Uruguay Coastal Properties

For those of us with vacation rentals in Piriapolis, the timid tourist season of 2008 - 09 is clearly over.

The 2009 - 10 season is a home run. We’re booked solid from mid November through March. I guess this says two things: The world economy is improving (or else people have gotten accustomed to being poor) and the Piriapolis area is getting well known. There’s news to come on the growing notoriety of our fair village.

The visitors we’re helping are from Europe and North America, with a healthy dose of the North American traffic coming from Canada.

Thank you to the visitors and we hope you enjoy our picturesque beach town.

This is going to be brief, as my day job is keeping tied up in knots for the next few weeks. However, here’s a quick update to the last article about property prices in Uruguay.

While it appears to me that from top to bottom, prices are mostly flat, I guessed Luxury real estate and property, particularly in Punta del Este is doing pretty well. The guess may have been accurate.

I’ve had conversations with property owners in the luxury end, lets say over $500,000, and they report sales and prices have indeed moved North. Realtors, and others with vested interest in the answer have said the same thing…….but who knows considering the source?

Why? Know one knows for sure, but the odds on bet is it’s mostly money trying to escape Argentina.

Five months ago, I did an article about real estate prices and where they might go. I feel like it’s a good time to revisit the subject. First, a few words about the global economic backdrop.

Justin Lin, Chief Economist at the World Bank recently warned that a global surge in excess capacity could lead to a worldwide “deflationary downward spiral.” Ask the Japanese about deflation, and their lost decade. The economy was in the sewer for over ten years, millions lost their jobs, banks collapsed, stock prices fell by 75% and real estate tanked. (Sound familiar?) The economy has yet to recover. Speaking of which, the Bank of Japan is forecasting two years of declining prices.

Prices are also falling in the remaining economic engines, India and China. For instance, the producer price index is down about 5.9% during the last year according to the China National Bureau of Statistics. Prices in Europe are on track to fall about 1.5% this year.  And of course this bleak backdrop is crowned by the collapse in US demand for imported goods.

So here’s a ten second history lesson…..the Great Depression of the 30s was a deflationary bust. The virus started with the breakdown of the financial markets in 1929/1930. The epidemic didn’t affect the average person until the 1931/1932 time frame. By 1932, 25% unemployment was common in the industrialized world as well as negative growth. This ugly picture didn’t change until the 40s. Needless to say, all asset classes got hammered.

So here we set in mid 2009. Western economies have been getting the crap kicked out of them for nearly two years, with the same MO as the Japanese debacle. What effect has this had on prices in Uruguay? The long and the short of it is not much. The average from top to bottom is mostly flat. The luxury property market might even be moving up a bit; the mid market is clearly flat or down a few pesos. Why?

My feeling is prices are flat because this is a cash market; there’s little or no debt on real estate. I know people that would like to sell and can’t, but they aren’t forced too since there’s no payment, often no insurance and taxes can be quite low. In the long run, if global deflation continues to build, there will be zero to nil demand from the outside world for property in tiny Uruguay. This will cause pricing pressure. How much? Your guess is as good as mine.

The real threat is from within and nearby. Uruguay, and its primary partner in the real estate dance, Argentina, are both due for a bust. Every eight to ten years is the pattern.

If the bust happens, not good. Prices could move down sharply. If Southern South America avoids the pain the rest of the planet is experiencing, the flat line in prices could continue for some time.

Are flat prices a bad thing? Ask the average Brit, Spaniard or American.

This is an important consideration I left out of the last week’s article.

This post talked about the brisk lot sales at Sugar Loaf Ocean Club and Spa. I wondered when I first talked to David James about the lot sales, “Can people build whatever they want?”

I’m very happy to report the answer is NO. They are free to do as they please inside the house, but the design has to be the developers. In my opinion, this is a very good thing; the luxury designs are attractive and very Local in appearance as well as the feel. I feel this requirement assures the upscale status of the project will be maintained.

I’ve seen some very upscale hoods here where people have purchased expensive lots and put trash in……go figure.

Sugar Loaf Ocean Club and Spa, Piriapolis’ luxury home development, recently released and sold out all building lots in Phase II, Armonia. This was the first time the option to buy lots without a home has been offered. Previously, the only alternative was to buy a home package which included the plot, a home design and construction.

