Uruguay Properties

Investing in Uruguay

Find out what makes Uruguay a viable and attractive destination for foreign investment in real estate today.

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Living in Uruguay

Discover what makes Uruguay stand out in the region as a unique choice to live or vacation in.

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Uruguay Real Estate: On a Steady Beat

Uruguay Real Estate: On a Steady Beat

Hailed as the “Switzerland of the Americas”, the once undiscovered Uruguay is now a popular tourist destination. Its attractive cities, beautiful, laidback beaches, and the country’s overall affordability are enticing many suitors. Wanderers and pensioners are beginning to cast lustful eyes towards this small South American country.

“Uruguay has a lot to offer and has become especially popular with retirees and those who work online,” said Elaine Herbert from www.totaluruguay.com, a virtual meeting point for expatriates and travelers to the country. “Uruguay is small and therefore not overwhelming, safe and politically stable especially in the context of South America,” she said. “There are many beautiful beaches and coastal areas within easy reach of the cities.”

About Uruguay

Outside of the tiny Charrua tribe, not much has been found in the way of evidence regarding the existence of other settlements before the Europeans arrived in Uruguay. The Spanish came in 1516 but the country’s lack of gold and silver kept them generally disinterested until they noticed the expanding Portuguese in the region.

Montevideo, Uruguay’s capital city, was established as a Spanish military and commercial center in the 18th century. The Spanish dominance was challenged by both the British and the Portuguese through out the 19th century. The British had gone as far as occupying the city, albeit for a short period of time, in 1807. A dizzyingly quick succession of events, including a successful independence bid against the Spanish, a subsequent Portuguese invasion, a forcible inclusion of the region into Brazil proper, and a war between Brazil and Argentina, followed. Finally, in 1828, aided by the usually meddling British hand, Uruguay was born.

Present day Uruguay is the second smallest country in South America and is home to approximately 3.5 million people out of which about half live in the capital. Tucked away in the south eastern corner of the continent, the only country Uruguay borders by land is Brazil. It is otherwise surrounded by water. Its population reflects the centuries long European interest in the area, with over 85 percent claiming to descend from the old continent or of mixed heritage.

Since gaining independence, Uruguay, just like other Latin American countries, has seen a series of conflicts. Currently, however, it is a picture of regional stability and prosperity. Following Chile, it is considered to be the second least corrupt country according to Transparency International. Uruguay’s labor laws are also some of the most business friendly on the continent. Tourism, agriculture, and the state sector all play an important role in the country’s economy.

Some of the things that make Uruguay a desirable place to relocate to include low crime rate, a transparent legal system, and “a strong respect for private property,” according to Dr. Juan Federico Fischer, Managing Partner at LVM Attorneys at Law - a firm that specializes in assisting international investors in their relocation and real estate needs.

In addition, the financial infrastructure of the country is reliable. Funds brought into the country don't even have to be converted into the local currency, according to LVM Attorneys at Law. "In fact, all properties are bought in Dollars or Euros. Additionally, there are no waiting periods to take out any [capital] gains you make, or withholding taxes.” said Fischer.

Real Estate in Uruguay

While the world saw its property prices tumble, Uruguay’s property market seems to have remained stable. “Uruguay has not seen a slump in the real estate market,” said Fischer whose law firm also has a Foreign-Investment Consulting Unit. This is “partly, because Uruguay has a very small mortgage-backed-lending market, so the country did not experience an asset bubble.” It also helps the market that there is a decent trickle of foreign buyers. Steady growth in the local property market, mostly for two and three bedroom condos and in the capital city, also offsets any discernable fluctuation in the foreign market.

Some of the popular places in country where buyers like to plunk down their cash for a piece of a lifelong dream include colonial Montevideo – the oldest sections of the city, beach side towns such as Punta del Este and Piriápolis, Colonia in the western part of the country, and Rocha “where there is still untouched beachfront land,” according to Fischer.

Outside of the coastal areas, many buyers in settle in “upper class [Montevideo] suburbs of Pocitos, Buceo and Carrasco,” said Herbert. Those interested in coastal living should also check out some of the up and coming towns. “Personally I think the smart ones should snap up some property in the beautiful coastal towns further north such as La Paloma, La Pedrera, Punta Del Diablo, and La Esmerelda,” she said.

