The Board of Regents of the University of Wisconsin System

Land Values in Bogot, Colombia

Author(s): J. Douglas McCallum
Source: Land Economics, Vol. 50, No. 3 (Aug., 1974), pp. 312-317
Published by: University of Wisconsin Press
Stable URL: http://www.jstor.org/stable/3145047
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312

LAND ECONOMICS

Land Values in Bogotai, Colombiat

HE RAPID URBANIZATION of
has
created an enormous demandBogotai
for urban
land, which is owned by relatively few persons. There is a widespread feeling in this
city and in the nation that there has been
a rapid rise in land values, resulting in
hardship through increased house prices
for the poor while giving enormous "unearned" gains to rich landowners. This view
is reinforced by a feeling that the capture
of some of this "unearned" increment
would not only serve the interests of equity,
but would also provide a valuable addition
to the revenues of a city chronically short
of finance. It is therefore important to obtain some hard information about the real
rates of change of land values in Bogotai.
There is an equally clear need to gain an
understanding of the present geographic
pattern of land values and recent changes
in these patterns in order to more effectively plan for the accommodation of the
extra two million people expected between
1972 and 1980. Such information is necessary to make reasonable projections about
the types and location of development and
to provide a basis for realistically projecting
future public investment needs by taking
into account the probable rises in land
costs.
Unfortunately, there is almost no readily
available empirical literature on the subject
of urban land values in developing nations;
that which is available is almost exclusively
North American or West European in origin and application. This note is intended
to contribute to the process of building up
a stock of relevant information by reporting
on certain studies of land values which were
carried out in Bogota, Colombia.
Background. Bogota is typical of major cities in developing countries-large,
densely inhabited, very rapidly expanding,
and characterized by extremes of wealth
and income. Its 1972 population was estimated at 3,150,000 and was then growing
at about 61/2 percent per annum. It is not
only Colombia's capital and therefore its
administrative and political center, but also
its financial, commercial, and industrial
center-it produces nearly one-quarter of
the nation's gross product. About half of

the city's current population growth is due

to migration from surrounding rural areas.
It is densely built-up, and housing for the
poor, although physically more substantial
than "invasion" or "squatter" homes typical in some Latin American cities, is characterized by severe over-crowding and lack of
essential services.
Data and Empirical Analysis. Uncharacteristically, empirical data existed on which
analysis could be based: a sample of property valuations from Lonja de Propiedad
Raiz (association of Bogotaiproperty agents).
These data were utilized to estimate the rate
of growth of land values and to examine the
geographical structure of land values within
the city.
The data covered the period since 1960
and provided a total of 2,640 useable data
points. Because of limited access to the
Lonja files and records (which are strictly
private) it was not possible to determine the
exact scale of the sample or the precise
method of sampling used. On the other
hand, discussions with Lonja officials did
suggest that the method of valuation used
was consistent with accepted practice and
that, within the sample, there was every reason to expect compatibility of information.
The period from 1960 to 1970 was well covered (2,545 data points), and no year in that
period is represented by less than 144 data;
relatively few data were available for the
more recent period 1971-1973.
More critically, only part of the city was
covered. After these data were located in
terms of a 63-zone system it was discovered
that practically all of the information (over
95 percent) was for only 24 of the zones.
For these zones-mostly in the center, west,
and north-there were on the average over
10 data points per zone per year. Of the remaining 39 zones, 24 had no data whatsoever, while the other 15 had less than 20
points each for the whole 10-year period.
Fortunately, the zones with data cover the
C.B.D., the major industrial estates, the major non-central commercial centers, and the
principal high- and middle-income residential areas; the zones without data or with
little data are newly developed, sparsely
populated or low-income residential areas

