House Hunting in Uruguay: A Sprawling Former General Store for $975,000

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With its borders still tightly restricted, the small South American nation is eagerly awaiting the return of foreigners — particularly Argentines — to jump-start its housing sector.

Built as a general store in the late 19th century, this five-bedroom home sits at the boundary of Pueblo Eden, a rural village in the Maldonado Department of southern Uruguay, about 25 miles from the popular resort city of Punta del Este.

The 6,800-square-foot house was purchased by its current owners, Margarita Arsenault, an expatriate Canadian, and her husband, Michael Arsenault, in 2009, and restored over several years. “It was a ruin,” Ms. Arsenault said. The couple renewed the structure’s original stone walls and added doors and flooring they purchased on trips to Brazil and around Uruguay.

“They maintained its historic character by using materials salvaged from old estancias,” or estates said Bettina Waldraff of Team Haverkate at Engel & Volkers, one of several agencies listing the property. “Their mission was to restore the building to its former glory.”

Twelve-foot wood double doors open to a great room whose fieldstone walls and wood-beam ceilings complement a large stone fireplace. Intricate antique floor tiles around the room’s perimeter encircle pale tiles with radiant heating beneath.

The eat-in kitchen has a vaulted wood ceiling, stone walls and custom wood cabinetry, as well as commercial-grade appliances and two ovens. “The sellers have enjoyed this as a private home, but it could easily accommodate an inn, gallery or restaurant,” Ms. Waldraff said.

The five bedrooms — each with an en suite bath — and living room surround a courtyard with a custom-built parrilla, the traditional Uruguayan grill for meats and bread, and various seating areas. A spiral staircase leads from the courtyard to a roof terrace with vistas of the pastoral Maldonado landscape.

The house sits on more than two landscaped acres, with a brook, a eucalyptus grove, lemon and peach trees, and shrubs of lemongrass and verbena.

Pueblo Eden, a 0.25-square-mile village with fewer than 100 residents about 40 minutes north of Uruguay’s Atlantic coastline, has emerged as a trendy destination for wine lovers. Viña Eden, a Brazilian-owned winery, has earned global acclaim, and tourists also trek to La Posta del Vaimaca for rustic Uruguayan staples like roasted lamb and potatoes.

“Pueblo Eden was unknown a few years ago,” said Charles Wright, owner of La Cite Real Estate/Leading Real Estate Companies of the World, in Punta del Este. “Now it’s becoming like the Napa Valley. I’ve been surprised at the changes, and a lot of people are settling there.”

While the town has a monthly organic-food market and a “tiny” convenience store, residents travel to Punta del Este for groceries, banking or personal services, Ms. Waldraff said. Punta del Este International Airport is 23 miles south. Montevideo, Uruguay’s capital and financial center, is about 80 miles west.

Uruguay’s borders have been closed to all but citizens and permanent residents since March 17 of last year, which has paralyzed property sales. “The market is stagnant,” said Germán Gomez Picasso, partner/director of Reporte Inmobiliaro, a Buenos Aires-based site that covers real estate in Uruguay, speaking in Spanish. “Things went from bad to worse in 2020 because of the pandemic.”

Enrique Argüello, managing director of the Curiocity Villas brokerage in Punta del Este, which specializes in luxury properties, said that “border closings have led to a 90 percent decline in sales volume this year in Punta del Este and the region. A lot of foreign clients are waiting for travel to happen so they can buy.”

Meanwhile, changes in immigration policy are helping to stoke pent-up demand. Last July, in an effort to attract investors, the Uruguayan government lowered the real estate investment threshold for obtaining Uruguayan tax residency from about $1.7 million to about $400,000. The minimum stay to retain residency was shortened from six months to 60 days.

The coastal Maldonado region is “the area most searched by foreign people” seeking property in Uruguay, said Mr. Wright. “And they don’t want apartments.”

Along with the pandemic, which has buyers seeking more space, the rush for residency has fueled interest in houses, which are in shorter supply than apartments. “There are currently thousands of apartments for sale in the $300,000 to $400,000 range in Punta del Este, and more under construction,” said Martina van Bevern, co-owner of van Bevern Properties in Punta Ballena. “They have to offer a special feature, special building, or special view to have value.”

