Uruguay Coastal Properties

Would you pay $7.3 million for a penthouse in Uruguay? Well, a Swiss buyer has done just that. The flat is in Acqua, a Rafael Viñoly designed beachfront project in Punta del Este. From what I hear, this is a record setting price for an apartment. This may answer a few question about the luxury property market.

The 34 unit luxury project Acqua is the first designed by Mr. Viñoly in his home country. He is the architect behind Jazz at Lincoln Center, the Brooklyn Children’s Museum and the Tokyo International Forum. We’ve watched this building take shape for years. We often wondered if the tiered, glass-walled, pools everywhere structure was a condo or an office building. The project is in its final stages of construction and supposedly about 50 percent of the units are sold. Prices start at $980,000; most of the buyers are European.

The recently sold four-bedroom penthouse covers 18,500 square feet (1,719 square meters), with an 800-square-foot (74 square meter) master suite and ocean views on three sides. It also includes a private swimming pool, home theater, wine cellar and servant quarters.

There are no details about the Swiss buyer other than the penthouse was purchased as a second home.

Punta del Este is a high-end resort city. It’s often referred to as the Riviera of Uruguay and is popular with jet setters from Argentina, Brazil and Europe.

Here’s the original article from Raising the Roof.

As you probably know, there are no statistics for real estate sales in Uruguay. About all there is are informal polls of realtors hopping you get a semi straight answer.

So here it goes. At the end of last year, about the only sector that was racing ahead was high-end Punta del Este flats, the $750K an up market. The Argies are bringing suite cases full of money into the country (literally) and dumping it into property. This is the usual end-run game for Argentines who fear the rath of their government in its many different forms. I’ve never understood this as a strategy for wealth protection? Why would you put your money in an illiquid, volatile asset if you’re afraid of losing it? Seems like a UY bank account, with its reasonable secrecy protection would be a better idea.

As far as the middle market: 100K  - 250K, traffic is down as compared with last year, buying is a bit more muted. So far, prices are stable, but I can’t see much in the way of upward pricing pressure.

My call for 2009 is mostly flat prices unless the bottom falls out of the Argentine economy which is just a matter of time. The country is not as tied to the Argentine economy as it was, but the impact will be brutal in Punta’s high-end, less so in the middle market

Why are people becoming Coastal Uruguay expats or second home owners?

During the last three years, I’ve put together a criteria based shopping list:

* The pristine beaches
* Mountain views
* The laid-back lifestyle
* Friendly/helpful people
* Reasonable property prices
* Safety/security
* A cosmopolitan environment
* Reasonable living costs
* Health care
* Luxury real estate and property that are relative bargains
* The good international schools in Punta del Este
* Great second home location for all the above reasons.

I feel, without question, there is a clear winner. If you’re interested read this article on Coastal Uruguay.

Stay Tuned!

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