Interest in the old part of the capital city is also reviving, according to Herbert. “I think one thing that will really catch on over the next few years is renovation work in Ciudad Vieja (the oldest part of Montevideo),” she said. “The colonial buildings there are so beautiful but they are falling to pieces and are just waiting for someone to renovate them.” Even the government recognizes this dire need. It has started offering assistance to those willing to take on the task of such renovation.

Buying Property in Uruguay

There are no restrictions on foreigners who wish to buy property in Uruguay, according to David Hammond, author of the e-book Buying Real Estate in Uruguay - Invest in a True South American Paradise. Hammond praises the Uruguayan system as one that stands out in Latin America. The country’s property registry system is transparent. International buyers are not required to undergo through an unduly bureaucratic process to acquire real estate. In other words, “no special forms, preauthorization, or residency requirements” to buy property, according to Buying Real Estate in Uruguay.

“A foreign buyer can even purchase real estate remotely, with a Power of Attorney,” said Fischer. “One does not need […] to even to set foot in the country, in order to own real estate.” After purchasing the desired property, taxes need to be paid during the duration of ownership. There are two kinds, the Municipal Tax and Public Schools Tax – both of which usually add up to less than 1 percent of the property value. “There are numerous property managers in Uruguay, who can take care of this and paying the utility bills for a small fee.”

Until recently, many international buyers considered property prices in Uruguay as low when compared to costs in the U.S. or Europe, according to Herbert. “Although [prices] still remain quiet affordable, with the current [global] recession and the [bursting] real estate bubble, Uruguay's prices have remained stable,” she said. Therefore, they may not appear as much of a bargain as they used to before the financial crisis.

Just as everywhere else, costs vary according to location. Real estate in Montevideo is much more expensive than in rural parts of the country. “Apartment and house prices in the cities have slowly risen toward prices seen in more developed countries, whereas land prices in rural Uruguay are still very low,” said Herbert.

Real estate in the popular Punta del Este can be expensive. “Condos start at around USD 70,000 and go up to just over 7 million,” said Hammond. “Single-family homes sell in a range from just under USD 100,000 to over 4 million, and homes on large estates sell in a range from USD 400,000 to over 10 million,” Summer rentals for small condos can start at around USD 3,000 during the busiest month of January.

Prices in Ciudad Vieja, the old parts of Montevideo, come off as affordable. “Ciudad Vieja has a variety of property types and price ranges which include individual apartments from USD 25,000 to USD 100,000 – [with] units that do not need restoration starting [at] mid 40’s,” according to David Hammond’s Uruguay Investor’s Report. Office or retail spaces can be had for as low as US USD 20,000. Single family homes begin at about USD 70,000 while small buildings with retail space at the bottom and living space atop can go for about USD 100,000.

Overall Uruguay is a safe place for international property investors. “Uruguay values and respects its competitive advantage [and is] a country with clear, predictable rules,” said Fischer. Still, buyers should assume nothing. For example, “if buying a condo in Punta del Este, you may want to verify the condo fees and whether the building has a heating system designed for year-round living - if you are looking for a home, not just a vacation home,” he said. It is best to get a real estate lawyer that has international experience.

To avoid possible frustrations, it is important to remember that Uruguay is still a middle income country that is developing. "Things are not made, built or finished to the same standards as they are in the USA or Europe," said Herbert. "It [can be] difficult to find reliable contractors who do a decent job." Work must be supervised by someone who is knowledgeable and reliable.

Looking Ahead

Uruguay has some positive trends going for it. "[It] does not have a mortgage crisis – almost everyone owns their homes free and clear and they don’t lose them during hard times," said Hammond. "[There will probably be] some softening in values of properties in the middle [price] ranges if the global economic crisis continues."

"I foresee steady, non-speculative growth," said Fischer. "In areas such as Montevideo’s coastline and the Old City, demand will be steady. In Oceanside areas - Punta del Este, Piriápolis, and Rocha - there will be continued growth of closed communities. Farmland, after having reached a peak in prices in mid 2008, has adjusted, and will continue a slower but steady growth," he predicted.

Source: Nuwire Investor


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