Ola Uruguay Real Estate and Investments

At a time of political and economic instability, one small country, covering an area smaller than Washington state, and with a population less than 3.5 million is emerging as a real gladiator on the world stage of economic survival…and its beginning to draw the attention of many a foreign investor.

For a long time now Uruguay has been a focus for Argentine and Brazilian tourists and retirees, but now North Americans and Europeans have discovered Uruguay, and the country is on the verge of a real estate boom. They’re coming for the beautiful beaches, for the friendly and charming people, for the European culture resonating here since colonial times, for the mild climate, and low cost of living. But they’re also coming with their dollars and euros to invest and to buy real estate.

So what’s drawing this new wave of interest from serious foreign investors. Well for one…Uruguay’s stable and steadily-growing economy. Following a slowdown from 1999 to 2002 (kick started by a devaluation of the Brazilian real, and compounded by an economic downturn in Argentina), Uruguay’s economy grew by 10.2%, 6.1%, 7%, and 7.4% year on year since 2004. The Uruguan Peso strenthened, and the unemployment rate decreased from 19.4% in 2003 to 6.3%, a figure released from the National Statistics Institute last week.

Figures from 2008 tell an ever better story… The World Bank reported economic growth was up by 13.2% from January to September last year and ECLAC (Latin American and Caribbean demographic centre) estimates that 2008 will show a level of growth of 11.5% in total, the highest level in all of Latin America.

While the country is not expected to remain unscathed by the world economic crisis, at a business forum held in December, the economic minister, Álvaro García said that the strong financial and banking sectors will help toward surviving the downturn. While tourism, exports, and investment are said to be down in the first half of the year, it is expected that these sectors will improve in the latter half. All in all, economic growth in 2009 is estimated to be around the 3% to 4% mark—substantially lower than recent years, nonetheless an strong figure bearing in mind the current global economic climate.

In addition to a strong economy, Uruguay’s government—recognizing the importance of foreign investment—has put in place laws assuring that foreign investors are treated equally to local investors. One hundred percent foreign ownership of corporations is permitted, investors are free to transfer capital and profits, from their investment, out of Uruguay, and business transactions can be carried out in any currency.

Over the past few decades, the government has privatized a number of previously government-run sectors opening up the market to more private investing.

Uruguay was one of the founding member of Mercosur (which has it’s headquarters in Uruguay’s capital, Montevideo), the South American body responsible for promoting free trade and the fluid movement of goods, people, and currency.

Other factors contributing to Uruguay’s favorable investment climate include:

A favorable tax system—No tax is charged on income sourced outside of Uruguay, import tax is generally not imposed on goods entering from other Mercosur countries, and little or no tax is imposed on the importation of capital equipment.

Investments are allowed without prior authorization or registration.
A good infrastructure is in place.
Uruguay has an established legal, judicial, and banking system.
The country offers private banking, along with corporate privacy.
There is a vast and highly-educated workforce to choose from.
Uruguay has a fortunate geographic position—free of natural disasters, and situated between two big-hitting economies, Brazil and Argentina.

All of this also bodes well for the potential expat considering Uruguay as their new home. A good economy and lower levels of unemployment means fewer petty crimes, a safer environment, and overall a more pleasant place to live.

In fact International Living has listed Uruguay 13th in it’s 2009 Quality of Life index, the highest listed Central or South American country, with most of it’s Latin American counterparts appearing some 30 places below. It also comes in ahead of Canada, the UK, Norway and Japan. The index takes into account—among others—climate, cost of living, leisure and culture, risk and safety, the economy, and infrastructure.

So if you long to live out your retirement years in sunniers climes, or wish for a laid-back summery haven to spend your winter months, or indeed if you are looking for a investment-postive country that welcomes foreign currencies…Uruguay is small but it sure packs a powerful punch.