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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. So here we go, yet another study is out suggesting that the wealthy are collectively thumbing their noses at the oft-reported global property crisis. Well maybe. “Despite media reports to the contrary, high end buyers are still confident about the market”, the study shows, according to the Sotheby’s press release. A whopping 79 percent of respondents believe the value of their house will remain constant or increase in the months ahead, the study found. Also, 85 percent of the respondents still believe real estate is a good investment. In other words, many luxury buyers understand the industry’s fundamental cycles. In many markets around the world, agents report that luxury homes are holding their value, even though sales have slowed dramatically. Considering the sponsors….it’s hardly surprising. But it’s worth noting that the results are similar to a report released a few months ago by American Express Publishing, which found that 75 percent of the “super rich” said they believe the current real estate market represents a “real opportunity” and 33 percent plan on buying a second home this year. Who knows? But after the global financial market meltdown last week, the rich may be getting closer to being in the same boat the rest of us are in. How is luxury property in Uruguay holding up? So far so good, but panics, and let there be no doubt this is a full fledged panic, is a new and worrisome wrinkle. Stay Tuned! Steve Bowman 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 be 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 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 The Advertising With Us Page is recently updated. We’ve developed some new options for real estate Internet Marketing that are now spelled out. See if they make sense for your business or property. Please check out the advertising page if you haven’t done so. Thanks, 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. A quick note to our readers. This week’s post will be short. My wife Chris is having a minor surgery and a huge city tree feel over and demolished one of our cars. Savannah has massive, beautiful live oaks that are very protected by law. We’ve seen the downside. Next week I’ll be back with a real estate or property related article. Thanks, Steve I’ve never brought up personal stuff on this site because I haven’t felt like it’s relevant, but recently, a number of people have asked about what I do here in the States. We’re in the real estate business, residential property management in Savannah, GA, primarily for our own portfolio. Most of our rentals are long-term, although we do have a couple of short-term/vacation rentals. I also do some professional contract work for organizations in town. I feel very lucky to add the rental business is strong in our niche; we’re even increasing rents a bit. So far, the real estate crisis has not affected our strategy: positive current cash flow. Fortunately, we own mostly smaller units (studio & one bedroom) which are typically in high demand locally. We’re seeing the large rental units, three bedrooms plus, getting hammered; they’re vacant or fetching lower rents. As the growing glut of unsold houses and condos come on-line as rentals, the bleeding will get far worse in this sector. There is one underlying reason we’re doing OK. I never bought into appreciation get rich quick frenzy. We purchased based current cash flow/return on investment, which guided us to well priced smaller units, with reasonable cash down payments. Don’t get me wrong. Our balance sheet has taken a hit like everyone else but that wasn’t the reason for owning the stuff in the first place. In the long run, rental property is worth the rents. That’s it. For what it’s worth, the bottom in the US market in nowhere in sight. There are shoes yet to drop that no one is even talking about. As we’ve been saying for nearly two years, look to international property markets for opportunity, diversification and perhaps even safety at some point. Someday, the US market will be a screaming deal and the prospect of making gobs of money will be off the scale. This day is well into the next decade. Stay Tuned! Steve Bowman |
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