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REPORTS

AND COMMENTS

in which most property transactions are

done without the benefit of agents attached
to the Lonja.
Therefore, although the lack of city-wide
coverage reduced the power of the data to
yield reliable city-wide averages, the fact
that there was a consistent pattern to the
partial coverage meant that a systematic
partial analysis of intra-urban structure
could still be carried out.
Time-Series Analysis. After the data were
converted to standard prices and units, a
number of time-series analyses were executed. In general, these involved fitting
least-squares exponential curves to the data
for each individual zone; in some runs the
data were used unweighted, in others the
years were weighted by the number of data
points, and in still others those cells with
few data points were eliminated. In addition, analyses were run for the whole 19601972 period and for two sub-periods, 19601966 and 1967-1972.
Map 1 shows the results for those zones
with adequate data. Rates are given in
terms of average annual rate of growth of
real (constant peso) land values, and represent the statistically best projection given
by the various methods used.' The rates
vary from a high of plus 6 percent to a low
of minus 3.5 percent.
Finally, by weighting individual zone
rates by their developed area, an overall
average for those zones with data was constructed. This turned out to be only 1.5 percent per annum, but there are a number of
reasons why this figure may understate the
actual rate of growth. A first possibility is
that the rates of growth during the early
sixties were lower than those of the later
sixties and early seventies, and since the
data sample was very sparse for the early
seventies period this change was underrecorded.
Second, and much more important, the
figure of 1.5 percent is obtained from a
sample which excludes large areas of the
city's low-income housing. Although comparable statistics are not available, there are
persistent indications that land values in
such areas, especially near the city's southern periphery, have been rising faster than
values in the city generally.2 The extent of
this reported rapid rise may be slightly exaggerated, because land values commonly

313

rise quickly at the periphery when first

brought into urban use, especially when
(and if) services are installed-although the
true rise in value should net out the costs
of service provision. Still, considerable nonsystematic evidence suggests that, even
when adjusted for such problems, values
in these poorer areas have been rising
faster.
The third possible reason for understatement is that many techniques of land valuation tend to undervalue land in built-up
central areas relative to land in suburban
areas. This is because valuers often attribute some of the rise in property prices to
buildings, while in fact very little is properly attributable to appreciation of building values since the rise in replacement
costs is typically offset by depreciation of
the existing structure. The Lonja valuation
practices, however, appeared to avoid this
tendency.
It was estimated that the city-wide average rate of growth of real (constant peso)
land values, including those zones for which
there were no Lonja data, has been about
2 percent per annum over the whole period
1960-1972. This may seem low in view of
the commonly held opinion that prices
have been soaring. However, this 2.0 percent is for rises in real value; the prices in
current pesos have indeed been rising very
fast simply because of price inflation, which
has tended to be from 10 to 15 percent per
year.
One reason for a seemingly low rate of
growth is that, unlike many cities undergoing rapid growth, Bogota has been well
supplied with available building land relative to effective demand. There are highly
organized supply markets for both lowerincome families and for middle- and highincome families, and the topography of the
city and its surroundings has placed little
physical limitation on the land supply.3
There seems to have been, therefore, no
chronic supply shortage which might have
driven up the real price of land. Of course,
the increased effective demand resulting
from the newly-established national savings
and loan institutions (Corporaciones de
Ahorro) could cause a sudden jump in land
and housing prices, particularly if the supply side is constrained by an inability of the
construction industry to expand adequately
in the short run. This would likely be a

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or

0365
0.5

0.0

2.0

O5

3.

1.5

a35

61

2.5

61

32

O.0
3.
3.O

-0.51.03.0

5.0

31

0o
6.0

58
S

,,

14

1is-1.0

-1

13

2.5

30

06.0

6.0
29

"

47

59

28

27

1.0

51

48

40

46

50

49
45

41

43

MAP

1-AVERAGE

ANNUAL

0.0

5512

'0.
51.

