Uruguay Coastal Properties

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

If you’re planning on doing business when you visit our Coast, which many of our readers are, here’s an important tip: Get a Uruguayan phone number!

A foreign mobile service may work in Uruguay, but to do business effectively within the country, you’ll need a Uruguayan phone number. While Uruguay is not a poor country, the average businessperson is not going to call your US number. Won’t happen. In addition, placing any volume of calls at all, could be really expensive with a US cell phone….hundreds of dollars.

There are two ways to solve the problem:

The first possibility is to buy a phone when you get here and hold on to it for future visits (less than US$80.) The second option is to bring an “Unlocked” phone with you. The advantage of owning an Unlocked phone is you can take it with you anywhere in the world and use with very little extra expense.

There are two options for an Unlocked phone. Option one is to unlock your current GSM phone, or, buy an Unlocked GSM handset. In either case, all that’s required is to place a Sim Card (the handset’s brain) from a Uruguayan service provider such as Ancel or Movistar, inside your device. The magic word is Unlocked.

Here’s the skinny on Locked/Unlocked. When you buy a phone from ATT, T-Mobile, or whoever, it’s Locked to work only on the supplier’s network (That’s why the phone is cheap when signing up for a new service.)

Unlocking your Existing GSM Handset:
If you have a fairly recent, or not TOO new/exotic, there are shops in Uruguayan cities that can Unlock your phone. (There are hardware only stores in most countries that can as well.) This is the type of cottage industry the people here do very well with. All that’s required is the software and a little knowledge. The cost is about US$25.

Buying an Unlocked GSM Phone:
Handsets can by purchased online or at wireless hardware retail stores. The specifications are pretty simple; you’re looking for a Quad Band GSM phone. (More bands are better but not really necessary.) A quad band device will function on the four frequency bands that cover about 85% of the planet. A nice handset can be had online for less than US$200. For instance, we bought an unlocked handset, plugged in the ATT Sim, and the service came right up. Mostly, it was that simple when we put in the Ancel Sim.

An Unlocked phone doesn’t “care” what service it’s directed to use.

The Last Piece:
The Sim card can be purchased online or in Uruguay. We bought a Sim card from Ancel in Montevideo for 50 pesos, about US$2.50. The online sites make a big deal (convenience) of buying the card from them before leaving the country….for about US$25. Based on a couple technical twists, buy the chip in UY.

You’re ready for business.

Stay Tuned!

Steve Bowman

The international flavor of Saint Anthony’s hill, here in Piriapolis, just got a little stronger and better.

Candy, from the US, Lesley and Jean from South Africa and Dave from Canada are joining our eclectic neighborhood. Candy purchased perhaps the best view lot on the hill, Lesley and Jean bought a large plot lower on the hill near the old Hotel Suizo and Dave bought a flat next door to us.

From what we know, we now have neighbors in the hood from the Czech Republic, Germany, Canada, Argentina, South Africa, England, the US and of course Uruguay. We feel like this diverse group, which is growing steadily, will make for a really neat enclave in time.

Why are people attracted to this hill? The best views in the whole country. Plain and simple.

A warm welcome to Candy, Lesley & Jean and Dave!

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.

Yep. Yes sir’ee. Inflation is indeed rearing its ugly head.

Here in Uruguay, the government claims the official rate of inflation is 8.5%. Yeah, sure. The tooth fairy gave them that number. Based on my by gosh and by golly assessment, in January 2008 prices were, on average, at least 15% above December 2007. Food prices up 20%, and other items like medications were up 35%. Building materials skyrocketed 30% from between Spring of 2007 and now. (By the way, inflation is an issue on a planetary level right now; it’s not just Uruguay.) However, this region is legendary for its insane inflation levels, 300%….. the sky has been the limit.

So what does that mean if you’re a prospective real estate investor? In moderation, inflation is very good for hard assets like real estate. When it goes to extremes, like what is happening in Argentina right now (23% so they say, ah huh), it always turns out ugly. The economic crisis of 2001 - 2002 in Uruguay and Argentina is one way the drama could unfold. For those of you that don’t know, the bottom fell out here. It was one nasty mother!

