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

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.

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

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.

If you’re not getting info updates about the Sugar Loaf development, this may be of interest. Below is what I guess is a PR release of sorts.

The message about prices makes sense to some degree. With the price changes, clearly the project is in the Luxury category (homes, property, real estate, estates) for Piriapolis. The larger units will sell for over $500,000 with upgrades.

What’s a little hard to buy is the Fractional Ownership stuff. So why would I do this? Don’t get me wrong; I’m rooting for Sugar Loaf to be a success. The plan is nifty, the designs are cool and the location is excellent. But this Fractional Ownership thing is pretty much re-fried time share.

Here’s the release:

“For the past couple of weeks we have been building the streets in Phase One, so that the trucks with the building materials to build the first homes can climb the hill. It is will take about 3 more weeks for the streets to be completed, but they are ready for truck traffic now. The contractor would have begun building the first group of homes on Monday, except it has been raining the last few days, so we are delayed until we get a couple of sunny days. Literally construction of homes will begin any day now.

As you may have noticed on the website, we have had a significant price increase. This was due to several factors, and is happening in every development in Uruguay. As is the case in all developments in Uruguay we are priced in dollars. Unfortunately, most of the building materials and contractors get paid in Uruguayan pesos. When we set our pricing over a year ago, the dollar was 24 to 1, now it is 18.75 to one. That combined with the general increase of construction materials, like steel, plus inflation has increased our construction costs by about 45%. We had no choice but to compensate for that by increasing prices. Please check the website for updated price list.

To make up for the price increase and still have a good beginning price point, I have started a new program in Sugar Loaf, which happens to be very fashionable in real estates sales today, Fractional Ownership. Fractional Ownership is the shared ownership in a villa with other partner owners. It is not a time share. In a time share you own fractions of time. In Fractional Ownership you own real property or fractions of a home. We are about to start promoting this through International Living on July 29^th. I expect it to do well, because it is a very good price point, US$59,900 for a 1/6 share including the villa, furniture, appliances, and a private pool. This is attractive for buyers who cannot live in Uruguay year round.”

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Stay Tuned!

Steve Bowman

According to Telemondo, 2008 was the best year for tourism since 1996. The 2009 visitors season is off with a bang as well! We have bookings for next year and inquiries about rentals are up quite a bit compared with last year.

We feel we’ve played a small part by making Piriapolis far more visible in the international market. Our sister publication, Coastal Uruguay, the virtual Coastal Chamber of Commerce, had a larger hand in the success. Of the goals targeted, none is more important than exposing the Coast of Uruguay to European and North American audiences, with the express purpose expanding the visitor’s season beyond the two months (at best) it’s historically limited to. I’m happy to report progress is excellent.

I’ve talked with several travelers from North America and Europe that visited Piriapolis because of these publications. Another thing I appreciate about these people is most of them choose to visit in wonderful times like November, March and April, months South Americans do not come. We’ve also had rugged individuals as renters in May, June and September.

As the tourist season expands, we feel with complete and absolute certainty, cultural, creative as well as investment opportunities in real estate will grow exponentially. This trend has played out many times, many places on earth with the same results!

Stay Tuned!

Steve Bowman

For those of you who love lists of international real estate hot spots, here’s yet another that may be interesting. And no, Uruguay is no where on the horizon. Is this a good thing, or a bad thing?

Propertyshowrooms.com produced a list of the supposedly most outstanding property hot-spots across the world, in terms of projected investment returns. By combining the key results of several surveys in the public domain published by companies like Price Waterhouse Coopers, Knight Frank, and Forbes, the company has produced what it feels is an authoritative Top Ten places to invest.

“It’s very much a buyer’s market out there, with emerging markets taking the industry by storm,” says Danny Bance, Managing Partner of Propertyshowrooms.com. He continues: “What’s for sure is that it’s a very exciting time for property investors and individual home buyers alike. Places like Morocco and Brazil have certainly surprised the market with the quality of their product and rapidly improving infrastructure. Both factors are great for short and long-term investment.”

Counting down the list, Romania weighs in at number ten, followed by Estonia, Panama, Egypt and Malaysia. Morocco has a strong placing at number five, with its current high GDP growth and low cost of living compared to European countries.

Number four is Turkey, with ongoing EU membership talks continuing to boost the property market. It’s true to say that a recent legal debate in Turkey has made the purchase of property by foreigners something of a grey area, as the ruling elite decide on the size of land that foreigners are allowed to purchase. This is expected to be resolved soon.

A surprise entry at number three is Canada, which is attracting investors due to political and economic stability. The USA is at number two, with Florida’s pummeled market a favorite with foreigners, particularly given current weakness of the American dollar.

And the number one investment hot spot? The answer is: Brazil.

“Brazil is a country which has seriously found its feet in the property market and is beginning to outshine many other more established sectors,” says Danny Bance. “Obviously there are several factors involved in placing Brazil at number one, including good transport links and the availability of 100% freehold properties.” He continues: “Brazil is tipped to be among the world’s top five largest economies by 2050, according to global investment banking firm Goldman Sachs. Plus the recent discovery of off-shore oil reserves, and the cultural boost of being awarded the 2014 football World Cup, has seriously put Brazil on the map. In addition, it has the highest GDP in South America. It really is our number one investment hot-spot.”

So there you have it. No bubble here, except in perhaps land prices.

Stay Tuned!

Steve Bowman

Here’s a good story about, erahh…..justice in the deep south.

A judge in La Paloma, Rocha ruled to transfer a vast beach property of the Mar del Plata area in Rocha, valued at more than USD 4 million, to Luis Sosa for UYP 17,000 (USD 750) using the adverse possession (squatter’s rights) rule. In Uruguay, adverse possession implies that if for 30 years an individual has behaved as the owner of the land, paying corresponding taxes and making improvements, the land becomes this persons property. (The land still has property tax debts totaling USD 100,000. Huh? Go figure.)

The municipality of Rocha requested that the judge reverse her ruling on the transfer. However, Martínez believes the municipality was late in presenting the lawsuit. The judge, Amalis Martinez said, “I don’t give anything to anyone. He has rights in accordance with the evidence and the demands of the law,” Martínez told El Este newspaper.

The 200 hectare property is near La Pedrera on route 10, between El Palenque and San Antonio. It has five kilometers of coastline and can be divided into dozens of high value seaside farms.