Beach and view property on our Coast is a relative bargain…but is it a buy? The answer is not obvious.
Before I voice my 200 peso opinion, let’s be clear about my crystal ball; I don’t have one. Anyone that claims they know the direction of any market in the short run is either a fool, liar or both. Plain and simple.
With that said, here’s my personal take about investing on the Coast of Uruguay.
The picture is global. Consider the pivotal point in history in which we live in. During the next 15 years, the largest mass exodus of capital in world history will occur. This movement of wealth will eclipse all previous measures of wealth migration.
Trillions of euros and dollars will leave home in this exodus. The leading edge of this tidal wave is clearly visible. What’s the primary catalyst? The retirement of the post war generation is not coming off as assumed. Particularly in the US, with its horrid savings/investment statistics, and lack of a social system, people are starting to realize, “Damn I don’t have enough money to retire in style, maybe not at all.” Fear of terrorism, political disillusionment, adventurism, etc. are trumped by the clinker, “What the blank am I gonna do now?” The answer for millions and millions is, and will continue to be, emigration – leaving home.
So, where in the world can one live well with a modest treasure chest? Start at home. There are plenty of cheap places to live in North America, less so in Europe, but who wants them? Mostly, they’re boring, boring choices with bad weather, near nothing of interest. Nope. No thanks.
What are my specifications? For starters:
- Inexpensive cost of living; food, housing
- Coastal area, clean water
- Decent infrastructure
- Close to an urban center
- Low crime level
- Favorable immigration policy
- Sound environment
- Inexpensive, acceptable health care
- Political stability
- Safe, warm weather much of the year
- Protected Property Rights
- a little sex appeal
What places make the cut? Select locations in Eastern Europe, a few countries in Latin America and a couple of spots in the Asia/Pacific region. (Eastern Europe is a new, iffy addition to the list.) The short list is pretty slim after this screen. How does Coastal Uruguay measure up? Check, check, mostly check. It’s intriguing that prices for oceanfront and choice view property is roughly the same throughout this short list of countries. Globalization produces mostly same-same prices for similar products in attractive real estate markets, worldwide. The winning picks are not obvious; they all have unique challenges.
There’s a second current pushing this tsunami from North America - and the EU, the lack of investment options. What are the options for money that must be invested in the near term? Real estate in Western Europe? Frothy after more than a decade of run-ups. US real estate? Not for a year or two. Equity markets? World markets have moved in one direction for four plus years….straight up. P/E ratios are elevated, debt yields are improving but not great, credit markets are getting clobbered. Aggressive investment is questionable. Many investment hungry investors from the EU and North America will choose international coastal real estate.
Where’s the best place on the short list to invest? If I knew the answer with certainty, I sure wouldn’t write about it. What I know without question, there are two powerful forces at work right now, and they will only get stronger. Consider the prices for spectacular view or seaside properties on the Coast. Opportunities exist in the US$100,000 to $200,000 range, appealing by global benchmarks. Here’s my crystal ball view of the future.
By mid 2012, the tidal wave of mobile wealth is really on the move. Several trillion dollars & euros are now chasing the same prime coastal real estate…..pricing pressures are intensifying all over the planet. Prices are up 30% ….100% depending on the location. Now a vision of 2021 is clear. I see stellar price gains; one market that had inexpensive coastal real estate earlier in the century is up 410%. Wait! The crystal ball is getting hazy. I can’t quite see this place. It looks like, uhh, is it - no I can’t tell.
Perhaps the story is not written yet. Come to think about it……success stories don’t just happen, they are always written. We at Coastal Uruguay hope to play a small part in writing the success story, a story that reads like this.
To capture a few splashes of this exodus capital, we first need to attract the creative expatriates that will bring it. Structural change is required. (Real estate appreciation is only a byproduct of a sound economy.) Without more full/part-time creative residents, an expanded visitor season, beyond the ridiculous one month when Argentina over-runs us, we will continue to lack the cultural juice, creative spark, year round activities and social richness that’ll make this a world class destination. This safe, quaint, pristine little stretch of beach is lonely much of the year. We hope for more, an environment structured to serve creative residents that ask, “what could be?” instead of acceptance of the status quo, “es lo que hay” (This is the way it is.) We see an economy serving a five month visitors’ season the weather easily supports. We envision our major city, Punta del Este, progress beyond the ghost town status it suffers most of the year.
Considering the question marks surrounding all potential investment options, this may not be too difficult story to write.
Stay tuned!
Steve Bowman
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