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Uruguay Heads for the Limelight

Uruguay could be forgiven for having something of an inferiority complex. A tiny country, squeezed in between two South American giants, Brazil and Argentina, it has a tendency to get overlooked. Not any more. As one of the richest countries in Latin America with undoubtedly the most secure economy, Uruguay is starting to get some serious attention from overseas property investors.

Uruguayan property developers had a strong presence at the annual SIMA property exhibition held in Madrid in June 2008, where they represented 15% of international developers. "Uruguay has been hiding its light under a bushel until recently," commented James Gonzalez, Market Analyst at Obelisk. "It is showing promising signs for investors with its competitive prices, political stability and a secure economy. I believe that Uruguay is worth serious investor consideration."

A major draw for potential foreign property investors is Uruguay's low property and land prices coupled with no restrictions for foreign investors. The government actively encourages foreign investment and Argentinean and Spanish companies are already prominent investors in Uruguay. Land in the border regions with Argentina and Brazil, is top of investors' lists and the Ministry of Agriculture estimates that approximately 25% of land in Uruguay was bought by foreigners in the period 2000 to 2006.

Popular areas with foreign investors are the capital, Montevideo, particularly the elite district of Carrasco and Punta del Este, which is around 100km from Montevideo and often called Uruguay's French Riviera as it is one of the most expensive places in the region. Previously popular with Argentineans, wealthy Brazilians are now the major investors in Uruguay with increasing numbers of Europeans and Americans upping demand for housing and causing a construction boom.

Uruguay has made an impressive economic recovery since its financial and banking crisis in the late 1990s. The country was affected by the recessions in Brazil and Argentina, Uruguay's nearest neighbours and main trading partners. Since then, it has reduced its dependency on its big brothers by diversifying its trade policy achieving the kind of economic growth that is the envy of many countries.

Recent figures published by the Central Bank of Uruguay show how much the country has recovered and reveals a booming economy - GDP growth for Q1 2008 was a massive 10.9% and the country is set for an annual increase of 6.8%, slightly higher than 2007. Forecasts for 2009 are also promising with the Central Bank predicting around 4.5% growth. Further good economic news came in May when unemployment figures reached a record low at 7.2%. The Uruguayan government has started to implement stringent economic policies with the ambitious goal of doubling the country's FDI/GDP ratio over the next 5 years. It plans to do this by improving existing legislation on investment, developing the local capital market and attracting further foreign direct investment.

Along with its healthy economy and political stability, Uruguay boasts more than 650km of breathtaking coastline and an excellent climate. Tourism is on the increase and according to the Ministry of Tourism, visitor numbers grew throughout the country during the first 3 months of 2008 with some resorts seeing huge rises. A good example is Costa Oceánica, where visitor numbers rose by over 130% and Colonia which saw rises of more than 50%.

James Gonzalez says that Obelisk will be keeping a close watch on investment conditions in Uruguay, "It may be a small country, certainly when compared with its near neighbours, but Uruguay is more than holding its own and will soon be sharing the limelight with the biggest of them."

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