"
4.5

53

-3.5

1.0

or

is0

O5
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-2.0

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oo001

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0.5

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2.0

RISE IN REAL LAND VALUE,

42

1962-1970:

(Underlined figures are based on less than 10 data)

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BOGOTA

(o)

2.5

REPORTS

AND COMMENTS

315

once-and-for-all increase, and would affect area office building during the last decade.
In zone 33 (Chapinero), the city's most imbuilding more than land.
For purposes of development planning, portant sub-center, the values are also quite
it was recommended that a higher rate of high at $1,250, reflecting the growth of ma3.0 percent be adopted as the basis for jor commercial activity in that zone. Values
future plans. This is partly because the em- are moderately high ($650 to $850) in all of
pirical analysis might have understated a the other zones of the high-income residenrecent (post-1970) acceleration in growth tial corridor to the north (zones 07, 18, 19,
rates, and partly because publicly pur- 32, 54 and 55). Values are also high in
chased land for development tends to be at the "mixed" (residential/ commercial/ indusor near the periphery of the city where trial) zones surrounding the C.B.D.: zones
values generally rise faster. An assumed rise 01, 04, 05, and 06. In the heavily built-up inof 3.0 percent in real value should then dustrial estate zones to the west (14, 15 and
cover the rises in price to be faced by the 16) the land values are also high ($560 to
public budget. Naturally, if public pur- $800). Finally, there appears to be a wellchases were to be concentrated in particular defined middle-distance "ring" of zones,
zones identified in the structural analysis mostly residential, with values in the $250
as undergoing unusually fast land value to $450 range, lying outside the main
rises, then a higher figure would be more C.B.D./northern corridor axis.
In terms of individual zonal rates of
appropriate.
the
it
Looking beyond
city-wide average,
growth (Map 1), the results must be interis tempting to examine the rates of growth preted cautiously, particularly where the
in individual zones. But this is difficult be- limited data base makes individual zone
cause at the zonal level of disaggregation analysis statistically unreliable. The indithe weaknesses of the small sample become cated zero growth in the C.B.D. zones 02
significant. Any such micro-interpretation and 03-for which there is substantial
has to be tempered by knowledge of the his- data-is consistent with the fact that the
tory and characteristics of the individual major thrust of growth has been northward
zone and of the details of its particular into zone 08 and the fact that few major
data base.
new buildings seem to be under construcStructural Analysis. Using the time-series tion or planned for the traditional C.B.D.
analysis described above, the data also The slow growth of zone 08 and the negayielded information on estimated 1972 val- tive growth of zones 07 and 19 may be exues for each zone; these are shown in Map plained by their gradual conversion from
2. The values vary between $4,000 and $230 older middle- and high-income residential
per square meter (1972 pesos), and when into mixed office and commercial zones,
weighted by the developed area of the zone with the ambiguous value situation to be
give an average for the 36 zones with use- expected in such circumstances; indeed, eviable data of $600 per square meter. (In this dence suggests that values have been rising
paper the $ symbol refers to Colombian faster in the latter part of the analysis time
pesos, not U.S. dollars.)4 As noted earlier, period. The high rates of growth of zones
the zones without data are the populous, 33 and 18 reflect their continued developpoorer areas of the south, southwest, and ment as major commercial centers. Of parnorthwest, as well as the sparsely populated ticular interest are the high rates of growth
areas of new development on the city's indicated for the industrial estate zones to
periphery. Allowing for an estimated aver- the west (14, 15, 28 and part of 29). This
age of $300 in these areas, the total city- suggests a continuing success of these areas
wide average becomes about $450 per as estates; in some cases it may also reflect
a filling-up of the estates and consequent
square meter.5
The 1972 values shown in Map 2 con- pressure upon limited sites. Certain of the
form closely to both theoretical expecta- other data are suggestive, for example, of
tions and generally known aspects of the the high rates of growth in the low-income
local situation. Prices are highest, at $4,000 residential zones 47 and 52, but the data
and $3,000, in the traditional C.B.D. zones base is too slim for confident interpretation.
02 and 03, but they are also high in zone 08,
Conclusions. The data sample, although
which has absorbed an extension of central weak, does stand up sufficiently to permit

