Uruguay’s Property Prices show mixed results
After two years of house price falls Uruguay’ property prices still show mixed results. In Montevideo Uruguay’s capital city property market is now showing slow signs of modest improvement. On the other hand luxury resorts like Punta del Este once a haven for undeclared money prices have declined with little demand for anything but prime properties that are well priced.
During 2014, house prices in the capital city Montevideo rose by 4.6%, to an average of US$159,522, based on data compiled by El Observador from a database of 20,000 apartments.
Among the eighteen Montevideo neighborhoods included in the survey, Centro recorded the biggest house price increase of 10.3% during 2014, followed by Carrasco (8.4%), Buceo (8%), Punta Gorda (5.7%) and Ciudad Vieja (5.7%).
Carrasco, Montevideo’s most exclusive suburb, had the most expensive housing in the capital city. Currently, a 65 sq. m. residential property in the area was priced at about US$224,997.
In Punta Gorda, a beautifully restored historic district, a 65 sq. m. residential unit costs around US$214,699. In Punta Carretas, where the magnificent Rambla (seaside avenue) can be found, the same unit has an average price of US$209,535.
In the districts of Malvin, Pocitos, and Buceo, the selling price of a 65 sq. m. residential property ranged from US$180,172 to US$188,767. On the other hand, the same property costs between US$158,551 and US$161,672 in the areas of Parque Batlle, Tres Cruces, and Parque Rodo.
Centro has the most affordable housing in the capital city, with an average price of US$126,174 for a 65 sq. m. residential property.
Despite the overall decline in property sales, demand remains healthy for well located apartments and newer townhouses with amenities like swimming pools, private patios and round-the-clock security, especially among retirees. Apartments and newer townhouses in the more desirable parts of Carrasco are priced from US$372 to US$418 per square foot (sq. ft.), more than high-end single-family homes, which are offered for US$232 to US$279 per sq. ft.
Foreign Investor demand still weak
Overall demand from foreign buyers remains weak. In Montevideo, purchases by foreigners decreased in 2014. Foreign homebuyers make up more than a third of the total property transactions every year.
The real estate market in Uruguay, and particularly its beach resorts, heavily rely on Argentina’s high-end buyers. Around 75% of foreign buyers in Uruguay are Argentines, followed by Brazilian buyers, making up around 20%, while the remaining 5% are buyers from other countries. Some European retirees are also drawn to Montevideo and its surrounds, especially writers and artists.
Real estate transactions in Uruguay are typically quoted in dollars because of a history of fluctuations in the value of the Uruguay Peso.
Farm funds own considerable farm lands in Uruguay with some owning up to 100 individual farms.
In general foreign buyers are not restricted when buying farm properties in Uruguay. However, in November 2013, the Uruguayan government filed a new bill in Congress, which prohibits ownership of productive land by corporations in which foreign nations are direct or indirect shareholders ( ie sovereign funds ) .
The bill aimed at Chinese Sovereign Funds in particular but does not affect individual foreign buyers, who can still purchase farms land in Uruguay. Farmland prices peaked in 2013 and have since declined in areas of less productive soils.
Uruguay’s economic growth slowed to 3.3% in 2014, the lowest level in five years, mainly due to a slump in commodity prices and the economic slowdown in the country’s trade partners, based on figures from the International Monetary Fund (IMF). Uruguay enjoyed high economic growth in 2010 and 2011 at around 8.4% and 7.3%, respectively, and avoided recession in 2009 with a 2.4% GDP increase. The IMF’s forecasts a growth rate of around 2.8% in 2015.
Recovery of the market will depend on neighbouring countries Argentine and Brazilian politicians restoring the health of their larger economies. An election later this month in Argentina for a new President will indicate whether this is likely or not.
Contact the Gateway to South America team to learn about the best investment opportunities in the region. The company is a benchmark for foreign investors wishing to invest in Argentina, Brazil, Chile, Paraguay, Peru and Uruguay, providing expert advice on property acquisition and investment tours.