Miami of South America

Punta del Este is a magnet for investors from all over the world. Argentines continue to invest the most in the area, but the arrival of tourists from Brazil and the city’s potencial as a destination for retired people could change this trend.Price study and comparison of 56 projects in development during the years 2006, 2007 and 2008.

This is the third consecutive year that Real Estate & Economy has undertaken an investigation of the real estate market of Punta del Este and again the feature of the market that caught out attention is the growth in surface area under development, together with the rise in property values.

The average value for a brand new apartment in the whole area was USD1,897 per sq m in 2006. But today, after a period of 24 months brand new apartments reach USD2,494 per sq m, an increase of 31.4 per cent. The average increase last year was 13.53 per cent, a lower rise than the year before but it was accompanied by a dramatic expansion in the scale of investments in the area. It is estimated that the total investment allocated to the 56 large-scale residential projects under construction is around USD1bn.

At the beginning of 2006, there were 34 buildings in development or at the sales stage but this has risen to 56 today.

Today’s 56 projects are distributed from Punta Ballena up to La Barra, with the biggest concentration within the areas near to La Punta and on the La Brava corridor.

If we look at the behavior of property values over the past 12 months for the area, it can be seen that the buildings that face the coast are those that have appreciated the most by 17.13 per cent.

However, the smallest increases have been witnessed by the projects located on La Brava. The projects with the highest value per sq m are Acqua in La Brava area which is asking USD5,350 per sq m and Quay, in the port area, at USD4,688 per sq m.

La Brava has the biggest concentration of the largest projects under construction.

Values increased last year not only because of demand but also because of a strong rise in construction costs, changes in the taxation system that have taken place in Uruguay (which added VAT to housing projects), and the loss in the dollar value against the Uruguayan peso during the last year.

Glamorous and innovative projects are concentrated around the coast of Punta del Este. Argentines continue being the biggest buyers but the high purchasing power of Brazilians means that they are increasingly interested in properties in the area. International brands such as YOO are coming to the western beaches, because of the potential that experts say it has for continuing growth and for attracting more and more investment.

Punta del Este is a never ending showroom for foreign investment. Every day one or two huge cruise ships arrive from which tourists disembark, with willingness to know more about this attractive beach destination, with strong acquisitive power and with enthusiasm to place their capital in emerging real estate markets. We have always referred to the combined potential of two neighboring and complementary cities such as Buenos Aires and Punta del Este, offering unique features to compete with other strong international destinations.

A picture that is often repeated; giant crew ships arrive everyday in Punta with tourists form all over the world

Among the projects that were launched last year, only one that was going to be started in the area of La Barra has been cancelled: Airena.

The surface area that was granted planning permission last year surpassed that of 2006, although it was lower than the record year of 2005, the year in which a great number of the projects that we see completed today were approved. Nonetheless, the increases in surface area with planning permission during the past two years leads us to foresee that there will continue to be real estate development in the area.

The time of thinking about retirement, Punta is one of the most attractive destinations, because of a large amount of land with panoramic views, land prices considerably lower than others locations with an equal setting, an unrivaled location in relation to Sao Paulo, Buenos Aires and Santiago, and an excellent infrastructure.

© Real Estate & Economy, 2003-2008, March 2007