10 Reasons Why Montevideo’s Ciudad Vieja is Today’s Best Offshore Opportunity for the Individual Real Estate Investor

With globalization, the economy of any given country is increasingly becoming a sub-economy of a world network of supply and demand for products, services, and capital; which includes the demand for real estate.

Today large sums of development and investment capital are moving to South America where many real estate markets are experiencing robust growth. Although much of this investment capital is controlled by large corporations and trusts that move tens of millions of dollars at a time, there are still exciting international opportunities for the individual investor (even the small investor). Which brings us to the question: What is the individual investor’s best offshore real estate opportunity? Here are ten reasons why the answer is Montevideo’s Ciudad Vieja.

Ciudad Vieja is a community within Montevideo, the capital city of Uruguay. It is called Ciudad Vieja (the Old City) because it was the original walled citadel of Montevideo founded by the Spanish in 1726.

As Montevideo grew to a city of 1.4 million, Ciudad Vieja became rundown and forgotten. However, like many communities in the world with historic significance and period architecture, Montevideo’s Old City is turning around.

1) Location
The most stable country in South America.

Uruguay is a small South American country located between Brazil and Argentina. It has just recently appeared on the North American investor’s radar, but is making a big blip. Here are some reasons why.

Uruguay is the safest and most stable country in South America. The government, foreign investment laws, real estate ownership laws, banking practices, and social climate provide the most stable investment opportunity in South America for the individual investor.

Uruguay’s political system is a democratic republic with executive, legislative, and judicial branches, much like the U.S. Citizens of the U.S.A. can enter and exit Uruguay without a visa. Uruguay’s political and labor conditions are the freest on the continent.

Foreigners can buy and sell real estate in Uruguay with the same rights and protections as residents. Clear laws and constitutional rights protect property rights.

Real estate in Uruguay is bought and sold in U.S. Dollars, so investors from countries with U.S. dollar economies can avoid the uncertainty that currency fluctuations can have on sales price, costs, returns, and cash flow.

Uruguay has a favorable social climate with the most highly educated population, the least economic disparity, the lowest crime rate, and the second lowest level of corruption in Latin America. The people of Uruguay are known for being friendly and tolerant with a strongly European culture. The water is safe to drink, and average citizens have access to higher education, good public transportation, and quality medical care.

2) Location:
The City with the highest quality of life in Latin America.

Ciudad Vieja is the Old City of Uruguay’s capital, Montevideo, which is known for providing its residents with the highest quality of life in Latin America. Mercer Human Resource Consulting conducts an annual study which rates the quality of life in the world’s major cities by assessing and evaluating 39 key quality of living factors which include: political stability, crime rate, law enforcement, banking, personal freedoms, medical care, waste disposal, electricity, water, public transportation, traffic congestion, air pollution, education, restaurants, leisure opportunities, availability of food and goods, housing, maintenance services, climate, and record of natural disasters. (Uruguay does not have hurricanes or earthquakes.) According to Mercer Human Resource Consulting, when all of their 39 factors are evaluated, the city with the highest quality of life in Latin America is Montevideo. (It must be said that Montevideo does have some purse snatching, camera grabbing, and pick pocketing, but threats to physical safety are rare. Montevideo is among the 30 safest cities in the world and the second safest capital city in the world after Tokyo.)

3) Location:
A community with historical significance and period architecture
Ciudad Vieja, the original walled Citadel of Montevideo, is a picturesque community with a mixture of architectural styles, town squares, a theatre, cathedral, and museums. Once abandoned, the area is gradually being restored in sections. The area’s historical integrity is protected through municipal guidelines that classify buildings and regulate the architectural changes that can be made.

4) Solid trend of gentrification underway
Ciudad Vieja is home to Montevideo’s financial district. The areas with the highest levels of restoration contain Montevideo’s best restaurants, designer shops, and most popular night spots. Living in Ciudad Vieja is becoming increasingly popular with tourists and young professionals who want to be close to work as well as Montevideo’s vibrant cultural center.

5) Limited Supply
Ciudad Vieja is an historic neighborhood of period architecture on an eight by 14 block peninsula. They can’t make or develop any more of it.

6) Diversity of property types and price ranges
Ciudad Vieja has a variety of property types and price ranges which include individual apartments from $25,000 to $100,000 (units that do not need restoration start in the mid 40’s), individual offices or retail spaces from $20,000, single family homes from $70,000, and small complete buildings with retail on the bottom and apartment spaces above from around $100,000.There are also large buildings with various combinations of retail, offices, and residences.

Except as indicated for apartments, the prices shown are for buildings that need restoration work. Today’s opportunity is buying a unit or building and hiring an architect to restore it. Another option is to learn about a planned restoration project and discuss your interest in buying a finished unit with the investors and architects.

7) Broad market appeal
Ciudad Vieja real estate is attracting attention in both Europe and North America as a good investment opportunity. Articles about Ciudad Vieja being a good investment opportunity are starting to show up in a variety of languages and publications from the National Association’s CRS magazine to a small German newspaper. The historic buildings and apartments in Ciudad Vieja are being purchased by Spanish, French, and Germans, as well as North Americans who have witnessed the revitalization of historic districts in their home countries and other parts of the world. Argentine and Uruguayan investors are seeing what is happening in Ciudad Vieja and are also buying apartments and buildings to restore.

8) Properties currently appreciating in value.
Rates of appreciation in Ciudad Vieja vary depending on a property’s specific location, condition, and architectural style, but have averaged well above 30% over the last year. Ciudad Vieja is still in its early stages of discovery and gentrification with prices still a fraction of the prices across the river in Buenos Aires.

9) Opportunity for cash flow as well as appreciation
Some Ciudad Vieja investors were reluctant to rent their apartments out long term because Uruguay’s tenant rights laws can make it time-consuming to evict tenants who are unable to pay their rent. Instead of just letting their properties sit empty while they appreciated, they decided to make them short-term rentals, with daily, weekly, and monthly rates. Last month I was speaking to a property manager in Ciudad Vieja who told me that all her apartments in Ciudad Vieja were rented, with people staying in hotels while they wait for an apartment to become available.