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500

650

390

730
1102G

1250

710

300

33
3 3

1902

80

04

322

5023

s11

16

260

260

230

560

800

16I

17

31

400

os

580
60

310

14

1 5

23

14
300

13

soso

34340

58

250

12

320

60

270

0300

903
930

56

4000

os7

52

-26

27

28

47

340
51

48

40

46

50
49

45441

39

42
43

MAP

2-ESTIMATED

1972 AVERAGE LAND VALUES: BOGOTA (1972 PESOS/SQUARE

(Underlined figures are based on less than 10 data)

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METER)

REPORTS AND COMMENTS

317

some conclusions to be drawn. First, these of knowledge to go well beyond these

studies do not support a contention that rudimentary beginnings.
land values are rising very fast. In real (conJ. DOUGLAS MCCALLUM
stant peso) terms, they seem to be rising
about the same as, or a bit less than, real Lecturer in Town and Regional Planning,
per capita incomes-a reasonable result. Sec- University of Glasgow, Scotland
ond, the spatial structure of land values
within the city appears to conform well to
FOOTNOTES
general theoretical expectations, suggesting
that the land market operates in a manner
t The original research for this paper was carried
not too dissimilar to that observed in cities out in 1973 while the author was employed by
Lybrand Associates Ltd. (London) as
of the more developed countries. Third, the Coopers and
Urban Economist for the Bogotai Urban
differential rates of change of value among Principal
Development Study. The analysis, interpretation,
different parts of the city are generally con- and conclusions given here are solely the responsisistent with expectations; in particular, it bility of the author and in no way reflect the views,
Developindicates a relative decline in the impor- opinions, or policies of the Bogoti Urban
its Steering Committee, or its consultant
ment
tance of the traditional C.B.D., and the firms. Study,
The author would like to thank Ian C. Bartgrowth of new office and commercial sub- lett of Coopers and Lybrand Associates and Christocenters to the north.
pher Foster of the London School of Economics for
contribution to the original work. ApThese conclusions leave many questions their majormust
also go to Hernando Gonzalez of
preciation
unanswered. They throw little light on the the Bogotai Special District
Planning Office and
problem of assessing the impact of land Oscar Marulanda of Consultecnicos Ltda., who were
for much of the original data compilaprice changes on the poor, since it is pre- responsible
tion.
cisely for the poor areas that data are miss1 While there were a few non-systematic differing. They throw little light on the question ences among the results of the various methods used,
of "windfall" gains, for they say nothing on the whole the results were not sensitive to choice
about the distribution of land ownership; of 2analytical technique.
For example, work done by Prof. William Doebeven at only 2 percent per annum the ble of Harvard
University in 1973 indicated a very
returns to land ownership will constitute rapid rise in land prices for selected poor areas in
the south.
a substantial-and inflation-proof-income.
3 The nature of the thriving low-income housing
Finally, it is not possible on the basis of this and land market in Bogotai is inadequately underevidence to make predictions about land stood, but it has been of great importance in deteras well as social and economic,
value levels and changes for individual mining the physical,
organization of the low-income residents who conzones, except in the most general way; the stitute a majority of the city's population. One clear
data base is too small and the conditions result of this market has been the relative absence
too changeable. Nonetheless, a beginning of "invasion" settlements. Another result has been
the increasing crowding of the poor onto hilly, less
has been made in understanding the struc- accessible, and difficult to service sites, such as along
ture and dynamics of the Third World the Villavicencio road.
4 The average value of the Colombian peso in 1972
city by putting forward even this modest was roughly 221/2 to the U.S. dollar or 55 to the
amount of new information about one city. pound sterling.
5 The estimated mean annual income for families
It can only be hoped that further work
in Bogotai (average size 5.7 persons) was roughly
allow
from other developing countries will
$60,000 in 1972 (1972 pesos). This was equivalent to
an analytically and empirically based body a per capita income of 468 U.S. dollars per year.

"FederalHousingPolicies:SubsidizedHousing,Filtrationand
Objectives":A Reply
of a two-partarticle in this
journal, Professor Frank S. Kristof traces,
with census data, general improvements in
the housing stock during the period 1950N THE FIRST

1970.1 Using a modified version of the traditional filtering analysis he explores, in

Part Two, the relationship between improvements in the housing stock and bene-

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