The hand coming out of the sand in Punta del Este

Together the U.S. & Brazil account for 20% of DFI in Punta del Este and other corners of Uruguay.

Foreign investment in Uruguay is shifting in two major ways: the destination and the origin.

An interesting analysis today in El Observador: “Real estate investment and construction have replaced land purchases and loans to financial institutions as the primary pole of attraction for foreign capital coming into the country over the last decade.”

Outside investors also play a more important role in Uruguay considering foreign capital only accounted for 10% of investments realized in 2001. Today that figure is 31% according to the Central Bank. In 2003, almost 50% of the direct foreign investment in Uruguay went toward land purchases, financial loans absorbed 13% and real estate only accounted for 4%.

Foreign investment in Uruguay real estate has grown from 4% in 2003 to 31% in 2009. Foreign demand has grown thanks to Uruguay’s affordability and quality of life rankings, while domestic demand has risen together with GDP and household incomes. In 2008, foreign investment in raw land in Uruguay reached a peak of $404 million, or 19% of total DFI. Since then, foreign investment in land has trended downward while real estate investment has risen dramatically.

In terms of country of origin, El Observador repeats the usual refrain that Argentina was the source of most foreign investment in Uruguay over the last decade. Today Argentina only accounts for 29% of capital entering the country, while U.S. and Brazilian investors are playing a much more important role. The U.S. and Brazil each accounted for less than 1% of Uruguay DFI in 2004, but the two nation’s DFI levels had risen to 10.5% and 8.7% by 2009, respectively according to the Central Bank. (Full Story in Spanish)

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