Uruguay Coastal Properties

The following article is by a friend, Margarita Palatnik. She is a writer/translator who lives near us in Punta Colorada. Her astute observations are always appreciated.

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I’ve noticed that Spanish real-estate investors have been targeting Uruguay for quite some time now, but it’s interesting to see it confirmed from the developers´ themselves (see article pasted below)… And by Spanish I mean both Spaniards and money that was made in real estate development in Spain by nationals of other countries, who are also making their way here, in addition to Miami developers, who in many instances are one and the same (were developing in Miami and in Spain, and now have projects in Punta).

This is important in order to patch us over between Argentine recessions. That is, it means that possibly not all real estate and economic activity will grind to a halt the second Argentina crashes (like last time around) as some of these developers and realtors also bring the buyers/investors with them.

I’ve seen large numbers of investors from American, Spanish, French, Finnish, Dutch and British developers and realtors, all coming here via Spain (and Miami) and driving a flow of development money and/or buyers.

On the other hand, Brazilian developers, who have always been active at various levels of intensity in Punta del Este, seem to be picking up the pace. News came out last week of the purchase of the 120 hectare lot across from Laguna del Sauce airport by a Brazilian consortium, for $6 million. Cyrela, possibly the largest real-estate developer in Brazil, and significantly, owner of the luxury Fasano hotel chain, has also announced plans for a huge development in Punta, with the purchase of a 500 hectare site that will include a Fasano hotel, and which the company estimates has a potential end value of $540 million.

The fact that on three consecutive days we have seen large and glowing articles in British and even Arab media extolling the virtues of investing and or moving to Uruguay is a huge boost for our tourism and real-estate industries, and probably signals a tipping point in terms of numbers of foreigners coming to invest, buy, live, etc.

Uruguay being so small, it takes very little to produce a very large impact, and the many recent articles in the Financial Times and Sunday Times are the kind whose effects may be felt for several years to come.

- Margarita Palatnik

We recently mentioned a major project coming up in La Paloma, Rocha. If you haven’t heard, Rocha is hotter than a Saturday Night Special a few minutes after midnight. Rocha is particularly popular with Europeans, who have been buying small and vast tracks of inland farm property for over three years now. Now the game is spreading to the Coast, and the South Americans will be front and center in this push. Wealthy Argentines and Brazilians are projected to build luxury custom homes in the La Paloma area in the $500,000 - $1m plus range in the next year.

Further East, at Punta Negra, between Piriapolis and Punta del Este, there is a major luxury property development and hotel project under way.

More info on these to game changing projects will be coming up in the next few weeks.

Stay Tuned!

Steve Bowman

I have a major consulting engagement that’s keeping me really busy. In addition, to being in the property rental business in the states and Uruguay, I’m also a business consultant. So if the articles seem a bit sparse for the next few weeks, don’t be concerned. I’ve got a full plate as we speak, so hang in there.

We have some good stuff on tap, economic observations/analysis, truly bizarre property sales stories, you name it.

Stay Tuned!

Steve

Chris and I in our courtyard, Piriapolis

A report, commissioned by Sotheby’s International and Architectural Digest magazine, finds the rich are not being effected by the financial market meltdown. For the most part Luxury property, other types of high-end real estate and luxury homes are selling well.

El Espectador reports Argentine President Cristina Fernández Show me the Money! de Kirchner told Uruguayan Foreign Minister Gonzalo Fernandez she intends to end the blockades at the bridges into Uruguay by people protesting the Botnia cellulose pulp mill.

For those of you not aware, Argie protesters have blocked the bridges into the country on and off for two years. They claim the nasty, polluting plant, built by the Uruguayan third world lackeys from Finland is an environmental threat. Of course, the competitive disadvantage of Argentina’s technologically inferior plants have absolutely nothing to do with it.

Mr Fernandez explained, “I mentioned the claims Uruguay makes at every forum regarding the highway blocks to the president. I can say that her answer was understanding and positive regarding this issue.” A few days earlier, the Argentine Foreign Ministry released a statement denying that it had plans to end the blocks, stating that only the Justice Department had the authority to do so. Members of the Gualeguaychu Environmental Assembly rejected Fernandez’s statements and said it was an operation by the Uruguayan press to affect the blocks. Assembly member Jorge Pouler said he does not believe the news from Montevideo.

