Uruguay: Argentines tripled their property purchases in two months

RIO DE JANEIRO, BRAZIL – Uruguay is the favorite country for Argentines to invest in real estate. Its legal security, economic stability and proximity are key factors.

There has been a boom in transactions over the past two months. “Between October and November, we sold almost the same as in a full year,” say Uruguayan brokers.

The reopening of borders from November 1 to all foreigners was a before and after for the Uruguayan real estate market. “The level of reservations and purchases tripled in the last three months,” says Moebius real estate consultancy Gonzalo Martínez Vargas.

According to data surveyed by the firm, between August and November there were 89 property reservations by Argentines.

But the most relevant data is how many of them completed the transaction. “The purchase rate increased from 10 to almost 30 per month. With an accumulated investment of around US$100 million,” Martínez Vargas explains.

Uruguayan President Luis Lacalle Pou’s decision to reopen the borders did not go unnoticed in the real estate market. Although the number of inquiries from Argentines remained during the pandemic, transactions were strongly affected by the impossibility of traveling to the country.

“When it comes to buying a property, people want to see the conditions and location, and the progress of works,” explains Zmart real estate company owner Daniel Zaindestat, who has been working with the Argentine public for over 18 years.

“The impact of the reopening is very noticeable. Last year, we had many inquiries. But, in a year and a half, since the pandemic through October 2021, we sold only two properties. Between then and November, we have already completed 7 transactions,” the consultant explained.

“This is not a low number considering that before Covid came, we averaged 10 transactions with Argentine buyers per year. At most, it could reach 15 sales. In just two months, we made 7 transfers,” he explains.

“What we also noticed is that many people ask us about tax residency. That proves that they don’t come only to invest, but to live in the country. We also have many Argentines who began to open stores in Uruguay, something we didn’t see as much before the pandemic,” he adds.

WHAT DO ARGENTINES LOOK FOR MOST?

Historically, Punta del Este has been Argentines’ favorite destination when it comes to buying real estate. But that changed with the pandemic. Montevideo gained prominence, mainly because of its Promovida housing.

“Today, the focus is on Montevideo. Although Punta del Este has started its reactivation, there is interest in the Uruguayan capital’s properties. Argentines are mainly looking for Promovida homes,” explains Kopel Sánchez real estate and development company director Fabián Kopel.

Promovida homes are becoming established in the Uruguayan capital as a good investment option, with affordable prices, low rent and a rental yield of between 5% and 6%.

“A studio apartment in a tower in Carrasco is sold for US$100,000. A two-bedroom with garage costs US$140,000 and these are units in a privileged location and in a building with a large number of amenities but with affordable expenses,” Kopel says.

WHAT IS THE YIELD IN URUGUAY?

Investment yield is crucial for Argentine investors looking for income in dollars.

“As an example, a property under construction is 20% cheaper than the same unit when completed. During a 10-year period, with tax exemptions, once it has been completed and with the lease, 80% of the invested capital can be recovered in the case of Promovida homes,” Martínez Vargas explains.

“And, obviously, the property’s resale value increases by at least 10% after a couple of years. In short, at the end of the 10-year rental period, it is possible to recover all the capital invested, if one decides to sell the property,” he adds.

Moebius explains that currently the yield of an apartment in Montevideo is close to 6% per year in dollars, with an interesting fact: “Vacancy is almost non-existent because the rental market is very mature in Uruguay.”

The report prepared by the consulting firm adds that Argentine investors prefer to buy properties on plan rather than brand new apartments. “They pay in installments over a longer period of time, allowing them to have access to more m2 and, eventually, to a garage,” Martínez Vargas said.