Because some buyers now want to live in the region year-round, updated houses with features like heating (which is less common) are most in demand, Mr. Wright said: “We have a big inventory of houses that need to be renovated to suit four-season living.”

He estimated that a house with a garden, pool and barbecue in the upscale resort village of Jose Ignacio would average about $800,000. A similar house in Punta del Este would average about $450,000. Beachfront properties could cost nearly double that.

Foreign tastes in property vary, said Mr. Argüello, with Americans tending to prefer beachfront villas and British buyers seeking multi-acre estates not far from the coast. The entry price for a home in Jose Ignacio is about $1 million, he said. Near Jose Ignacio, non-beachfront homes start at around $750,000. Prices have remained steady at the high end, he said, despite market slowdowns.

Mr. Argüello noted that some buyers from Argentina — which shares part of its eastern border with Uruguay — have been forced to sell their vacation condos because currency devaluations at home have made it difficult to keep up with expenses. “That’s created an opportunity for discounts, but it’s not at the high end.”

Michael Oliphant, owner of Focus Properties in Punta del Este, agreed that “everyone is waiting for the Argentines to come back, and prices will rise when they do.” In the meantime, he said, most market activity has been local: “People from Montevideo who have a good nose for the macroeconomic situation are being opportunistic, buying properties here that they can flip to foreigners when the borders open up.”

The Maldonado region has long been a glamour spot for the wealthiest Argentines and Brazilians. While the area still attracts the superrich, “it’s now a place to live — still exclusive, but low-key and unostentatious,” Mr. Argüello said, adding that Uruguayans “are not the priority investors here.”

Recently, Maldonado has been drawing more Europeans, with a smaller cohort of Canadians and Americans, said Ms. van Bevern. “We’re German, and 90 percent of our clients are foreigners,” she said. “Everyone is thinking of property as their ticket to coming to Uruguay for residency.”

As of March 22, the country had reported 81,537 Covid-19 cases and 792 deaths, according to the New York Times’s coronavirus world map.

Ms Waldraff, one of the listing agent on this property, said that her firm is “seeing increases in daily inquiries from foreign buyers that we’ve never seen in the 10 years we’ve been here. Uruguay is perceived as safe. We have a good health system. The government looks out for its people. There’s a secure banking system.”

“Anyone from outside Uruguay can buy a property, and the process is crystal clear,” said Federico Carrau, a certified public accountant and partner at PKF Uruguay in Montevideo, noting that the government has long lured foreign investors with policies that simplify purchases. “Uruguayans and foreign buyers have the same rights. All you need is a valid passport.”

Most foreign buyers pay cash rather than obtain financing, he said. Funds can come directly from a U.S. bank account, “though normally foreign investors open a local bank account, which can be in any currency.”

John Leaman, partner in charge of the Real Estate Department of the Guyer & Regales law firm in Montevideo, said that once both parties enter into a preliminary selling agreement, called a Boleto de Reserva, the buyer’s lawyer deposits 10 percent of the purchase price into an escrow account. Once a title search is completed, usually by a notary public, title is transferred to the buyer. The process can take up to 60 days.

Because of the border closings, the government has allowed buyers to assign power of attorney to real estate brokers or other local agents who can execute a purchase on their behalf.

Real estate commissions and notary fees in Uruguay are set by law at up to 3 percent, Mr. Carrau said, “but can be negotiated with the professional.” Buyers and sellers pay broker’s commission to their respective agents, along with a value-added tax of 22 percent on the commission.

Buyers cover notary expenses related to certificates, stamps, registration fees and other public registry costs; those can range from $300 to $800, Mr. Argüello said. Buyers also pay a property transfer tax of 2 percent of the “cadastral,” or assessed value of the property. “The fiscal value is usually less than 50 percent of the market value,” he said.

Ms. Arsenault, the seller, said annual taxes on this home total about $1,000.

Source: NY Times

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