The Uruguayan officials clearly don’t understand the game. Cristina and her good ole boys and gals are fond of findings several hundred thousand US dollars in cash in the restroom when such matters are at stake. Christina Show Me the Money! says the executive restrooms always have suitcases in them for just this reason.

Our sister publication, Coastal Uruguay, has a series of futuristic time warp articles comparing Spain in the 70’s to present day Uruguay. The estimate of how things might unfold appears to accurate. (I lived in Spain back then for awhile; I’ve seen it first hand.) This same group of articles clearly identifies the challenges…..and the opportunities.

In this parallel universe, the challenges are almost identical. Are the opportunities? If the history of the motherland repeats itself here, things could get interesting on the Coast of Uruguay. The gods may smile on real estate for many of the same reasons here in the Land of the Sun.

Here’s a link to the page where these posts are found, Futurism and History. Do yourself a favor and read these, particularly if you’re researching the country for possible investment.

As Empires crumble into the sand, tiny Uruguay, the little train that could, remains steady.

Stay Tuned!

Steve Bowman

PS: Below is the dictionary definition of Futurism. This pretty much underscores how we feel about life and the tools we approach it with.

fu·tur·ism n
1. fu·tur·ism or Fu·tur·ism an early 20th-century artistic movement that attempted to express the dynamic nature of the modern age using technology.
2. belief in the need to look to the future rather than reflect on the past, coupled with an optimism that personal and social fulfillment lies in the future.

We have a new advertising client coming on board with a residential project in La Paloma.

It’s a little early to talk about the project, except to say that La Paloma is well positioned in the last, inexpensive frontier on the Uruguay Coast, the Department of Rocha. La Paloma itself is the first logical stop because of its proximity to Punta del Este, about one hour by car. In addition, the town which has been established for many years, has most of the basics required for a comfortable community.

We’ll be following the progress of the project during the next year.

Stay Tuned!

Steve Bowman

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If you’ve considered buying a luxury home in Uruguay, or other types of luxury property in Uruguay, this may be a good time. (Let’s not forget luxury real estate Uruguay.)

Here in the prime Coastal Corridor, between Jose Ignacio and Piriapolis, there is a wide variety of really, really nice stuff in the $750,000 - $2.5M range, estates and chakras (small farms) with fine homes. In the EU and North America, this is not the price range of the super wealthy. A nice flat in Paris can be $2M easily. This price range is not in the rarefied air zone and is subject to the laws of gravity. Tightening global markets have to take a toll in some measure on prices here.  As always, there are countries that won’t take hits to value; Uruguay may be one of them. We don’t really know because there are no hard statistics for the country.

The wild card of course is the dollar. Prices are already lower for EU buyers and many others because of the bucks steep decline.

Never the less, if you’re looking in this price range, make an offer. There are some flexible sellers about; of that I feel certain.

Stay Tuned!

Steve Bowman

Could fallout from the Credit Crisis hit countries that were not participants of the easy money orgy, such as Uruguay?

If you’re living and breathing, you probably know the US financial markets, the credit markets in particular, are in a tale spin reminiscent of the 70’s. The bad news is it’s not just the US; Much of Europe is suffering from the same disease: Too Much Debt. The easy money, low interest rate, high risk loans that fueled the real estate boom in the UK and Spain, among others, are bringing the house down (pun intended.) Even the hard money Swiss are taking big hits. Credit Suissee recently reported loses of 14 billion francs on just one portion of its credit portfolio, and is marking down major chunks of their total holdings by 20%.

The video Debt Implosion provides a wonderful explanation from an old school conservatives point of view how bad it really is……think a few trillion, may be more. There’s a priceless spin by the BushWacker, aka as the W (President Bush), “The credit markets are functioning effectively.” Doesn’t this guy just crack you up? While the subject is the US, the fall out from the credit crisis will affect of the whole planet to one degree or another.

Will Uruguay feel the back blast? Count on it.

Will it be as severe as the US and parts of Europe? I do not believe so.

Stay Tuned!

Steve Bowman

PS: Just for fun, here’s a way to conceptualize a trillion dollars. 100 billion, a tenth of a trillion, is estimated to be a stack of 100 dollar bills extending to the moon.