Monday, June 06, 2011
Dear Reader,
The second home real estate market in Uruguay’s beach resorts is on a tear. Not surprising when you consider how commodity rich Uruguay and its neighbors Argentina and Brazil are. The soya dollar is driving prices for new condos in Punta de Este to an all-time high.
But the soya dollar isn’t just chasing condos. It’s also chasing chacras. These are large lots of up to five acres. They are often in communities with limited amenities (a small clubhouse, maybe a swimming pool or tennis courts). Still, prices can be very high. I’m talking in the region of $40-$135 per square meter ($162,000 to over $500,000 per acre).
New inventory is quickly snapped up. Some owners build mansions on their chacras and spend summers and vacations here. Other just sit on the land. Many Argentineans are more comfortable having their savings in a chacra than in a bank back home. The key for these chacra projects to work is accessibility to a resort that Argentineans find desirable.
Identify where development is moving and there are two ways we could play this trend:
- Buy farmland and lease it out while we wait for development to come
- Buy a chacra in a community the market (Argentineans, Uruguayans and Brazilians) will find attractive.
It’s important to understand that this market of wealthy Argentineans can be particular in their tastes. A place or a project can become very fashionable, and buyers will flood in. This can be led by an influential person or group. A soccer player or a high-profile entrepreneur, for example. They get their other influential friends in from the get-go and start the trend.
Where to look
East from Punta del Este you’ll find the department of Rocha. It stretches to the border with Brazil. Inland, you’ll find cattle ranches and sleepy little towns. The coast is where the action is. The beaches (the best in Uruguay) here are wide, natural and pristine. You won’t find high-rises or all-inclusive resorts…yet.
There’s an abundance of nature reserves and parks in Rocha, many with lagoons ideal for bird watching enthusiasts. And there are great little seaside towns like La Paloma and the upmarket La Pedrera with its sweeping curve of beach. Cabo Polonia is famous for its shifting sand dunes, and bohemian residents.
Rocha’s seacoast draws visitors from Uruguay, Argentina and Brazil. You can buy beachfront land here for as little as $1 per square meter ($4,050 per acre). Paying $1 per meter, your land will be relatively inaccessible and close to the border with Brazil. Lands closer to La Paloma and La Pedrera are more desirable and priced in the region of $4-10 per meter for large parcels. That’s $16,000-$40,000 per acre.
This stretch of coast is in the sights of a handful of international developers. One planned project is by Argentina’s foremost developer, Eduardo Constantini. Estimated costs for his development run to $350 million. There have been newspaper reports of another planned community by the founder of clothing chains Mango and Etiqueta Negra.
My recommendation is to look close to La Paloma or La Pedrera.
If you are land banking a piece of raw land, same as with any residential purchase, always focus on who the ultimate end user will be. Who will you sell the land on to? For the biggest returns, you will want to sell to a developer. You need to look at the land through a developer’s eyes. He will look for things like an accessible location with water, electricity and sanitation close by, and an easy and transparent permitting process.
If you are buying a chacra in a community, find out where other buyers are coming from, and if any are famous or influential. These owners will bring a cachet that will attract future buyers.
Ronan McMahon
P.S. I've written extensively about landbanking opportunities...in Uruguay and elsewhere...for members of my Real Estate Trend Alert group. This VIP club hears all about my latest scouting trips...gets first pick of the property deals I find..and takes advantage of special discounts, pricing and payment terms that I negotiate on their behalf. If you want to be first in line for the hottest real estate opportunities, you need to join Real Estate Trend Alert. Find out more here.
Posted Under:
uruguay, real estate opportunities, farmland
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