Paraguay becomes the “New Promised Land”

The Argentine newspaper Clarín described Paraguay as a “promised land”. According to the paper, the landlocked South American country has been transformed from a stagnant country into fertile ground for investment.

The prestigious newspaper also highlights that the capital Asunción is showing signs of accelerated real estate growth, which is a magnet for Argentines and attracts Latin American, European, and Asian business people.

In an article titled “The new promised land: the neighboring country that keeps attracting Argentine investment,” Clarín highlighted Paraguay’s competitive advantages and, above all, its improved image compared to the last decade.

From the journalistic material, it appears that Argentines value stability, predictability, and proximity to Buenos Aires and other major Argentine cities.

Factors such as controlled inflation, a low budget deficit, a stable exchange rate, a low tax burden, and investment promotion programs created the conditions for an extended period of economic prosperity.

It is also mentioned that the proposals are diverse, ranging from affordable housing for the middle class to exclusive premium housing. The average price per square meter in Asunción is US$1,300, while in Buenos Aires, it is US$2,275.

In this regard, it is noted that real estate is the option with the highest return and that real estate is one of the primary sources of attracting investors.

Renting an apartment in Paraguay offers between seven and nine percent return on the annual investment, while in Argentina, there is a profit of only one percent. Rent is paid in guaraníes, but purchase and sale transactions are conducted in US dollars.

The source said that the equation is the same because there is freedom of exchange, and the guaraní is currently a stable currency that has not lost zeros over time.

THE ARGENTINE PHENOMENON

It is estimated that Argentines purchase seven out of ten homes sold in Paraguay. Investments by Argentine nationals account for nearly 35% of the construction projects put on the market in the last ten years.

Several business people even maintain strategic alliances with development groups in Asunción.

“It is a country where it is possible to plan for the long term without problems because macroeconomic indicators are managed in a disciplined way. Fiscal equity is the great regulator of urban development,” say entrepreneurs and investors interviewed by Clarín.

Ronal Starsenbaum, director of “Yapeyu Consultora”, mentions that Argentine clients’ demand increased by 75% between 2019 and 2022, given the unstable economic situation.

“Probably 50% of real estate developments in the last ten years are projects carried out from the beginning with Argentine capital (Argentine developers or even Argentine buyers). It is almost a sine qua non to target the Rio de la Plata market when starting in this sector,” he argues.

ARGENTINE REAL ESTATE BOOM AND CLEAR RULES

The real estate boom began a little more than ten years ago without abrupt changes and staggered.

However, in the last five years, growth has been stronger and more noticeable due to the Argentine economy’s volatility and the Paraguayan economy’s predictability.

The rising curve is also a response to a socioeconomic problem. The housing deficit in Paraguay is 1.5 million homes, according to data presented at the Housing Forum: “Access and Development in 2021.” And 60% of the population is under 30 years old.

Other reasons for the interest of Argentine investors in the Paraguayan real estate market are the yield, the low tax burden (the average economic growth is 4.5%), the stability, and the laws that promote the inflow of capital.