It appears all the lots were sold in a few weeks. Based on the brisk activity, the developer decided to release another section of lots called Tranquilidad.  Tranquilidad is at higher level on the hill and the lots have even better panoramic ocean views than the ones offered at Armonia. This section of lots will be released to the public on August 1st. These lots are priced at US$59,900. Currently there is owner financing available but is due to expire on August 1st.

As far as the current status of construction on Pan Azucar, there are seven luxury homes due to be complete and delivered in December. Three more houses will start in August.

If you’re coming to town, be sure to stop by. The views range from excellent to out of this world and the designs are tasteful with distinct local, Uruguayan influence.

To our readers (or anyone else for the matter) that are in Uruguay now, and will be returning to the US in the next few weeks, please let me know. I have a favor to ask.

Please send me an email. The address can be found on the contact page. I can also call you by phone or with a Skype call. The Skype name is spbowman.

Thanks,

Steve

Although the first half of 2009 was OK for the vacation rental market in Piriapolis, the last half of the year and high season 2010 are off to a strong start. Typically, we start booking January and February in August or so. This year, bookings started in May.

This is a nice turn-around when compared with the first half of the year. Although we were booked pretty solidly, we didn’t turn a lot of people away. In contrast, during the first half of 2008, we could have filled far more space than was available to us. For instance, we turned loads of people away who wanted to book the whole month of March.

Perhaps this reflects a global economy which is recovering a bit. At the very least, it’s a clear indicator the fear level that was palatable early in the year is easing.

This is good news for those of us with rentals and an advisory for those of you planning a visit.

Stay Tuned!

Steve Bowman

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.

Last week we introduced Uruguay Property Tour, six properties cooperatively marketed by a group of developers:

Sugar Loaf Ocean Club and Spa in Piriapolis

The Alexander, Tiburon, and Blue Blue projects in Punta del Este

Laguna Tranquila in La Paloma, Rocha.

While real estate tours are not unique, the approach by this group is. In addition to visiting all six projects, included is an all-inclusive accommodation, food and entertainment package. Here are a few highlights:

- Complete 7-night, 6-day guided tour of Piriapolis, Punta del Este, La Barra, Jose Ignacio, La Pedrera and La Paloma.

- Opportunity to purchase in six luxury developments on the coast

- Full range of cultural activities from wine tasting to tango!

- Fine cuisine; handmade pastas and world-famous beef

- Personal tour-guide with all local transportation provided

- Free attorney consultation on living and investing in Uruguay

- Professional tour-guide.

Includes: Accommodations for 7 nights, all meals, tour activities and ground transportation. Does not include alcoholic beverages or cash compensation.

Whether you buy property or not, this tour promises to be a lot of fun!

For details about the itinerary, click here for Uruguay Property Tours.

We have a new client, Uruguay Property Tour.

There’s an interesting, creative twist in play with these folks; this group of project owners have developed a joint marketing vehicle in Uruguay Property Tour. Six different properties are being cooperatively marketed through this partnership.

To build on this unique approach the group offers all inclusive real estate tours to showcase the properties as well as the cultural assets of Uruguay.

Here’s a sketch of the different real estate projects:

Sugar Loaf Ocean Club and Spa is the premiere development in the Piriapolis area. Sugar Loaf is South America’s only gated community and resort to combine Western comfort, Latin warmth, and thousands of years of Eastern wisdom, presented in a harmonious environment, very much by design. The development has the most commanding water and mountain views in the country. (This is my personal opinion.)

Alexander, Tiburon, and Blue Blue are three of Punta del Estes’ most luxurious condominiums located on the Playa Brava water front. These top quality condos are complete with luxury finishes and amenities that include indoor swimming pools, gyms, saunas, game rooms, movie theaters, business centers, tennis courts, and BBQ areas.

Laguna Tranquila is a new community overlooking the Rocha Lagoon near La Paloma. Just a few kilometers from Jose Ignacio, La Paloma and Laguna Tranquila are the next happening thing on the Coast. The property will feature a boutique hotel and spa as well as 146 homes, fractionals, and home sites ranging from 2,500 square meters to over a hectare. The beautiful views of the lagoon, ocean, and La Paloma lighthouse are perfect for exploration by hiking, by horseback, or by bike.

Be sure to visit the site and learn more about the fun and entertaining parts of the tour.

Click here to enter the Uruguay Property Tour site.