Colombia’s government makes a lot of money from cocaine. Indirectly that is. Since 2007, it has pulled in over €50m by auctioning the seized assets of drug barons and their associates. It’s using the cash from these “narco” sales to build 11 new prisons.

And the prospects for this revenue stream look good: seizures of these assets are on the rise. This is because the government of Álvaro Uribe – with a little help from the US – has managed to crack down on the trade, catching more drug lords than any previous Colombia administration. Although this has not yet allowed the country to ditch its status as the world’s biggest producer of cocaine.

Key among most barons’ possessions are their property portfolios (it’s one of the easiest ways of laundering piles of cash). And their tastes are varied: garages and warehouses used to store cocaine and the chemicals needed to manufacture it, hotels, whole apartment blocks, offices, one-storey houses in poor neighbourhoods for the use of henchmen, and penthouses for mistresses.

The ill-gotten property and possessions of one of the biggest drug lords to be caught, Juan Carlos Ramírez Abadía – aka Chupeta or “Lollipop” – of the Norte del Valle Cartel are alone estimated to be worth €300m. More than enough to pay for a nice new jail.

This is where veteran estate agent Juan Manuel Rivera comes in. He heads Arlemo y Bienes, one of 12 agencies authorised by the Colombian government to sell the seized properties.

It’s auction day at Artemo y Bienes’s offices in the north of Bogotá. But there are no expectant crowds flicking through catalogues, just two sealed envelopes lying on a desk.

The envelopes belong to the parties bidding for a large plot of land with a guide price of €140,000 in one of Bogotá’s affluent neighbourhoods. The process is an anonymous one to prevent favouritism and the envelopes are opened in front of all bidders to ensure no tampering or bribery takes place. Each person has had to deposit 20 per cent of the guide price in a government bank account to participate.

Already in the estate agents’ offices are the owner of a private school and his lawyer. He wants to expand the school, and this nearby plot is just what he’s looking for. Then a developer arrives 30 minutes late and the show gets underway.

Rivera reels off a list of legal matters before each envelope is opened and the offer read aloud. The bidders are poker faced. Only they know who has outbid the other. Each party then has another chance to raise their initial offer.

Usually these auctions – which attract two or three would-be buyers at a time – are quick and straightforward affairs. But this plot of land has been on the market for five months and is causing some concern. The developer is worried about some cows and an elderly couple who appear to be living on it. “Who was the drug trafficker who owned the land and do the people living on the lot have any relation to him?” he asks. No one seems to know.

The proceedings adjourn while the bidders mull over their final offers in a nearby café. They soon return holding new bids. Rivera opens the first envelope and like a magician performing in front of an audience, he shakes the envelope to show it’s empty. “No bribes in this envelope,” he winks, prompting chuckles from the bidders. In the end, the lot goes to the property developer who offers €143,000, exceeding the school’s bid by just €500. It’s a bargain at less than 20 per cent of the market value.

Rivera, who has presided over 130 closed-envelope auctions since the government introduced this system two years ago, says buyers like auctions because they are transparent. And also because the properties are owned by the state and so have been officially declared free of debt or any legal problems.

“Depending on what’s for sale, you get all sorts of buyers at these auctions, from the super rich to the working class,” says Rivera. There are over 1,200 ex-narco properties up for sale at present and closed-envelope auctions take place most days across Colombia.

Drug lords’ personal belongings also go on sale. Octavio Marquez, who is in charge of the warehouse in Bogotá where they are stored, has seen some unusual objects over the years, from fake Picassos to parts for a submarine drug barons were building to transport cocaine stocks.

The recent arrival of a large collection of shoes is Marquez’s favourite. It ­belonged to the notorious female drug trafficker known as “La Monita Retrechera” (which translates, roughly, as “Aloof Blond Woman”). The collection has yet to receive any offers.