How the story will actually play out in a hyper inflation scenario is impossible to know, but as I said, the ending is never pretty. If you feel this is just a temporary blip, or it won’t get too far out of hand, invest! If you believe hyper inflation is in play, I’d leave my checkbook at home when you come to visit our beautiful coast.

Stay Tuned!

Steve Bowman

The Holy Grail of many international real estate investors is the good deal on a beachfront home. Fortune magazine, had an article about the deals that are now available in the US due to the real estate crisis.

This article talks about the price implosion in Florida’s panhandle, among other battered locations. After a 25% - 30% swoon, you can now get a beachfront condo for less than $500,000. Big deal!

I know it’s a long way down here, but for that kind of money, you can get a small but nice place in La Bara. By the way, the panhandle ain’t up to La Bara standards; not by a long shot. For $200,000 a nice beach house can be had in the greater Piriapolis area.

Does it mean real estate here is a bargain? That’s impossible to say. However, if your primary motive is a second home, not wild speculation, our pristine coastline deserves a look.

Stay Tuned!

Steve Bowman

Well there’s nothing like being wrong to right the ship.

In a post a couple of weeks ago, I talked about the search engine terms we place very well with. A prospective client checked it out and found the assessment is correct. However, he let me know that we missed the boat on a Luxury Homes Uruguay search, a prized term with Google’s pay per click program.

(If you’re wondering why this matters, finding a property with ease through an internet search is a key leg in an international marketing program.)

We’ve check this out and here’s what we discovered. For some mysterious reason, we started showing up of the first page with a Luxury Homes Uruguay search, which is good. We’ll continue to watch and see if the favorable ranking continues.

The short coming we haven’t be able to rectify is the the Luxury Real Estate Uruguay problem.

Stay Tuned!

Steve Bowman

Most of the content found here is pragmatic, nitty-gritty fact based stuff. However, I’ve had calls from prospective clients interested in the less obvious things about Piriapolis, like its colorful history and founder.

Francisco Piria, master mason, mystic and developer of Piriapolis is an interesting figure. For those of you intrigued by the metaphysical roots of the city, Coastal Uruguay has a good article on the subject called Mystical Piriapolis. When you read this piece, be sure to take note of a comment by a local named Alex. His comment adds some hard additional details to the original article.

Stay Tuned!

Steve Bowman

Two people contacted me last week that are coming to Uruguay to buy modest pieces of real estate. In both cases, people from the US are planning on using Equity Lines of Credit based on the prime rate to finance the purchases. They also plan and renting the units.

This could be a terrible idea if one is on a budget. Here’s why.

Say you’re buying a 2 bedroom property for $125,000; with closing costs (9%) the total tab will be about $136,250. With 50,000 down, the financed amount is 86,250. Existing Equity Lines today frequently have rates at prime, 5.25%. The monthly interest cost is $377/month or 4,524 annually. There are too many Performa possibilities to be specific, but lets just say it will be a challenge to cover the interest costs with rental income. That’s before taxes, utilities, common area (if any), management fees and furniture costs are considered.

Just six months ago prime was 8.25% and the monthly tab would have been $593, about 216 more per month. The negative monthly cash flow in the example would easily top $300/month. If your reaction is big deal, great! Your finances are probably pretty sound; it’s not a lot of money. However, if feeding a property perhaps $4,000/year is worrisome, be careful!

I firmly believe this is the onset of an inflationary cycle. Interest rates will go up and they could shoot past 8.25% like a bullet. For those of you too young to remember, the last time we had a cataclysmic inflation burst, prime went to 20%. Even if rates only reach 12%, the monthly interest rate expense in the example bulges to $863. Negative annual cash flow from the interest alone becomes $10,356 year.

If you share my feeling about the risk, look into a second mortgage with a fixed rate.

Plan on prosperity and prepare for disaster. Use credit wisely. Be Safe.

Stay Tuned!

Steve Bowman