A tiny village of 198 residents some 180km east of Uruguay’s capital, Montevideo, has seen prices triple in line with those at the ever-popular beach resorts of nearby Punta del Este and José Ignacio.
In Pueblo Garzón, humble roadside properties – the majority abandoned – are scattered with “for sale” signs. María Blanca González sits outside her unassuming family home, drinking maté tea. Her new neighbour, she has been told, is John Pearse, tailor to stars such as the Rolling Stones and Paul McCartney. The previous owners accepted an offer of US$80,000 and moved to the nearby village of San Carlos, where larger houses are a third of the price.
According to the national census, there are currently more properties in Garzón than residents, but this looks set to change. Under-developed land in the area is still relatively inexpensive. A plot overlooking the attractive saltwater Laguna Garzón is priced at $70,000 for 1,149 sq metres through Caldeyro Victorica, and a similar asking price can be found for a chacra – a small farm – within the village itself. Throughout the area, buyers typically purchase a plot and then let their architectural fantasies run riot, resulting in an eclectic mix of minimalist showhomes, preferred by Spanish investors, and mock-Tudor 1960s structures, said to be popular among Swiss buyers.
An example of the former is a four-bedroom, 450 sq m property at the beach resort of El Chorro, 16km west of Punta del Este, on sale through, part of the Sotheby’s International Realty network, for just under $990,000.
Garzón’s proximity to Laguna Garzón, just 25km away, and to the other beach resorts mentioned above, has been a large part of its appeal. However, a new bridge across the lagoon looks set to have a significant impact on property prices. Since the 1960s an unfinished bridge has failed to link the two departments of Maldonado (home to Punta del Este) and Rocha. When Argentine property developer Eduardo Costantini started to build his exclusive gated community development, Las Garzas, on the western side of Laguna Garzón in 2009, there was a move to build a modern replacement.
Juan Federico Fischer, managing partner of Fischer & Schickendantz, a leading Uruguayan law firm, explains that it has not been an easy feat: “After environmental requirements were disputed for almost four years, the bridge was finally approved last September,” he says. It is believed that the new design by New York-based Uruguayan architect Rafael Viñoly will have little impact on the environment, and the ministry of transport foresees completion by 2015.
Land prices throughout Uruguay have undergone massive changes since Argentina defaulted back in 2001. “What Uruguay was before 2002 and what it is has become since 2003, is another country altogether,” says Rodolfo Victorica, from real estate agency Caldeyro Victorica. Victorica began specialising in land and rural property sales seven years ago, and his father-in-law has dealt with the urban property sector for more than two decades. “When Argentine and foreign investors came to Uruguay back in 2005, there was more of a risk with regard to property, but today, after seven years of investment, the country is seen in a different way.”
Argentines, who make up close to 75 per cent of international property ownership in Uruguay, feel their money is safer in property in Uruguay than with the banks at home – and this trend looks set to continue, given the current exchange controls implemented by President Señora Kirchner.
Victorica also points to proposals for a port near Rocha that were announced two years ago and that the Uruguayan ministry of transport is now seriously considering. The port, if completed, would be less than an hour’s drive away from the town of Garzón. There are two main commercial ports in Uruguay at present, Montevideo and Nueva Palmira, both in the west of the country. Punta del Este also has a small port, but the population swells during the South American summer, with cruise ships arriving daily. The new port would free up an entire eastern flank, significantly affecting both commercial and residential land prices.
A similar lake region outside Punta del Este caught the attention of a number of investors back in 2003. Alejandro Perazzo, owner of Perazzo Inmobiliaria, purchased his own chacra by Laguna del Sauce as early as 1992. In 2006 he substituted his small lakeside farm for a high-rise condo apartment in central Punta after accepting an offer four times higher than the purchase price.
Today an equivalent four-bedroom property with a pool and seven hectares of land is priced upwards from $1.6m. If Garzón is the new Sauce, the potential is clear.
Foreign buyers have been alert to Uruguay’s property market since the Punta boom began in the late 1990s. Forty per cent of land in Uruguay has changed ownership in the past decade, most notably farmland. Unlike its Mercosur neighbours, Uruguay is investor-friendly. International and local investors are treated equally; there are no currency exchange controls such as those in Argentina, no tax on income earned abroad, as is the case in Brazil, and taxes earned locally are at considerably lower rates than in Europe and the US.
● There are no restrictions on ownership of property
● Transfer tax is payable at 2 per cent of the purchase price and can be as little as 0.2 per cent for rural properties
● 660km of fertile coastal lowland, with a warm, pleasant climate
● In 2012, 9.19 homicides were committed and reported per 100,000 residents in Uruguay
● Uruguay is considered the safest of all 20 countries in Latin America with one of the lowest poverty levels, according to a recent study by Chilean non-profit organisation Latinobarómetro.
What you can buy for…
£500,000: A four-bedroom, 400 sq metre house with a large garden and pool in Maldonado, 15 minutes’ drive from Punta del Este
£1m: A four-bedroom, 350 sq metre sea-view apartment, minutes from Punta del Este town centre
£5m: Seven hectares of land by the sea together with luxury property in Fraccionamiento La Carolina, half an hour west of Punta del Este