Price Update

[Illinoissam]

Does anyone have an update on Uruguay R/E pricing? It has been a year since I have been there though I am still anticipating going as soon as I get clarification on the tax issue. (I am not sure I am reading it correctly but how can they tax "citizens" differently than "residents" that would seem me to be unconstitutional) That aside, am interested to know what forum members think of the current real estate situation, primarily for single family residences - houses/apartments in Montevideo (Pocitos, Punta Gordo, Carassco). Any general comments or opinions would be welcome.

[loei]

Does anyone have an update on Uruguay R/E pricing? It has been a year since I have been there though I am still anticipating going as soon as I get clarification on the tax issue. (I am not sure I am reading it correctly but how can they tax "citizens" differently than "residents" that would seem me to be unconstitutional) That aside, am interested to know what forum members think of the current real estate situation, primarily for single family residences - houses/apartments in Montevideo (Pocitos, Punta Gordo, Carassco). Any general comments or opinions would be welcome.

As far as I can tell wrt Lorenzo's tax proposals, the citizen/non-citizen differences concern IP (wealth tax) on overseas assets... citizens will have to pay it but non-citizens not. IRPF (income tax) on overseas income is to be charged to both citizen residents and non-citizen residents with the possible exception of rents received on overseas property. The effects of this will also depend on whether the income derives from a country which has or does not have a double tax agreement with the ROU... so smile if you're Canadian, French, German, Andorran etc.

I can't comment on MVD house prices but here in Valdense house purchase prices are about twice what they were 3 years ago and rents about 3 times more. Yesterday I looked at 2 old houses for a friend of mine... both detached single storey 2 bedders of about 100 sq meters and both needing about 5k to 8k U$S spending on them. The asking prices were 50k in central Valdense and 115k U$S in San Jose de Mayo. How local people can afford such prices I don't understand.

Patrick.

[expatbob]

How local people can afford such prices I don't understand.

They are being priced for foreigners.
As far as I can tell, PDE was built on flight capital, so it makes sense to have inflated bubbly prices there. Is Valdense being overrun with Argentine farmers looking for a way out?
It will be interesting to see how prices change over the next few years (or don't) based on Uruguayo pricing stubbornness and the wind-down of foreign nesteggs coming in to roost.

[loei]

They are being priced for foreigners.
As far as I can tell, PDE was built on flight capital, so it makes sense to have inflated bubbly prices there. Is Valdense being overrun with Argentine farmers looking for a way out?
It will be interesting to see how prices change over the next few years (or don't) based on Uruguayo pricing stubbornness and the wind-down of foreign nesteggs coming in to roost.

With respect to P de E and the posher bits of MVD/the coast I'd agree but foreigners in Valdense are as rare as hens with teeth. In surrounding rural areas we have Argentinian ex-pat farmers but according to friends who sell farm land, the rush ended a year ago and they haven't had a single enquiry since Lorenzo announced his intentions regarding banking secrecy and overseas tax.

I was talking to my mate Sergio about it 30 minutes ago when I went to buy some flue sealant. He reckons the price rises here are because local people with dollars to invest are tired of getting 0 point something % from the bank, see domestic property rentals as a way of getting more income while getting rid of dollars.

I came to the same conclusion regarding the ever diminishing value of pounds sterling back in 1970 but the mega-tight planning controls in the UK ensure a continuing housing shortage there. I suppose the rule of thumb here is not to buy investment houses at prices higher than the cost of building something similar.

Patrick.

[beverly1]

It really depends on where in Uruguay you are wanting to buy. Punta del Este is pretty high, but if you go 30 km. away to Piriapolis it is much more reasonable. Most of the houses will need to have A-C/heating units put in and an update of the kitchen. One of the largest websites for the Piriapolis area is uruguayconsulting.com. Good luck.

[Illinoissam]

Thanks for the comments. Part of me wants to be the gentleman farmer and leave all the silliness of Europe and America behind me but doubt I have the skills to manage that! It a dream but I should be more realistic. I have been watching a few properties in Carrasco over the past 18 months, a few have sold at the asking price but not quickly and one new built project in a great location is still on the market after two years at the same price.

What happens in 10 years when foreigners have bought all the property in Uruguay and citizens are priced out of the ownership market and potentially the rental market? Then would the government put all sort of rent controls etc? It is all too crazy. Maybe I should just rent....

[urufish]

From my perspective of 20+ years owning property here, I see Uruguay rapidly joining the ranks of countries with higher priced real estate. Everything I've seen here has gone in waves. The country was backwards technically 7-10 years ago. Now it's as modern as any country with the one small exception of bandwidth which should change when the new cables are finished. They were backwards in public transportation and that has really changed. I doubt these changes will reverse in the forseeable future. It's a maturation process.
Same thing is true for real estate except that it's the most recent change. They're just catching up with the rest of the world. The house I could buy for $60K 20 years ago is now $150K. The land I could buy for $7K 20 years ago is now $70K. Lots that were $500 20 years ago sell for $8K today. It's a steady progression just like the rest of the world. The great deals we saw over a few years ago have simply caught up to reality, gone up in price.

They will come down when we crash again here. If you go with the 10 year cycle, that's due in 2-3 years. When the crash comes, it may just bring down new construction prices as builders get caught with their pants down. Or maybe, now that we actually have mortgages, some people will get squeezed out by the banks. But it's hard to predict because it depends on what kind of crash we have. Over the 20+ years I've seen at least 3 totally different types of crashes. The last one in 2002-2003 was particularly devestating because any Uruguayan with money owed in US really got hit big time. That caused desperate measure and that caused real estate prices to dip. As one of my friends told me, you cant eat your house.

If it was me, I might consider renting here to wait out a correction in the next 2-4 years and offset the opportunity by buying a property in the US at 20% of its previous market value. Dont know how many homes I've seen in Florida selling at 20% of the 2006 purchase price. Sure, the 2006 price wont be seen again for a long time but 40% is reasonable and that still represents an ROI of 100%.

[oregon woodsmoke]

Rent control? Hadn't thought of it, but it's a Socialist government so rent control is a very real possibility.

[rabble]

Everything I've heard from Uruguayans is that the housing market is way overvalued right now. Construction prices have shot up as well. I consider myself incredibly lucky to have gotten in when we did.

Everybody seems to think that this bubble will collapse in the next few years and then that would be the time to buy.