What Returns Do New Projects Offer?

More Foreigners Invest in Properties in Montevideo: What Returns Do New Projects Offer?

By Victoria Aranda

4-5 minutes

The Promoted Housing Law. This is the name of the regulation that, sources agree, is largely responsible for the real estate boom in Montevideo, which has significantly changed the supply landscape. But in addition to the legislation, which is a state policy that transcends partisan biases, there are other reasons contributing to this good moment in the Uruguayan market, of which Argentines are by no means unaware.

First things first: What does the aforementioned regulation consist of? According to Fabián Kopel, director of the development company Kopel Sánchez, thanks to the law, many investors have found a profitable and secure option in Uruguayan real estate.

"Those who choose these apartments receive benefits such as 100% exemption from Income and Wealth Tax and 2% from the Property Transfer Tax (ITP) on the first sale," he points out.

"Additionally, the low entry prices allow investors to ensure liquidity in case they need the money immediately," continues the Uruguayan businessman, delving into the extra-legislative advantages. "Lastly, there's a guaranteed return in dollars as a consequence of the continuous rental demand, mainly within the middle class," he states.

Sales in Montevideo: Argentines Present

According to the developer, who is launching Cosmopolitan, a project of 213 apartments with units starting at $99,500, 13% of their total sales this year were thanks to Argentine buyers who acquired 30 units for $4,200,000. Kopel is certainly not the only one with data on clients from this shore.

For now, Martín de los Santos, Commercial Director of Vitrium Capital, specifies the current profitability. According to him, investing in Uruguay guarantees a return of around 5% net annual in dollars.

In Montevideo, renting out a $150,000 apartment can yield between $500 and $600 per month

"For capitalization investments, the expected return rises to 12% annually," says the executive of the Argentine development company that has six projects in the Uruguayan capital.

These numbers, he notes, explain the response from the Argentine public. "In the last decade, citizens of our country have spent over $125 million and bought more than 1,200 properties in central neighborhoods of Montevideo, thus becoming the main group of foreign investors," points out de los Santos, sharing that today there are more than 85,000 Argentines who own properties in Uruguay.

"It's a solid market, with legal security, with an annual inflation of 7% sustained over 20 years, broad access to long-term credit, and clear rules of the game for those who invest," emphasizes the Vitrium executive, whose latest project 01 Vila is being marketed from $1,740 per square meter.

Argentine Developers Also Bet on Montevideo

As seen so far, there are not only Argentine buyers, but also developers with an "Argentine accent" who choose Montevideo to carry out their projects. Such is the case of St.Moritz, currently in charge of Vivet 21, in the exclusive Punta Carretas, an initiative born during the pandemic and whose square meter is marketed between $3,000 and $3,500.

According to Marina Bertino, executive director of the company, the project, which has a delivery date in November 2024, is 25% sold. All buyers are Argentine.

"We have an office there," she says from Uruguay, explaining that in general it's a buyer who is "for the first time" acquiring a property outside their country and requires advice on legislation on both shores.

"Then they do their numbers and conclude," Bertino continues. "An apartment of $150,000 in Argentina can leave its owner 100,000 pesos per month in rent. Here, in Montevideo, the same investment leaves between $500 and $600," she estimates.

But the truth is that, according to market data, the Uruguayan capital has also aroused the interest of investors from Chile, Peru, and European countries. According to the director, for some time now, there have also been other interested neighbors: Brazilians who inquire "both to invest and to come to live."

https://www.iprofesional.com/negocios/374088-es-rentable-para-argentinos-invertir-en-propiedades-en-uruguay