Uruguay Investment Property

as reported by Obelisk Invesment Property via prlog -

One of South America’s more diminutive countries, Uruguay, gets overshadowed by it’s larger neighbors – Buenos Aires and Argentina to the west, and Brasil to the north. However, this year might be different.

This year, while Argentina’s economy has been pounded and has yet to recover, Uruguay seems to be doing better.

In general, last year was economically devastating for a number of the developed countries, but a few countries in latin america did quite well. According to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), Brazil, Ecuador and Panama, did well in GDP growth. However, Uruguay, with its 11.5% increase, outperformed the other 20 countries in the list.

The financial crisis in Argentina at the beginning of this century hit Uruguay like a tsunami, and Uruguay fell into recession. Economists believe that Uruguay’s “prudent” monetary policy since the crisis has set the groundwork for recovery. Uruguay has boomed, while Argentina has not had a full recovery.

The Uruguayan “secret” was to devalue its currency (ah the wonders of inflation). It’s claimed that this move led to a lower cost of living (only for those earning or saving in a foreign currency obviously as the cost of anything imported would soar) and an attractive environment for foreign investment. Argentinians have been particularly keen to invest in their neighbouring country and foreign investment in Uruguay generally grew by a massive 25% in 2008. Foreign funds also poured into the country – non-resident deposits in Uruguayan banks increased by over 40% last year. However, this is in no small part due to the strong bank secrecy laws enjoyed by the banking institutions which operate in the country.

Those that would sell you real estate, like to point to the fact that Uruguay’s devalued currency and favourable foreign investment climate makes it a country worth considering when it comes to property investment. However, this is a somewhat absurd rational. Most all property is priced in dollars and therefore currency fluctuations in the local Uruguayan peso have little immediate effect on property prices.

In addition, relevant cost of living in Montevideo is similar to other like situated cities throughout the world.

The report claims that Uruguay investment property prices are lower than those found in Europe and North America, however, offers no empirical or price per sq ft data to back this up.

The report goes on to point out that since Uruguay real estate is situated in the southern hemisphere it does make an attractive snowbird location for those who reside in the North. Uruguayan beach resorts such as Punta del Este are ideal destination for Europeans and North Americans escaping from the winter cold in their home countries.