How to Profit on the Dollar’s Strength By Investing Overseas (Uruguay)
It’s good to have brains.
Brains set true geniuses — like iconic artist David Bowie, who died today — apart from the mere mortal. But brains are also tasty.
No, I’m not a zombie. But ever since I tasted grilled calf brains at a raucous asado at the beach home of my good friend Juan Fischer, just north of Punta del Este in Uruguay, I’ve been hooked. I didn’t know they were sweetbreads until I’d consumed quite a bit, dished up personally by the asador himself, and by that time any residual cultural obstacles to my enjoyment had vanished.
I never miss the opportunity to visit that lovely country, which I’ll be doing again in March as part of our Offshore Investment Summit. Before I do, I always call my friend Juan to see what investment and lifestyle opportunities are coming up … and this year, the one he singled out is a doozy.
Uruguay: Location, Location, Location
La Serena Golf is a new development on Uruguay’s Atlantic coast, near the town of La Paloma, in rural Rocha province. It’s a few dozen miles northeast of Punta del Este, the fabulous resort town where I first tasted brains. While Rocha isn’t a bustling year-round destination like nightclub-heavy “Punta,” its untouched Atlantic beaches and cool ocean breezes make it an attractive residential choice for the summer months, when Punta itself is packed with Argentine and Brazilian holidaymakers. Many of the plots have ocean views, and/or frontage on the fish-packed Laguna de Rocha.
Until last month, getting to La Paloma required a bit of a drive. That’s because it lies on the other side of the lagoon from Punta, and there wasn’t a bridge at the lagoon’s mouth. That meant driving all the way around. The new bridge — an attraction in itself, by renowned Uruguayan architect Rafael Viñoly, whose design for the new World Trade Center in New York came in second — has suddenly cut the trip time from Punta to La Paloma in half.
It doesn’t take a genius to figure out what happens next. As soon as people realize that the logistics have changed, land values around La Paloma will increase. After all, developed beachside properties around Punta del Este can easily reach a million U.S. dollars or more.
Everybody knows which way this market is headed.
A Confluence of GOOD
But a new bridge isn’t the only reason I predict a rise in property values around La Paloma.
You see, the biggest buyers of real estate in that part of Uruguay are Argentines. They tend to buy up property in their more stable neighbor when times are good to hedge against the inevitable return of bad times in their perennially troubled country. Argentina just elected a new president, Mauricio Macri, who looks set to improve the country’s economy, just in time to fuel a new property boom in places like La Paloma … albeit one that probably won’t occur for another year or two.
And thanks in part to troubles under Macri’s predecessor, Cristina Kirchner, Uruguayan property prices are more reasonable at the moment than they usually are — which is very reasonable. Demand from Argentina has been flat, and many expats have been cashing in to deal with Kirchner-induced financial issues back home.
On top of that, the strength of the U.S. dollar makes buying Uruguayan pesos ever more attractive. The peso itself is rock solid, but against the dollar, it’s nearly 25% cheaper than it was this time last year.
And That Adds Up To…
You’ve got a hugely attractive property development in a largely-undeveloped coastal town that is suddenly less than an hour away from one of South America’s most famous resorts. Prices are low by local standards and ridiculous in U.S. dollar terms.
That means you could acquire a five-acre-plus plot in La Serena for as little as US$32,000. (The highest-priced plot I saw on the prospectus was under $70,000.) Many of them have spectacular ocean, lagoon or golf-course views. At historical construction costs, you could build a gorgeous home there for around $150,000. You could hang onto it whilst enjoying the inevitable value appreciation, renting it out to tourists during high summer season for tens of thousands of dollars a month.
Or you could live in it yourself, since Uruguay is completely open to foreign residents, and will gladly grant citizenship after a few years of residence.
In a little over two months’ time, I’m going to be visiting La Serena myself, and I’m going to be bringing my checkbook. Why don’t you join me?
Offshore and Asset Protection Editor