Buying a Piece of History in Montevideo’s Old Town

Wednesday, August 26, 2009

Montevideo’s Ciudad Vieja is an up-and-coming area for overseas property buyers

Dear Reader,

Uruguay’s capital city, Montevideo, has a very European flair. From its tree-lined streets to the grand buildings that surround the peaceful plazas, the feel is civilized and cosmopolitan.

Montevideo is a First World city—but with Third World property prices.

I based myself in Ciudad Vieja, the historic part of Montevideo. For decades, Ciudad Vieja was neglected and forgotten. But today, infrastructure investment and the restoration of properties are reversing that trend, and Ciudad Vieja is now an up-and-coming area for overseas property buyers.

Aside from a few areas however, Ciudad Vieja is not a preserved tourist zone. It’s home to the financial and business district, and many of the business transactions in Montevideo take place here.

I’ve set up my base here in an apartment on Peatonal Sarandí, the pedestrian walkway running through Ciudad Vieja. The location is perfect. Living here as an expat, everything you need is within walking distance…banks, shopping, Mercado del Puerto’s (Port Market’s) restaurants, the boardwalk, the national theater Teatro Solís, and a wealth of small museums.

Peatonal Sarandí has a bohemian, chic vibe. It boasts art galleries, trendy restaurants and cafes. On weekends, there’s a flea market in Plaza Matriz. It’s fun browsing the assortment of old silver, collectibles, glass, and lace…or people-watching from the sidewalk cafes on the plaza.

Twice weekly, a fruit and vegetable market sets up shop close to Plaza Zabala. The produce is fresh, and the prices unbeatable. We paid 25 pesos (that’s around $1.10) for twenty mandarin oranges, and 25 pesos for a kilo of bell peppers. Some stalls stocked fresh fish, meat, hand- made pasta, spices and cheeses.

The stall holders are friendly, and happy to share their knowledge. I asked one vendor what quince jelly was, and he told me it was perfect with manchego cheese as a snack… and then offered a sample.

The apartment I rented is typical of many in the larger renovated buildings in Ciudad. The original ornate exterior hides a modern loft-style interior. Loft style is rare outside Ciudad Vieja, but works well in many of the older buildings which have ceilings up to twenty feet high.

Short-term property rentals are few and far between. I found only seven—two of which did not have internet access. It’s surprising in a city the size of Montevideo to have such a limited choice. Short-term rental prices are higher than in Buenos Aires (competition from hundreds of rentals keeps the price low in Buenos Aires).

You might think there’s an opportunity here for short-term rentals, because of the apparent shortage. In fact, I’ve tried to pin down a number of local “experts” on this topic…with no success. One broker confirmed an occupancy rate for two existing short-term rentals in Ciudad Vieja of 50%. My opinion is that there is simply not solid, year-round demand for short-term rentals in Montevideo.

A 1950s building on the opposite corner undergoing renovation offered 29 apartments, aimed at young professionals and overseas buyers. The prices ranged from $1320-1635 per square meter, so a 51 square meter apartment would sell for $83,339. The price per square meter for these brand-new apartments is a useful comparison when looking at unrenovated properties (but remember that this is a 1950s building, not a true period building). Renovation in Ciudad Vieja costs $400-600 a sq m, depending on how much work needs doing.

I looked at one apartment in need of renovation. It had original floors, moldings and stained glass features. The 190 square meter (2044 square foot) apartment also overlooked the bay. I didn’t like the audible traffic noise from the busy street. The condition of the exterior was in bad repair, too, with cracks and exposed brickwork. The asking price was $140,000, which is only $736 per square meter…about half the price of the finished units above.

The next property was larger, 450 square meters, with a price tag of $390,000. This was a gorgeous house. The wood paneled hall had a large central oval stained glass ceiling. The second floor had an oval balcony, from where you could look up to the glass ceiling or down to the ground floor. The house has too many features to list, from plaster moldings, wood floors, and a marble staircase. It lacked a kitchen, but as a statement house, for $867 a square meter, it was hard to beat. (A “statement” house, a term from the UK market, is a house that is so picture-perfect it makes a “statement” about your wealth, status, and good taste).

I also found a recent sale that looked like a great bargain. The apartment had fifteen rooms with high ceilings, marble fireplaces and parquet floors, and a very French style. It boasted 400 square meters of space for only $180,000.

That’s an impressive $450 per square meter.

In Casco Viejo, Panama, where I live, renovated colonial properties average $2200 a square meter. A crumbling wreck that’s just four disintegrating walls starts at $1000 a square meter, and restoration costs $1100-1200 a square meter. Montevideo’s Ciudad Vieja offers a more budget-friendly alternative for colonial properties—with potential for capital appreciation. If you’re interested in any of these properties, and others in Ciudad Vieja, contact Patricia Turner: (JavaScript must be enabled to view this email address).

Margaret Summerfield

PS: Oddly, the realtor described the last property I mentioned above as being “ideal for offices”. This is a quirk of the Montevideo market I’ll explore in more detail next Wednesday… the fact that property listed for office space could be the best residential option you’re likely to find in Montevideo.