedicated in-depth guide to this topic in the following direction: How to buy a house in Bolivia? A complete guide.
In this overview of the real estate market in Bolivia, you’ve realized how this market works, and also that it has experienced steady and continuous growth throughout the 2010 decade, caused by a constant migration to the most populated areas of the country, a rapid growth of the GDP and a permanent high birth rate in the country.
Also, during the pandemic, an economic recession started that dropped the home sale prices by around 10%, and the rental prices by around 30%. Also that 2021 was a recovery year, and 2022 is a year of stabilization. Even more, from 2023 to 2025 or even beyond this period, we expect that a similar growth rate to the 2010 decade in home prices will happen, being also very steady and solid, except for real estate properties for corporate spaces and offices.
You also have seen that currently, there are some important opportunities for investment in the housing market of Bolivia, for example, properties in the outskirts of major cities that are increasing a lot in population, like Santa Cruz or El Alto, small apartments in the best neighborhoods of Bolivia, investing in the Airbnb tendency, and investing in properties that make easier remote and virtual working.
We hope this information has helped you, and if you want to know more accurate technical details about the actual situation of the real estate industry in Bolivia, including numbers about the earnings from renting properties, home prices, and the return on investment you can get, visit our dedicated note in the following direction: The real estate field in Bolivia, a complete overview.
BolivianExperts.com, information about how to live, work, invest, and travel in Bolivia.